Oxymoron of the year December 31, 2012 at 7:21 pm

“Self regulatory organisation.”

From Bloomberg:

The botched initial offering of Facebook Inc. (FB) is the catalyst that should lead to U.S. exchanges being stripped of self-regulatory powers and their related benefits, a Credit Suisse Group AG (CS) executive said.

Nasdaq Stock Market’s claim of immunity from liability for $500 million in brokerage losses stemming from technology problems on May 18 exposes a conflict between the historical, quasi-governmental role of exchanges and their status as profit- seeking public companies, Dan Mathisson, head of U.S. equity trading at Credit Suisse, told U.S. senators in Washington last week. Those tensions can’t be managed fairly and should spur a regulatory overhaul of the securities market, he said.

Legislation that created the Securities and Exchange Commission in 1934 also deemed the main venues self-regulatory organizations, or SROs, overseeing their member firms and trading. Critics say the Facebook mishap shows how changes in the structure of markets have made old regulations obsolete and created an uneven playing field where exchanges are governed by one set of rules and their competitors another.

That, surely, is difficult to argue with. 1934 supervisory architecture is not fit for 2013.

2 Responses to “Oxymoron of the year”

  1. Well, maybe.

    Bloomberg is practicing pretty weak journalism by failing to mention that Credit Suisse runs the largest dark pool in the world and is a direct competitor to NASDAQ.

    As an analogy if you wanted to find out if Samsung is filled with bastards you wouldn’t necessarily be asking Apple about it. Samsung might indeed loaded to the brim with bastards, or they might be a bunch of angels, but Tim Cook’s public opinion is probably going to be the same either way.

    Same effect here, even if the exchanges were perfectly run, dirt cheap, ultra-reliable and honest to a tee (and in no way am I claiming that they are). Credit Suisse would still be telling us that there’s no reason we even need exchanges in the first place, that they’re destroying the marketplace, that we should impose burdensome and costly regulation. And while you’re at it why don’t you take this brochure for the Crossfinder platform…

  2. Fair point, Doug… they are definitely self-interested and they may or may not be right.