Commissioner Johnson Expresses Discomfort with Disintermediated Markets
Commentary by Steven Lofchie
CFTC Commissioner Kristin N. Johnson expressed discomfort with the notion that investors could interact directly with other investors on an exchange without going through the intermediation of a futures commission merchant ("FCM").
In remarks at the World Federation of Exchanges Annual Meeting, Ms. Johnson said that this would result in (i) a loss of investor protections and (ii) a loss of the financial intermediation benefits that an FCM acting as intermediary provides.
She said that "it is imperative that we ensure parallel guardrails apply across our markets," adding "same activity, same risks, same rules."
Commentary
Commissioner Johnson's "same activity . . . same rules" echoes of SEC Chair Gensler's refrain that "like must be regulated as like." Among the problems with these slogans is that they shut off the possibility of change, whether that change ultimately proves for better or for worse, or some mix of the two.
Saying that everything new or different must be treated exactly as what was here before becomes just another way of saying nothing new or different will be permitted. Long live the status quo.
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