Who’s your regulator?
Will we look back on this as the official opening of the global debate on the status of national (exchange) regulators in a 24/7 world of global asset markets?
James Newsome, Nymex’s CEO has queried the fairness of being subject to a different set of rules as its chief competitor ICE given the fact that they are essentially competing in the same products with the same end users. Nymex is regulated by the CFCT, while ICE is regulated by the FSA in the UK.
Is regulatory competition a good thing? or will it inevitably lead to a ‘race-to-the-bottom?’ I’d be interested in hearing people’s opinions.
I haven’t given this alot of thought, but my first impression is that (regulatory) competition should be good for markets and their users. It will tend to drive positive innovation and dynamism in reacting to fundamental market changes, and I think market forces would also mitigate any potential laxness on the part of regulators as liquidity is unlike to remain in any market where the rules and/or the regulator are seen to be less than robust. Competition should also be a good guardian against regulatory capture, as end users are likely to migrate away from any market that is run for the benefit of a select constituency. Dissenting views welcome.
