This is not an emergency

Author: | Published: 1 Dec 2008

Kyle Siskey
Staff writer, Americas

The US government has talked seriously about credit derivative regulation for months; now the financial sector is getting a taste of what it wants to do. The President's Working Group on Financial Markets announced the formation of central counterparties in November, starting down the path to heavier regulation.

Changes are needed, but it should not be an emergency order like that issued on short selling, or – even more vaguely – Tarp (the Troubled Assets Relief Programme). This approach would cause immense confusion in one of the most fast-moving and dynamic markets. It is a market that cannot function without the freedom of creativity and, most importantly, without long-term certainty as to the rules it plays by.

"There is sensationalism going on across the market, on the back of which are some very serious proposals with serious consequences for the market," says Ian Cuillerier, a partner...