White House paper on Market Reform - recommendations to FIX Protocol

Here is a link to the reform white paper from the White House http://online.wsj.com/public/resources/documents/reform.pdf

The white paper is interesting in how much is left unchanged – on a net basis there are still about the same number of regulatory entities, despite some merging of responsibilities on the bank side. It is not unreasonable to conclude that this is a typical response to a crisis as opposed to some radical major reform and restructuring. Alas, it harkens back to Sarbanes-Oxley layering of regulations as opposed to restructuring.

From a FIX perspective – what does this mean? There are likely to be additional reporting requirements that can most efficiently be met by using the FIX Protocol. We have worked closely with regulators especially the SEC and CFTC in the past here in the US. Most recently The Options Clearing Corporation has worked with FINRA for listed derivatives large option position reporting.

I think FPL should continue its stance of not actively promoting regulations (as some other organizations are doing at this time) and focus instead on educating regulators as to what is currently available and in place using the FIX Protocol. When regulatory requirements dictate securities transaction reporting, assuming it makes sense from an efficiency and cost perspective, we should work to ensure that FIX is the standard that is adopted for reporting purposes.

Again the key here is that we educate regulators so that the markets don’t end up due to lack of regulator knowledge forcing inefficiency and costs due to excessive regulation into the areas covered by the FIX Protocol that have run well and even improved over the past two years of market turmoil.