Central clearing has an obvious benefit in securities markets as compared to swaps markets: in securities markets, there is an object to be delivered, and having a central clearing repository can reduce the risk of failure because it allows for the set-off of delivery obligations. That advantage does not exist in swaps (or other notional) markets, as there is nothing to be delivered. Central clearing works best (in fact, it only works) in markets where the underlying security is extremely…

Some Governors of the FRB have strongly criticized H.R. 3189. While the attention that the bill has received largely focuses on the constraints the bill would put on the FRB's power to set interest rates, perhaps the more interesting section of the bill deals with the FRB's regulatory authority. It is not obvious why the FRB when acting as a regulator should be subject to lower standards than other financial regulators. In addition, the FRB should be in a better position than any regulator…

Even though the firm was never accused of misusing clients' money, its failure to provide timely accounting was extreme and repeated. Since it is obvious that compliance with the Custody Rule is (and should be) an SEC priority, the fact that the firm's principals did not take any action to correct the initial failures reflects bad judgment.

From a policy standpoint, the question is whether the increasing constraints on, and rules around, publishing research, result in (or have resulted in) a material dimunition in the amount of research published, and, if so, whether the lesser amount of research is better for being conflict-free.  The business model for producing research obviously becomes less compelling as the regulators force research to be separated from other related businesses.  At what point do well-intended…