Three cheers amid a scornful silence

Most creative action by a regulator

Not awarded

When planning FOW's awards for innovation, we felt it was only right to consider the regulators - a category of market participant that probably bulks larger in the futures and options world than it does in many other areas of financial services.

We therefore included a category for "Most creative action by a regulator". It may not be surprising that no regulators put themselves forward - it is good to know that they have better things to do than applying for awards.

However, all our Awards were open for third parties to nominate candidates they felt should be considered. In fact, four of our entrants came into the process this way.

However, none of FOW's readers felt moved to recommend any regulatory action for an award. Yet we still felt it would be interesting to find out what our judges thought of this issue. So we asked all of them to suggest a possible winner of this award, if they could.

Look away now, regulators - the great majority of our judges could think of nothing creative you had done for a whole year.

"Difficult," one panellist mused. "The most creative action for most regulators would have been to shut themselves down. No regulatory initiative currently springs to mind but I will keep thinking!"

It got worse. "I think regulators are a cancer on markets, so I am never going to say anything that they do is good. The fact that none put anything forward says it all," wrote one trader in London.

More generous - or perhaps more ironic - was a US trader, who did not have a winner for 2008-9, but added "by next year at this time and considering the current environment, I am sure there will be several actions that will be considered 'creative'."

But while it is important to say that the majority of market players in this sample had little admiration for the regulators, or worse, there were three exceptions.

A banker in London nominated the Financial Services Authority for writing the Turner Report on the origins of the credit crisis. "It was a good report, and well respected," he said.

Another banker, in Singapore, chose the US Commodity Futures Trading Commission, for its no action letter in November 2008 allowing the Korea Exchange's futures on the Kospi 200 index, the South Korean equity index derivative, to be offered and sold in the US.

There was a sting in the tail, however. He added: "Only in that by receiving the award it should encourage the CFTC to grant Part 30 exemption." This would entitle US-based investors to open accounts with entities in Korea.

But perhaps the most surprising choice was from a UK broker, who wrote: "This goes to - the US SEC, 19 September 2008. The SEC ruled to prevent short selling of financial stocks to protect investors. Similar measures were taken up across the globe by many other regulators, actions which allowed some cooling off and prevented gang-run short selling on financial shares. I firmly believe this action, post the collapse of Lehman, gave precious breathing space to Morgan Stanley and Goldman Sachs, to name but two, faced with a similar fate. Had either collapsed, the consequences were (and are) unimaginable."

Many market participants, and certainly most that were quoted in the press, had only contempt for the shortselling ban, calling it useless or counterproductive - even though it is impossible to prove or disprove the effectiveness of such a ban, since it occurred in a real situation with no control experiment to compare it with.

In the light of that general opposition, this was an original and interesting choice.