A recurring theme of this column has been the need for greater cooperation among regulators so our markets can function effectively at a global level. This article’s publication comes at an important inflection point as the EU considers precedent-setting legislation on how foreign CCPs should be regulated. As we consider different ways to approach cross-border regulation, I want to talk about sports…yes sports…and how they can serve as a metaphor for resolving conflicts and overcoming our differences.
This month marks the start of the World Cup. Although I am disappointed the U.S. did not qualify, as a sports fanatic I am looking forward to watching this awe-inspiring tournament. Football, or soccer for us Americans, is truly a universal sport. Millions play the game and millions more root for their favorite teams. And as every fan knows, that passion reaches its pinnacle every four years with the World Cup.
Russia will be the host nation for 32 nations who will play 64 games to determine the world champion. In every major city around the world people from all backgrounds will unite to watch their countrymen compete. Nearly half of the world—3.2 billion people—watched the World Cup in 2010 and expectations are similar this year. This shared experience, when our daily lives take a backseat to our love for our national teams, is truly an awesome testament to the power of sports to bring us together.
What is it about sports that unites us? In my humble view, sports have a way to expose our basic human character—whether it's individuals overcoming obstacles, underdogs defeating favorites, or the victorious showing well-earned respect for their losing counterparts. That is what it means to be a “good sport” and what the Olympic Games celebrate every four years. Sports are a celebration of our humanness.
How does this relate to cross-border cooperation? I’m getting to that.
Recently Brian Quintenz, a new member of the Commodity Futures Trading Commission, told an interesting story at FIA’s Law & Compliance conference about his first day at the CFTC. The Commissioner was invited to play in a softball game on Washington’s Mall against the commissioners and staff of the Securities and Exchange Commission. According to Commissioner Quintenz, although both teams played with winning fervor, the act of competing allowed a good-natured comradery to develop that enabled the two agencies to get to know each other a bit better. In other words, a game occurred and a relationship broke out.
And that’s really the point—building trust. We need to find ways for regulators to be fierce defenders of their missions and yet good global citizens that harmonize and coordinate with other regulators in advancing global markets. These are not mutually exclusive goals. But it requires trust between regulators…and trust requires people to have a relationship and respect for each other.
"We need to find ways for regulators to be fierce defenders of their missions and yet good global citizens that harmonize and coordinate with other regulators in advancing global markets."
That gets me back to sports (thanks for being patient). Sports allow us to tear down the barriers that separate us and unite behind a common purpose. Am I suggesting that ESMA needs to play the FCA in a cricket match, or that the Bank of England should invite the ECB to curling? Actually, that’s not a bad idea and if we threw in some libations, we might build up enough goodwill to solve many of the issues facing our industry.
In all seriousness, the truth is that the need for international cooperation is greater now than ever before. The stakes are high. The derivatives markets are becoming more interconnected and yet the regulatory environment is getting more fragmented. This is creating all kinds of headaches for global firms, but there's a bigger issue than that. Sooner or later our industry will face a major crisis. When that happens, the regulators will need to work together smoothly, share information freely, and make decisions quickly and with unfettered trust. The time to prepare for this kind of working relationship is now, during peacetime, when our regulators have the time to get to know each other and develop a sense of comradery.
As I mentioned above, I am disappointed that the U.S. will not be competing in the World Cup. The good news for the rest of the world is that my allegiances are up for grab. One possible choice is Belgium, not because they have such wonderful players, although they certainly do, but rather because I want to recognize FIA's newest office in Brussels. Another possibility is England as a gesture of respect to the country that invented the game, and also because I feel post-Brexit England needs a big hug. The Brazilians would also be a logical choice because they inspire us with their "beautiful game" and no one has better hair. And lastly, Germany is high on my list because their team runs like their automobiles--with an impressive blend of power and precision.
If you are planning to attend our IDX conference in London this month, please join me for my opening remarks on the first day. The audience will vote on which of these national team jerseys I should wear at our IDX gala after-party, where yours truly and our industry all-star band, Pork Belly and the Out-Trades, will be performing for charity. Talk about uniting the industry!