The Finance Magnates London Summit 2016 is well on its way and halfway through the day we are getting comments from industry participants about the outlook for the industry going forward. The impact of a prospective Dodd Frank repeal, CFTC leadership, M&A, the outlook for MiFID II and other topics relevant to the industry.
The panel started with some discussion of one of the hottest topics for the industry – the election of Donald Trump as President of the United States. Commenting on the matter, the CEO of FXCM, Drew Niv, stated: “It’s the biggest sea change in the financial industry since the financial crisis. If the new administration repeals Dodd-Frank, the rest of the world might follow. The repeal of Dodd-Frank will reduce costs for FXCM between $5 and $10 million.”
The CEO of Advanced Markets, Anthony Brocco elaborated: “The prospects for a more conservative-leaning people running the CFTC could bring a lot of changes to the market.”
With the first duo of commentators living in the US, the outside perspective from the rest of the panel continued the positive tone. The CEO of Swissquote Bank, Mark Burki, said: “Swiss banks have had some issues with the US (namely the Foreign Account Tax Compliance Act FATCA).”
“The Obama administration was not that good for Swiss banks, but it all started during the Bush years, so there is no clarity what will the impact will be on the industry outside of the US,” he elaborated.
Elaborating on the matter, the CEO and co-founder of CFH Group, Cristian Frahm, said: “Everybody was very well prepared for a lot of volatility. The Italian referendum is coming soon, so we are going to take the same stance there and be well prepared.”
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Commenting on margin requirements, the Executive Managing Director of the Global Brokerage division at ADS Securities Marco Baggioli said: “We debated whether to raise margin requirements and we concluded that we had to communicate to clients that the market conditions are going to be challenging. This was not an unexpected event like a flash crash or the Swiss National Bank’s move in January 2016.”
Elaborating further, Drew Niv added: “The future is brighter in a less regulated world. The election is the most positive thing that can happen to us. The less regulation, the fewer flash crashes we are going to see in any market and flash crashes can disappear.”
The CEO and founder of Gold-i, Tom Higgins, added his perspective on events that cause volatility: “There’s been quite a change in the way that the industry is managing risks. The firms have become much better prepared.”
Regarding the challenges of the industry coming from MiFID II, the CEOs expressed their concern. The moderator of the panel, Ron Finberg, asked them to rate the incoming challenges to the industry in January 2018 on a scale from 1 to 10.
While the broad opinion of the panel voted with numbers between 7 and 10, Drew Niv rated the risks at 12. With the main challenges for the industry spread across the panel, the CEOs focused on regulation and market challenges.
From the looks of it those are likely to continue for the foreseeable future.