On the eve of the Obama administration unveiling its reforms for financial regulation, NYSE Euronext CEO Duncan Niederauer has an op-ed in today's Financial Times, Principles That Must Guide New Financial Regulation.
"Getting our regulatory house in order requires constructing a new foundation, rather than taping broken windows and patching cracked walls." Duncan writes.
Here are the four principles he cites:
1. "...[R]eform must protect investors and restore investor confidence...Innovative financial instruments blend elements of equity, debt and insurance - but regulators today only focus on their own specific area of responsibility. We must close the gaps, ensuring all market functions are supervised by an appropriate regulator. ..."
2. "...[F]inancial oversight must be rationalised and harmonised. Seven federal regulators with overlapping missions and fragmented supervision oversee US markets and financial institutions. ..." [Note, I've left as is the "English English" spellings instead of changing them to "American English" -- after all, it's in the FT.]
3. "...[A] new system must bring complex financial instruments out of the shadows. What cannot be seen cannot be regulated properly. ..."
4. "...[A] new regulatory system must stress smarter regulation, not over-regulation. Quality, not quantity, is the test. ..."
There's much more explanation in the article itself, which is a quick read. As always, your thoughts are welcome in the comment box below.
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