[G]lobal interconnections within the swap markets require cross-border regulatory cooperation and harmonization, as no one national regulator is equipped with the resources necessary to regulate comprehensively every participant in its local market nor every market in which its local institutions participate. At the same time, these global interconnections increase the potential for conflicting national implementation of regulatory reform to have adverse effects on the markets and market participants, especially if applied extraterritorially.

              -- August 27, 2012 Letter from the IIB to the CFTC

Concern mounts among regulators, legislators, and industry players about the international effects of regulating OTC derivatives.  Principally, they are worried about the lack of coordination among the CFTC, SEC, and their global counterparts, and the effect conflicting rules may have on the derivatives markets and the activities of firms with international operations.  As the deadlines loom for Dodd-Frank and Volker Rule implementation, influential voices are raising the alarm about potential harm to the US economy and investors, and making the case for a more coordinated and thoughtful regulatory effort with regard to OTC derivatives.

Basel III introduces a leverage ratio and raises the minimum risk-weighted capital ratios, but it does so using highly arcane formulas, suggesting more insight and accuracy than can possibly be achieved. Where the markets assess, demand and adjust intrinsic risk weights on a daily basis, regulators using Basel look backwards and never catch up.

Even as countries strive to meet the quickly approaching Basel III deadlines, some fairly influential voices in regulatory policy are wondering aloud if the latest Basel guidelines are up to the task.   Thomas M. Hoenig, director of the Federal Deposit Insurance Corporation, in a September 14, 2012 address before the American Banker Regulatory Symposium, raised his concerns that Basel III is based on faulty assumptions and processes, and introduces unworkable complications into an already complex system.  Hoenig proposes an alternative, a "back to basics" approach he feels would be more easily monitored and enforced, and represent a better measure of a firm's ability to withstand financial adversity.

With 1,304 funds and €215 billion assets under management, Exchange Traded Funds (ETFs) listed in Europe are a major element of the European fund management industry. However, some feel that European ETFs are hindered by a lack of liquidity as compared to their counterparts in the US ETF market, and that European ETFs could be even more robust if they followed the US model of employing greater levels of securities finance and collateral management. A white paper released on September 18, 2012, "ETFs, Securities Finance and Collateral," looks at ETFs in Europe and the reasons for their relative lack of activity in the securities finance world.  In their paper, Roy Zimmerhansl of FinTuition and Andrew Howieson of Howieson Consulting examine European ETFs relative underdevelopment of securities lending and collateral management relevant to European ETF shares. The authors also make a series of recommendations for co-ordinated changes at both individual firm and market levels required to promote development of an active securities lending market in European ETFs, driving improved liquidity in ETF trading and better risk management.