It is not clear whether the SEFs' changes in status from "temporary" to "permanent" registration has any significance to a better functioning market. The important issue, as Commissioner Giancarlo emphasizes, is whether the rules are good rules, and that means whether they are good rules for products of different types and liquidities. In other words, the type of market that serves plain-vanilla interest rate swaps is likely not the same kind of market that works best for illiquid…

This report is a significant step forward by the global regulators in at last acknowledging that very high and potentially punitive capital requirements may be counterproductive and a source of risk. This may seem counterintuitive. It may appear obvious that when a single institution has more capital than others, it is better placed to survive a downturn than are others. However, when all institutions carry more capital, because they are all subject to higher capital…

This case communicates that the SEC will award an "outsider," for providing original information (here, presumably for analyzing market data) that leads to a successful enforcement action, rather than awarding only a corporate insider. It's an award about which we may feel better than (in the worst case) one that was given to a company insider who did not attempt to correct the problem internally but went directly to the government in the hopes of collecting reward money.

The Bylaw 1101 regime that requires every NFA member to police every other firm is wasteful, particularly since it must be repeated every year. The burden to comply with the law should be on each firm. The government should police that compliance. At a minimum, an NFA member should be considered to have satisfied its Bylaw 1101 compliance when it takes on a new customer. It should not have to conduct an annual update as well.