Sibos 2016: markets still in “Dante’s circles of hell”
Sibos 2016: restoring trust in financial markets
Eight years on from the financial crisis, the market climate remains challenging. The global economy is still very shaky, there is still plenty of uncertainty regarding ongoing reforms and interaction with regulators, lending is limited by higher capital requirements, extremely low (or even negative) interest rates are not generating good returns and banks need to invest heavily in IT infrastructures to appease the supervisors.
Yesterday’s plenary session at Sibos 2016, Financial stability – the future of global finance, brought together heavyweights of the financial world – Bank of Russia’s first deputy governor, Sergey Shvetsov, Eurofi’s chairman, David Wright, and Hong Kong Exchanges & Clearing’s (HKEX) chief operating officer and group risk officer, Trevor Spanner, to discuss these challenges and offer some solutions to the industry.
“We are working on restoring trust,” said Wright. “Restoring trust means partly restoring stability.”
This is being done largely via regulation and ensuring (or at least making every possible effort) the mistakes of the financial crisis are not repeated. No more “too big to fail”, no more bank bailouts, the panellists said. Although they were quick to add that such is the theory. The practice could be very different.
“The financial world has become more global, but so has regulation,” said Spanner. And regulating the existing players is not enough; there is a raft of new entrants to the financial sector that regulators should be also taking into consideration.
“If we want the stability of the market, we must pay attention to the stability of the new players,” pointed out Shvetsov. Perhaps it is too early to regulate the newcomers – due to their size and still emerging business models – but they definitely need to be at least supervised by the authorities, he added.
But at the same time, the panellists pointed out that regulators should not be biased towards either traditional or emerging market participants. There must be a level playing field for both, they agreed.
Inevitably, conversation turned to politics and Brexit. Will the UK be displaced as one of the key global financial services hubs? Very unlikely, the panellists agreed. But the implications and even the processes of Brexit are yet to be understood and worked out (not least by the government officals charged with making it happen) – it is the waiting game that pains everyone.
“There are nine circles in Dante’s Hell and we are just at circle one of Brexit – Limbo,” said Wright.
