James Moore: Regulators love to give exchanges new toys
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Outlook Exchanges are in vogue right now. The European Union's competition people love them. Last week they brandished a big stick at a group of 13 City banks after exchanges complained that they had been shut out of the lucrative credit derivative market.
Financial regulators love them too. It's not just credit derivatives they want to see moved on to exchanges. They'd like the latter to handle all sorts of previously opaque financial instruments in the hope that this will help them to get a better handle on what's going on.
Now it seems that the Libor people love them. The British Bankers' Association yesterday handed the job of overseeing that once rather obscure little interest rate, which has caused all sorts of problems, to an exchange in the form of NYSE Euronext, owner of the New York Stock Exchange (among others). It beat the London Stock Exchange for the position.
There's a certain sense in handing the job to the Americans. US regulators kicked up the biggest fuss over the attempts by traders at mainly European banks to fix Libor, and levied the biggest fines. With NYSE running the show, however, they'll find it tougher to blame the problem on venal Europeans and their somnolent watchdogs if things go wrong again.
Whether giving exchanges so many new toys will result in better outcomes in future, however, remains an open question. Many of them are, after all, run by bankers, or ex-bankers. And it isn't just banks that can find themselves prone to cultural problems. If regulators want to be smart, they'll keep a careful eye out for side-effects if they're bent on using exchanges as a drug to help treat the financial world's ills.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments