Derivatives Clearinghouses: Clearing the Way to Failure

One of the major components of Dodd-Frank was a comprehensive regulatory framework for over-the-counter derivatives. A key feature of this framework is a requirement that many of these derivatives be cleared through central counterparty clearinghouses. Clearinghouses have long played a stabilizing force in many markets, but Dodd-Frank’s regulatory mandate may adversely affect the way they operate. Risk management by clearinghouses and market participants could suffer, and improper risks could find their way into clearinghouses. If a clearinghouse were to fail, there would be tremendous pressure for the government to bail it out in the name of financial stability. Dodd-Frank’s derivatives framework should be reconsidered before it destabilizes the financial system. A better approach would empower market participants to decide whether to use clearinghouses and would allow clearinghouses the regulatory latitude to effectively manage their risks

Derivatives Clearinghouses: Clearing the Way to Failure

One of the major components of Dodd-Frank was a comprehensive regulatory framework for over-the-counter derivatives. A key feature of this framework is a requirement that many of these derivatives be cleared through central counterparty clearinghouses. Clearinghouses have long played a stabilizing force in many markets, but Dodd-Frank’s regulatory mandate may adversely affect the way they operate. Risk management by clearinghouses and market participants could suffer, and improper risks could find their way into clearinghouses. If a clearinghouse were to fail, there would be tremendous pressure for the government to bail it out in the name of financial stability. Dodd-Frank’s derivatives framework should be reconsidered before it destabilizes the financial system. A better approach would empower market participants to decide whether to use clearinghouses and would allow clearinghouses the regulatory latitude to effectively manage their risks

Regulation: A View from Inside the Machine

This is a transcript of the keynote address virtually delivered by Hester M. Peirce at the symposium “Protecting the Public While Fostering Innovation and Entrepreneurship: First Principles for Optimal Regulation,” hosted at the University of Missouri School of Law on February 8, 2019. The transcript of this address was initially published on the official website of the Securities and Exchange Commission; it has been lightly edited to ensure readability and formatting continuity

Opening the Gate to Money Market Fund Reform

This article proceeds as follows. Part I outlines briefly the background of MMFs. Part II discusses the role of the board of directors in governing MMFs, a role upon which our proposal would build. Part III discusses MMF-related events during the financial crisis of 2007-2008 and describes the government’s response to these events. Part IV describes the reforms the SEC instituted in 2010. Part V outlines options for further reform. Part VI outlines and discusses benefits and drawbacks of our proposed solution—unrestricted discretionary gating by fund boards. Part VII concludes

A Conversation About Current Issues Facing the Global Financial Industry

https://digitalcommons.nyls.edu/filler_institute_events/1014/thumbnail.jp

Capital Markets and Human Capital

The Catholic University of America Columbus School of Law’s first Faith In Action event of the semester featured Hester Peirce, Commissioner, Securities and Exchange Commission, who gave a talk entitled “Capital Markets and Human Capital.”During the January 15 event, Peirce discussed how her faith has shaped her interest in and approach to the regulation of financial markets. A summary of the event is available here