UPDATE: Exchanges Watchful On Overreach In Rules Revamp
March 16 2011 - 11:58AM
Dow Jones News
Futures exchange operators are wary that financial market
regulators may overreach in their effort to address the 2008
financial crisis, resulting in more restrictive rules that will
hinder growth in derivatives markets.
Market authorities must bear in mind the potential costs and
benefits of new rules around trading and clearing derivatives
contracts, and take care not to do "damage to the industry," said
Craig Donohue, chief executive of CME Group Inc. (CME).
"It's a fundamental concern that in the rulemaking process, are
the [Commodity Futures Trading Commission] and other agencies
sticking to what Congress intended and not using this as an
opportunity to legislate and get into areas well beyond the
intentions of Congress," Donohue said, speaking Wednesday at an
event hosted by the Futures Industry Association.
Garry Jones, head of derivatives business for NYSE Euronext
(NYX), raised concerns around a potential "lack of focus" among
regulators and the danger that they may be focusing on issues not
intrinsic to the root cause of the financial crisis.
Exchange officials remained wary that rules being crafted in the
U.S. and Europe won't closely match, encouraging some market
participants to shift their business to one jurisdiction or the
other to avoid more strict regulations.
CME's Donohue said that "a substantial risk" of such regulatory
arbitrage remains, despite high-level agreements on general terms
of financial markets overhaul among G20 nations.
"All of us firmly are in the camp of endorsing an even
regulatory playing field," said Andreas Preuss, CEO of Eurex, the
derivatives arm of Deutsche Boerse AG (DB1.XE).
Magnus Bocker, CEO of Singapore Exchange, said he believes
long-term regulators will harmonize their approach to rules-making
across venues.
-By Jacob Bunge, Dow Jones Newswires; 312 307 4879;
jacob.bunge@dowjones.com
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