February 2017: The US Unleashes Its Trump Card


Victor Anderson, Editor-in-Chief, Waters

A fortnight has now passed since Donald Trump’s inauguration as the 45th president of the United States, and already it appears as though the next four years will be something of a lifetime, given how much has transpired in this two-week period.

George W. Bush spoke about “shock and awe” in response to the September 11 attacks, but if the past 14 days is anything to go by, Trump is doing his best to, well, trump Bush’s jingoistic hyperbole.

A lot has been speculated about Trump’s keenness to reduce the regulatory constraints on capital markets participants. Late last month, I exchanged views with one of my Twitter followers on the possibility of the Trump administration watering down certain aspects of the Dodd–Frank Act, a discussion that followed on the back of the Wall Street Journal’s January 30 piece, Trump Blasts Dodd–Frank as He Tries to Cut Regulations. When interviewed by CNBC three days prior to the WSJ piece, Barney Frank was clear that while certain amendments to the Act might transpire, there is still a world of difference between making it easier for banks to lend capital to the average person and the scrapping of, for example, the Volcker Rule and deregulating derivatives trading.

In this month’s issue of Waters, Emilia David’s column on page 36 looks at two regulations—Reg SCI and Reg AT—that might be on the chopping block, but not because they are overly restrictive and represent thorns in the side of the banking industry, but because if they are repealed, not a lot would change across the capital markets and certainly most of the US public would be none the wiser as to their disappearance.

Personally, I think Dodd–Frank—the first piece of substantive regulation affecting the framework of the US capital markets since the Glass–Steagall Act of 1933—was a crucial addition to the industry’s regulatory framework, given that it has achieved what it was ostensibly designed to: reduce systemic risk, drive greater levels of transparency into how the capital markets and their constituents work, and deliver greater protection to average investors through the adoption of best practices. In this respect, Dodd–Frank and Mifid—and, of course, Mifid II when it enters the statute books on January 3 next year—have a lot in common.

Based on the above sentiment, I cannot see how Donald Trump, or anyone else for that matter, would be able to make any substantive changes to an act that brought about stability, transparency and accountability to an industry in dire need of change. Sure, there might be tweaks and concessions, but Dodd–Frank and its 16 titles is going nowhere, irrespective of what Trump might threaten.

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