As 2017 comes to an end, it's time to reflect on some of
the key developments that shaped financial regulation this
'Key developments' may sound a bit optimistic given that
there's really only one overarching trend that's affected
markets in the past 12 months: the recalibration of regulatory
burdens on either side of the Atlantic.
In the US, the appointment of Donald Trump as President in
January was the trigger for a widespread legislative rollback
which saw a number of key financial rules trimmed down, put on
hold or shelved outright. Outgoing Commodity Futures Trading
Commission chairman Timothy Massad warned in January of the
threat that cutting post-crisis rules would pose to the
The Department of the Treasury (DoT) has embraced the Trump
rhetoric of two-for-one – for each new regulation
introduced, two have to be eliminated – with
enthusiasm. The DoT, headed by former Goldman Sachs banker
Steven Mnuchin, has already released some guidelines for its
proposed dismantling of the Dodd-Frank Act, in particular the
much-criticised Volcker Rule.
Elsewhere, the Department of Labor has confirmed that the
coming into effect of its fiduciary rule, which many have said
was doomed from the start, will be delayed by another 18
months, until at least July 2019. The rule mandates that
financial advisers act in the best interests of their clients,
something that former US President Barack Obama said would
prevent savers from losing nearly $20 billion every year to
advisers' misguided advice.
The EU's shiny new Markets in Financial Instruments
Directive (Mifid II) has also been a bone of contention because
of its extraterritorial reach (see boxout page XXX). While most
of Asia is scrambling to company with its provisions, the US is
taking a more relaxed approach and complying in its own time
and on its own terms.
All of which brings us to the EU, and to Mifid II's 1.4
million paragraphs of rules, which symbolise to an extent the
direction the region is going in. While the US is choosing the
rollback route, the EU and its soon to be 27 member states are
doing things differently, regulating left, right and centre.
Mifid II isn't the only example of this. In the capital markets
space, the sell-side has been discouraged from differentiating
between products too much, with a blanket requirement of
heightened disclosure for most asset classes, from vanilla
products to the more structured products. More work for
Both regions are moving at their own speed and in their own
direction: the US is swiftly rolling back (at least in theory),
the EU is slowly adding more rules – Mifid II's
implementation was postponed one year because of its complex
The regulatory tide is definitely flowing differently.
Enjoy the issue.
Happy New Year, and see you in 2018.