We have much to be thankful for. The Christmas festivities allow many of us quality time to reflect before setting New Year resolution plans, so this month I’m in seasonal reflective mode.
I’ve said many times that the real economy wants its financial markets to be just like King Wenceslas likes his snow - deep, crisp (functioning) and even (“whiter than white”). We appear to be making progress on creating an even market. Increasingly poor market behaviour is being challenged by regulators and the courts. Financial benchmarks are being reset and market participants and their firms are increasingly saying and doing the right things to rebuild trust in the financial markets. For some, “banging the close” will in future sound more like the cell door.
The ACT and its professional treasury practitioners are increasingly being asked to contribute our views on how the financial markets can better serve the needs of the real economy. A recent example is the Fair and Effective Markets Review consultation. Here is an example where tangible progress is being made toward ensuring that we have “crisp”, effective functioning markets. Please contribute your views directly or via the ACT’s Policy & Technical team at technical@treasurers.org. The response deadline is 30 January 2015.
Looking forward to the future, I’m worried about “No L”- No liquidity. With the rush to regulate, perpetrate the sins of the past, build fences and encourage the right market behaviours, we may not have drawn sufficient breath to evaluate whether we are building deep markets. In future, there will be greater loss absorbing capacity in our banks and financial institutions. My concern is, will financial market liquidity be compromised by the tighter regulatory straightjacket? Will market makers still be encouraged to take and trade end user risks? It would seem there are already some worrying signs. I would encourage you to read the latest ICMA report.
On a lighter note, have you read Clement Clarke Moore’s, “Twas the Night before Christmas”? If you have and are wondering how Santa will fare after this year’s added regulatory burden; increasing geo-political pressures; the growth of “on line” retail; increasing health and safety burdens; various medical scares; concern over noise pollution and animal rights campaigns? He’ll adapt of course.
All you need to know is that he’s had the health check. The age-adjusted waist line is fine, the nose is just the effect of cold rather than being alcohol-induced; a global “fly over zone” has been agreed; the reindeer love it and aren’t being worked too hard; Santa’s boots and sleigh have been fitted with noise deadening, ecologically friendly rubber substitute; the “fur” is now just imitation; and even the pipe has finally gone electronic. So it’s just the tight chimney, carcinogenic soot, working at heights legislation and flying long distances unrested without a co-pilot in a sleigh without aviation lights to contend with this year!
This year Santa has also been training our hard-pressed parcel delivery firms in the art of maintaining a positive business brand during the busy Christmas delivery season. His new book, “While you were in”, is his response to rival delivery firm’s flyer called, “While you were out...”, which was delivered last year to all households yet widely lampooned on social media. Only Santa knows that he needs to keep his 100% delivery service if he is to stay ahead of the competition.
Fortunately for us the politicians and regulators haven’t got their teeth into him yet. I understand there is a concern that his fuel hedge OTC derivative reporting is not Dodd Frank or EMIR compliant. When asked by the Daily Globe, “did he feel systemically important?” he just laughed. Haven’t we all.
Best wishes to you and your families from all at the ACT and our deepest thanks to everyone who gave their time voluntarily to help support the development of the treasury profession. There will be much to do at the start of 2015 as we gear up for our first event of the year, the ACT Cash Management Conference 2015.
Finally, please spend a moment thinking of those who are away from their loved ones, often doing good works selflessly for the benefit of others.
All the best
