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Operation Tame Finance | The Economist

NSARY GENSLER’S Student MIT Sloan was full of gratitude. By their nomination, he won the 2018-19 Business School “Excellent Teacher” award. He is currently the Chairman of the Securities and Exchange Commission (SEC), The guard dog of America’s major markets, his members are pretty unruly. The tumultuous explosion of innovation has disrupted public finances, and Gensler has to figure out how and to what extent to crack it all down. Forget the hard-working undergraduates. It’s more like trying to run the world’s largest and most noisy kindergarten.

The move for more adult supervision is already underway in cryptocurrencies. NS SEC Recently, Coinbase, a large cryptocurrency exchange, threatened to sue if it first launched a loan product without registering it as security. And this week, regulators withdrew $ 539 million from three media companies charged with illegal offerings of stocks and digital assets.

Cryptographic believers MIT Includes ones related to the use of blockchain technology.But after taking SECWhile Gensler is “neutral” to technology, he struggles to point out that there is nothing about investor protection and market stability. And that means tightening regulations on the $ 2.2 trillion crypto market. This is what I told the Senate Committee this week: “The Western Pioneer Era … full of fraud, fraud, and abuse.”

His agenda extends beyond annoying cryptography. He also uses special purpose companies (from trading apps like Robin Hood to encourage retail panthers to trade more often using “digital engagement practices”.SPACs) Pushing the limits of what securities law allows (early victims SPAC-Bill Ackman’s complex plans to invest in Universal Music Group). Other targets include the types of derivatives that blew up Alkegos, family offices, and the structure of shell companies used by many Chinese companies listed in the United States.

For anyone focused on the cutting edge of finance, Gensler SEC It may have an equally significant impact on more established markets. He believes stock trading requires overhaul. There is too much flow to venues outside the “dark” exchanges, where small investors can more easily suffer. They also believe that potential conflicts of interest, such as the “payment of order flows” that brokers get to route transactions to a particular market maker, can change in the short term. He wants to enforce all corporate disclosures, from climate risk to how businesses treat workers.

Then there are quite a few to-do lists. Policy reviews are underway in at least 50 areas. And a significant change from President Donald Trump’s time, when the Commission seemed pleased to take a step back in implementing reforms after the financial crisis.

The obvious question is whether Gensler is chewing more than he can. His career, equivalent poachers and gamekeepers should help him. After spending 18 years at Goldman Sachs and the last 10 years as a partner, he worked for the Treasury to help create the Services Oxley Reform after the collapse of energy company Enron in 2001. As Head of Commodity Futures Trading Commission (CFTC), Regulating derivatives, he forsaw attacks from the huge over-the-counter swap industry and forced it on a more highly regulated platform.

Being a good communicator can also help. Gensler understands that winning the debate means boiling the message into a simple analogy that most Panthers (and Senators) can understand. Under him SEC We are using social media effectively. When the Coinbase boss shocked that the loan product could be classified as a security, the Commission boldly tweeted a 30-second guide on how bonds work.

Good stuff. But Gensler can expect more lobbying for bureaucracy. He may also have to fight a lawn war with other regulators. NS CFTC I want some of the actions in digital currencies. And there are politicians. Regulatory Democrats dominate parliament, but some people say SECGiven the patch’s record, consider all scandals unearthed by outside detectives, not regulators, from the authority: Enron to Bernie Madoff. Gensler also needs more money. His budget is $ 2 billion, less than JPMorgan Chase’s annual marketing spending. However, the increase in 2022 is only 5%. Gensler has great ambitions. His problem may be finding a fortune to make them happen.

This article was published in the printed version of the Treasury and Economy section under the heading “SEC’s Modest Mission.”

Operation Tame Finance | The Economist Source link Operation Tame Finance | The Economist

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