Damn it's hot! Everywhere you turn—Chicago, London, Paris—seems to have temperatures above 40 degrees Celsius or 100 degrees Fahrenheit. The world seems to be getting warmer and we are learning how to live with it.
Living in Washington DC, I have grown used to unbearable summers in "the swamp." Long ago, Washington refrigerated itself to deal with the warm climate -- some may claim too effectively, with air conditioning set to accommodate large men in suits that makes some offices feel like meat lockers.
I have even heard some blame the rise of big government on the introduction of air conditioning in the US Capitol long ago. Congress used to dismiss for the year in June to avoid the hot summers in DC, until 1928 when Carrier Corporation won the contract to air condition the Capitol complex. This made it bearable for Congress to legislate over the summer months, nearly doubling the time that Congress was in session.
The rising temperatures are a reminder of the growing importance of our markets and the energy and climate products traded on them. Climate and energy are going to be areas of policy focus for years to come as we manage this transition to a more carbon-neutral economy with plenty of short-term disruptions along the way.
Over the last few months, I've had the pleasure of connecting with many key policymakers who are in the thick of major initiatives impacting the future of our markets, especially in the areas of energy, climate, and digital assets. These will be some of the key individuals to watch as the agenda develops for our markets globally.
The Fantastic Four – Under the leadership of CFTC Chair Rostin Behnam, the four newly appointed CFTC Commissioners have an opportunity to shape the agenda of the agency for years to come. When meeting these new appointees, you are struck by the breadth and depth of experience that each Commissioner brings to the job. You also notice how each of their backgrounds complement the others with experience ranging from academia to enforcement to Capitol Hill to Wall Street. But what's heartening is the collegiality and seriousness of purpose that each brings to the job. Those traits will be important as the agency tackles policies of first impression like climate and digital assets.
Klaus Löber – The first Chair of ESMA's CCP Supervisory Committee appears unassuming at first. But Klaus Löber's expertise and influence shouldn't be underestimated. As a former central banker, he has a deep understanding of how markets work. This "plumber's mentality" will be useful in his current role leading ESMA's newly designed oversight of global CCPs. FIA has been a proponent of rational equivalence and recognition rules that allow hedgers access to exchanges and CCPs globally. Löber will be leading ESMA's efforts to implement the tiered levels of CCP oversight that provides proper governance for the EU while avoiding duplicative regulation. The good news is that Löber and other members of the committee understand our industry well and have the technical acumen to implement these policies in a constructive way.
Nellie Liang – As Under Secretary for Domestic Finance at the US Department of Treasury, Nellie Liang holds one of the most influential financial policy seats in Washington. This spot has been a launching point for bigger DC careers with past luminaries including Jerome Powell, Gary Gensler, Randy Quarles, and Michael Barr. With the ear of Treasury Secretary Janet Yellen, Liang's views on markets and financial policy are far-reaching. Interestingly, Undersecretary Liang has taken an interest in the dark arts of margining, providing a speech on the importance of anti-procyclicality margining measures at CCPs. FIA has been a proponent of preventing margins from dropping artificially low during non-volatile times to avoid margin shocks when volatility rears its ugly head. The fact that this esoteric issue has gotten the attention of one of the top financial policy voices in Washington is notable. Liang will also be influential with the Administration's agenda on digital assets with Treasury taking a lead role on developing policies around stable coins and digital assets.
Cynthia Lummis and Kirsten Gillibrand – Who would think that a cattle rancher from Wyoming and a lawyer from upstate New York would be pivotal actors in developing the regulatory scheme for digital assets? Welcome to Washington, where Senator Cynthia Lummis (R-WY) and Senator Kirsten Gillibrand (D-NY) have introduced a comprehensive bill to regulate the cash markets for digital assets. With respective committee assignments on banking and agriculture, these individuals have put forward the opening salvo in how to divide the regulatory oversight of these markets between the CFTC and SEC. With growing pressure to regulate these markets, Lummis and Gillibrand will be influential players in shaping the regulatory structure going forward.
Ashley Alder – The former top regulatory cop in Hong Kong and long-standing chair of the International Organization of Securities Commissions (IOSCO), Ashley Alder has been named Chair of the UK Financial Conduct Authority at a critical time for the UK and the financial services industry of London. His experience, in partnership with FCA Chief Executive Nikhil Rathi, will be needed, as the City navigates the post-Brexit regulatory environment with its largest trading partner—the European Union. Alder will help to stand up the UK's new regulatory framework and provide guidance when the UK should strategically diverge from the EU on its rules and approaches. There will be growing pains in this nuanced dance, but Alder's experience and credibility will be an asset for London both internationally and at home.
As the dog days of summer approach and temperatures rise, I hope that many of you are heading to cooler climes with family and friends. But when September comes, the pace of regulatory change is expected to pick up speed, and you would be wise to keep an eye on these individuals of influence. Stay cool!
