CME Group Executive Chairman Terry Duffy said, “it’s a critical time for financial markets right now,” in an address titled, “Financial Market Quality by the Numbers” he gave at the Georgetown Financial Markets Quality Conference this week.
Duffy addressed the current global economic problems, technology’s role in markets and recent regulatory breakdowns in both securities and futures markets.
He noted that while the issues in the various market breakdowns — citing the flash crash, BATS and Knight Capital on the securities side and MF Global and Peregrine Financial Group on the futures side — have been different, the end result was the same. “The combined impact has shaken market confidence overall. This is our shared problem as an industry,” Duffy said, adding, “All market participants expect a marketplace they can rely on for price discovery, risk management and capital formation.”
But of course there are other results.
He pointed out that a big issue in the presidential election is which party will be better at creating jobs. He said, “There’s something that has far greater influence over a business’s ability to hire workers than who sits in the White House… that is a business’s ability to manage its risk, control costs and invest for the future. When successful in these efforts, the result that is most important is the ability to hire more employees.”
He added that there are other benefits as well. “By managing risk properly, airlines can fly more flights, farmers can grow more crops, and banks can lend to more businesses and institutions.”
Duffy said, “We are at a pivotal moment in our history,” in regard to ensuring confidence in the financial system and regulation will need to play a role. “The challenge for regulators is to promote regulation that provides genuine consumer protections that do not impede sound financial market development. “