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Gazing into the Future of Financial Market Structure…

Traders Magazine Online News, January 3, 2018

David Weisberger

While I am not usually one for predictions (owning to my own record of poor timing), I think that this year will be particularly humbling for a great many people in the market.  Many are predicting massive changes and I suspect that those will take much longer to occur than is the common wisdom.  In addition, there is a major clash brewing between the "old guard" in D.C. and New York and the newer, techno-centric Silicon Valley crowd in the arena of financial products.  The ground zero for this clash is crypto-assets, and there is certainly risk of major disruptions owing to the lack of knowledge from both sides.   (Hint - the D.C. and NY leadership does not accept the premise behind many of these assets, so thinks that existing rules could suffice, while the Silicon Valley cohort has displayed ignorance of how financial markets operate.  What is needed is better bridge building and cooperation between the two...)

Most of us are well aware of the backdrop for the beginning of 2018:

  • MiFID II takes effect, forcing un-bundling of research from trading for firms servicing European investors, along with significant pre & post trade reporting requirements; both sets of rules apply to most asset classes.
  • US rules are in flux, with increased focus on order routing from FINRA, SEC initiatives on maker-taker as well as enhanced reporting, along with market data reform.
  • BitCoin, Crypto-Assets in general, and ICOs (Initial Coin Offerings) have dominated the news cycle for the past few months, leading to guidance from regulators in the U.S. and abroad that increased regulation of these assets is in the works.

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