Feels like it’s a pretty tough time to be in global banking right now. If it’s not falling volumes then it’s layoffs or, worse still, actors like Bill Nighy bleating on about the need for a Robin Hood tax hitting the headlines. And on both sides of the Atlantic we have regulators that seem oblivious to the damage they leave in their wake as they dream up yet more ways to be seen to be doing something about the evil banking world. This certainly seemed to be the theme at last week’s Trade Tech Liquidity event at the Guoman Tower Hotel in London. The panel that I was on seemed in unanimous agreement that regulators struggle with the detail, and even those bodies that do get the joke are so undermanned that they have little chance of fully pursuing the regulatory agenda that the politicians have laid out for them. Despite the fact that there were many representatives from Europe’s regulators at the event, they seemed unable or unwilling to answer any of the criticisms laid before them.
It was reported this week, however, that they may be backing down on the demands they are placing on the HFT community to permanently make markets in instruments they trade. Is this a more benign side that we are seeing from the regulators or just the realization that they can’t regulate something that they can’t even define? Whatever the reason, the simple fact is that the assumptions made about our industry when MiFID and other regulations were first being conceived, seem woefully inaccurate nowadays and the original objectives (transparency and lower execution costs), have been subsumed beneath a far more political agenda.
As our industry transforms itself to meet the emerging trading and regulatory landscape, the winners, just as with any ecosystem, will be those firms that can adapt fastest and the most creatively. Early signs of this already seem to be emerging especially as market participants of all types adapt the business models they have created in the US and Europe and start deploying them throughout Asia.
Oh and the good news? Well with so much bad news around we are pretty much spoilt for choice as to what to moan about………