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For Global Regulated Participants, the Debate of Dodd-Frank is Brief
Traders Magazine Online News, May 11, 2017
While talk of repealing the Dodd-Frank Act has been at the fore of regulatory rollbacks vowed by the new U.S. administration, in most financial industry circles the sentiment is that a wholesale dismissal of the regulation is unlikely. And though parts of the legislation are being targeted – ostensibly to recalibrate bank lending thresholds and protections under the Consumer Financial Protection Bureau – for millions of regulated market participants, the ship has sailed regarding ethical guidelines, communications standards, record-keeping and data compliance.
The Dodd-Frank Act is often referenced as the post-2008 financial crisis law that, by defining dealer conduct standards, recordkeeping and reporting requirements and mandating trading on regulated exchanges, swap execution facilities and two-party transactions via clearinghouses, lowers risk and costs for businesses, consumers, and strengthens confidence in the market. So what are financial firms and regulated participants to make of this repeal talk? Even if changes were to include trading guidelines, for good reason, for most global financial firms it would (and should) be business as usual. 
To better understand where we currently find ourselves with Dodd Frank it’s worth a brief visit through history of the financial markets and the different regulations that have been enacted. Absent a Dodd-Frank Act and immediately following the 1929 stock market crash, to avoid a casino-like environment, boost market integrity and protect investors, the U.S. federal government enacted rules for compliance and mitigating risk through a slew of then-new legislation such as the Glass Steagall Banking Act of 1933, which held that commercial banks were no longer allowed to underwrite or deal in securities, while investment banks were no longer allowed to have close connections to commercial banks. Further, the Securities Act ensured issuers selling securities to the general public disclosed material information to investors and that securities transactions are not based on fraudulent information or practices, while the Securities Exchange Act of 1934 directly regulated the markets on which securities are sold and their participants. Lastly, the Investment Company Act of 1940 outlined investment company functions, structure, accounting recordkeeping, auditing requirements, transactions among affiliated persons and the redemption and repurchase of securities.
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