This is a substantial report. The tone of the report is moderately negative. One of the report's underlying themes is "the potential unintended consequences of financial regulation and financial stability policies" (at 1). This theme amounts to a reluctant admission by the regulators that certain policies were either ill-considered or pushed too far.

The mandate to force derivatives into central counterparties ("CCPs") is the most obvious example of new regulatory requirements that…

Commissioner Piwowar's dissent from the proposal of the rule is well-reasoned. The SEC does not have adequate information needed for proper analysis of the proposal at the current time.

As the Commissioner argues, the SEC justifies the proposed derivatives framework as an "exemption" from Section 18 of the Investment Company Act ("Capital Structure of Investment Companies"), even though the SEC is in fact limiting behavior that it has previously sanctioned. It is not at all obvious…

The implementation of a "reply comment period" is a truly excellent regulatory development. Financial regulation can benefit from regulatory innovations such as this, which foster genuine discussion.

The numbers presented in the FINRA report send considerably more mixed or ambiguous signals than the tone of the report would suggest. The report certainly has some positive numbers in it, but a closer look at those numbers, when viewed in context, may present a different picture. Take, for example, the finding that bid/ask spreads had declined, which seems to be a healthy indicator for the market. The estimated bid/ask spreads are analyzed in the study without regard to average trade size.…