Allan Grody, the president of Financial Intergroup Holdings, said this week that while U.S. regulators have good intentions in implementing financial reforms, their methods of implementation has been flawed up until the present.
“Solutions are needed for implementing financial reforms, but those that are on the table here in the U.S., especially swaps regulations, have to be paused to make sure they are logically implemented, integrate with each other and provide for more permanent solutions on a global scale,” Grody said, according to Futures & Options World.
Grody pointed to several regulatory provisions, including swaps regulations, the contentious Volcker Rule, mortgage “skin in the game” rules and new capital standards, saying all of the measures “are…necessary to be dealt with before final rules are to be implemented.”
Additionally, Grody defended the Financial Stability Board, saying that the financial industry “need[s] to support this entity and its Chairman vigorously,” Futures & Options World.
Grody said that the global unique identification being implemented by the FSB is necessary to improve transparency and identify risk. He also said that more work is required on the cross-margining of clearing house deposits before swaps and other over-the-counter derivatives become subject to new clearing requirements.
Grody added that capital backstops should be extended to clearinghouses, some of which have been labeled as “too-big-to-fail,” and that the backstop could be funded through insurance-like payments, according to Futures & Options World.