Felix Shipkevich
Felix Shipkevich

FX regulatory enforcement and financial market turmoil

In the last edition of e-Forex, Felix Shipkevich, General Counsel at CMS Forex, discussed the emergence of FX regulations, which in the first decade of their existence were primarily fuelled through intermittent regulatory enforcement efforts. Here he examines how the global financial market turmoil has further stimulated regulatory enforcement initiatives and continue to serve as a catalyst for additional regulatory oversight to prevent any further market destruction.

The unprecedented turmoil in the financial markets in the last year has brought the financial sector to a historic low.  Financial institutions from banks to hedge funds have suffered a great deal of loss as a result of failing to properly govern their market risk exposure while taking large bets on the upswing profitability from the first 7 years of this millennium.  The recent scandals on Wall Street, Madoff and Stanford, to name just a few--have fueled the fire for regulators world-wide to create greater oversight over financial institutions and their market exposure.  Unlike their counterparties (banks), most FX brokers have weathered and arguably profited from this market volatility.  However, the foreign exchange industry did not entirely avoid the reactive blitz of regulations.For those who are new to the world of FX regulation, it is important to note that other than the US, most regulated jurisdictions do not promulgate specific FX legal authority.   Rather, regulators in the...continued

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