Contributor: Past Author - Richard Hulit
Last Thursday, I joined a full room at FIA Boca in Boca Raton for CFTC Chairman Gary Gensler’s keynote speech. If you have been keeping up with Gensler’s recent speeches, you know that he is a passionate supporter of increasing transparency in the over-the-counter derivatives market through explicit regulation and the movement of OTC contracts to clearinghouses. On Thursday his speech highlighted these calls to action once again.
I believe transparency and a new regulatory climate will transform our industry, and therefore found Gensler’s keynote particularly compelling.
Gensler utilized an interesting story to give context to his speech. He used the historical example of how the Great Chicago Fire (possibly started by Mrs. O’Leary’s cow) prompted new building codes in Chicago to frame today’s financial crisis prompting the need for a different sort of “building code.” We all know that new regulations are coming and that they will change how financial firms operate and report, however it isn’t as simple as making sure our buildings aren’t made from matchsticks. While regulatory bodies and lobbyists work to determine what our new “building codes” for the derivatives markets should be, I expect our industry to be rebuilt on a solid foundation of transparency and supported by the right steel-beam regulations to prevent any financial fires in the future.
Across SunGard Financial Systems, there is a strong belief that transparency is and will be one of the most important drivers in our industry this year. You’ve seen Gerry Murphy, Tony Scianna and me blog about the topic before, and throughout the year I bet we will revisit this topic again. When we are talking about risk, regulation and new changes moving us forward as an industry, transparency will be at the heart of these conversations.
Were you at FIA Boca last week, and did you attend Gensler’s keynote? What did you take away from his speech? Did his “building code” story resonate with you? Please leave a comment with your ideas and opinions.