LONDON - “I like regulation because it’s going to make me rich.” The comment from Simon Gleeson, partner at Clifford Chance in London, drew a big laugh from the audience at Markit’s “Evolving OTC Market Landscape” conference in London last week. But his remark underscores a serious point: uncertainty in the OTC derivatives markets is alive and well.
Gleeson characterized the stance of regulators as “everybody waiting to see what everyone else will do,” as the pace of derivatives regulation on both sides of the Atlantic slows down. At the same time, “Regulators are galloping toward balkanization.”
Gleeson didn’t mean just the mismatch between U.S. and European regulators. The hidden tiger, if you will, is Asian regulation. Gleeson reminded the audience that when the crisis is mentioned to Asian market players, they hark back to the currency crisis in 1997, not the implosion of the credit markets in 2008. Regulators there are still trying to promote product innovation and open markets. “Asian macro policy objectives are almost 180 degrees in opposition to ours here but they’re also signatories to the G20 and trying to implement the same thing,” he said.
Despite the furore over new rules and the handwringing over the difference between the different jurisdictions, Gleeson did not think the new world order would sound a death knell for the derivatives industry. “If you think of what the market wants and what the regulators want, the market always wins. Just think of the regulation of cocaine in this country,” he said.
