While the Director certainly covered a lot of historical and regulatory ground in his speech, he actually gave very little sense of the direction, if any, toward which he believed the Division should proceed. For example, although he noted that the discussion on re-thinking interim financial reporting has been going on for some time now, and he likewise remarked that commenters have noted that "a focus on short-term performance is not conducive" to long-term growth, he did not indicate…

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…