The Regulatory Horse Race

On Saturday, my girlfriend and I attended the Belmont Stakes and got to witness history, as American Pharoah became the first horse to win the Triple Crown since Affirmed accomplished the feat in 1978.

Both as a former sports reporter and as a fan, I have literally attended numerous major sporting events, and watched many more on TV, and let me tell you ─ that was the most exciting/jubilant end to a contest I've ever been a part of.

As the magnificent brown colt extended his lead by one length, then two lengths, and then three lengths, even before he reached the wire, with about 200 yards to go there was this POP of emotion as the crowd collectively realized, "Holy crap! THIS IS ACTUALLY GOING TO HAPPEN!" The sheer thought of it makes the hair on my arms stand up every single time. I imagine it will for the rest of my life.

Oh yeah...regulation

Listening to some CIOs talk about it, regulation has some horse racing (and betting) aspects to it. [OK, here's where Anthony attempts to make a horse racing analogy simply because he wanted to talk about the Belmont Stakes.] Take, for example, the Dodd-Frank Act. Everyone knew that this was going to be a long race straight out of the gate.

You didn't want to make an early move because there was no telling if the regulators might soften some aspects after receiving feedback from the market. Every firm would be jockeying for position so as not to far too far behind and raise any red flags. And CIOs have been left in a position where they basically have to make bets on which rules will reach the finish line as is, and which ones are likely to be changed, if not scrapped all together.

Regulatory changes are needed, but for a CIO, in many ways they are running multiple races at the same exact time, without a finish line in sight.

Last month, the US Senate failed to agree on how to potentially revise certain aspects of Dodd-Frank. As a result, according to sources in a Financial Times article, "the chances of significant reforms being made passed into law before the 2016 elections [are] not high."

I'm not going to get into the finger-pointing aspects of this story between the Republicans and Democrats, but at least for the moment there is a bit of clarity as to where DFA stands, even if that applecart could get overturned with a Republican triumph come November 2016. So even though Dodd-Frank will turn five years old in July, we're still probably only halfway through this race. There's perhaps a little more clarity today as opposed to before the Senate stalemate, but questions still abound.

(In 2013, I covered the three-year anniversary of DFA, click here to see where the industry stood back then.)

For the June issue of Waters, my colleagues Dan DeFrancesco and Tim Bourgaize Murray looked at two other rule changes that will provide many a sleepless night for some of our readers.

Dan looked at BCBS 239, which serves as a set of guidelines for risk data aggregation and reporting. While the mandate seems unassuming on the face of it, much like an iceberg, there's a world a pain underneath.

Tim, on the other hand, wrote about the SEC's proposed amendments to rule 15b9-1, which would get rid of an exemption used by some high-frequency trading shops to avoid broker-dealer registration with Finra. If passed, it could leave these often small firms with a handful of technological and operational challenges to overcome.

The features ─ replete with end users and industry experts ─ further illustrate the regulatory challenges that firms have been facing (and will continue to face) post-Crisis. And to be sure, regulatory changes are needed, but for a CIO, in many ways they are running multiple races at the same exact time, without a finish line in sight.

Some Random Thoughts

* I mentioned the great Affirmed earlier, his rivalry with Alydar is the greatest rivalry in horse racing. Affirmed bested Alydar seven times in 10 meetings, including all three Triple Crown races (with the Belmont being considered as one of the most exciting finishes ever). But, for what it's worth, Alydar did get the "W" in his final match against Affirmed and then retired. Go out on a high note, I guess.

As great as that rivalry was, no sporting performance will ever top Secretariat at the Belmont. Consider this: while American Pharoah ran the second-fastest Belmont by a Triple Crown winner, he still would've finished THIRTEEN LENGTHS behind Secretariat!

* While Pharoah's final quarter-mile was the best ending of a sporting event I've ever seen, my favorite all-time event ─ start to finish ─ is, and will likely always be, the first Arturo Gatti-Micky Ward fight. It was 30 minutes of sublime brutality.

* The reboot of "Mad Max" is basically two hours of chase scenes and explosions...which is fine by me, but don't expect much of a plot. But "Mad Max" without special effects might just be better than the movie itself. Just bananas.

* My favorite story stemming from the FIFA corruption scandal is this profile of famed investigative reporter Andrew Jennings, who was the original journalist to bring FIFA's misdeeds to light. This is a very entertaining read.

* In last week's column I compared the Houston Astros' rebuild to that of banks trying to rebuild their data management and governance operations.

Well since I'm sure you're all very interested in keeping up with how Houston's rebuild is going, the Astros have just called up the best prospect in baseball, shortstop Carlos Correa (only 20 years old!), and pitcher Vincent Velasquez. The future is here!

* I kinda hated the movies "Gravity" and "Interstellar", so I'm skeptical of "The Martian". But this trailer does look pretty sick, even if a tad over-the-top at times.