The SEC's proposals regarding liquidity and derivatives have been subject to significant negative reaction. The common theme from both industry and academic critics is that these proposals are economically simplistic and only appear to reduce risk. This may work for the economically unsophisticated (e.g., those who believe that all derivatives are inherently risk-creating), but in reality, those fearful of derivatives would increase risk by discouraging the use of hedging…

Just like banks, broker-dealers should also review their treatment of MMFs that have a floating share value or that otherwise do not behave in the same manner as "traditional" MMFs. For example, one question that firms must consider is whether or not a share in a floating value MMF should be treated as a cash-equivalent for margin purposes.

Assuming that FINRA "considers a proposal," one wonders whether the Treasury and SEC will be able to make use of the information collected. After all, it is increasingly evident that part of the reason for increased volatility in the market is not the result of "bad" behavior, but rather from diminished liquidity resulting in part from increased regulatory and capital costs. Anyone attempting to argue that the costs exceed the benefits of such a central information collecting scheme…

This case may be the first in which a whistleblower award was granted to an employee who did not produce evidence that initiated a case, but rather evidence that furthered an ongoing investigation of which the employee was aware. For those who find the concept of whistleblower payments troubling, at least in the case of whistleblowers who do not first raise the issue within their own organization, this case should raise the level of discomfort. In effect, the SEC offers a bounty to…