The Power of the Cupcake

The industry gained insight this week into how well US regulators are getting along. At the Futures Industry Association's (FIA's) annual Expo in Chicago, Gary Gensler, chair of the US Commodity Futures Trading Commission (CFTC), mentioned that Mary Schapiro, chair of the US Securities and Exchange Commission (SEC), had given him homemade cupcakes for his birthday, which had recently passed.

It's good to see that the heads of the two regulatory bodies are on such cordial terms and not pulling the industry in different directions.

Overall, the regulators’ recent efforts to roll out the Dodd–Frank Wall Street Reform and Consumer Protection Act, and address the needs of the changing markets, have been positive. The joint CFTC–SEC Advisory Committee is running smoothly. With its Technology Advisory Committee, the CFTC is gaining better insight into the technology that runs the futures markets, which is a good thing since the CFTC is shouldering the heavier portion of implementing Dodd–Frank.

What remains to be seen is the impact of the US mid-term elections that were held on Tuesday. Even though the Republicans now control the US House of Representatives, they are still the minority party in the Senate, and with a Democratic president in power, don't have the political leverage to outright repeal Dodd–Frank. The earliest this could happen would be in 2013—after the next US presidential election in 2012. In the meantime, the best they can due is retard the implementation and enforcement through Congressional oversight.

Of course, this won't change the fact that the industry will be investing billions of dollars to meet the new regulatory changes that might only have a shelf life of a couple of years.