The lack of market volume and historically low levels of volatility in financial markets over the last year in equities and derivatives trading are being driven in large part by the lack of clarity in federal rulemaking, CME Group executive chairman Terry Duffy said as part of a financial regulation panel at the Bloomberg Global Markets Summit yesterday in New York.
“When we talk about confidence, it’s really interesting. I don’t know if the public doesn’t have confidence because of BATS, Facebook and other events. I think the market doesn’t have confidence because there’s no clarity on the rules of the road of the game according to Washington,” said Duffy. ” We’re looking at an equity market sitting at historical levels with nobody in it. That’s because nobody has a clear vision of what is going to happen whether it is Dodd-Frank or something else.”
Moderator Robert Friedman from Bloomberg followed up, “You think that’s why investors are sitting on the sidelines? Duffy: “I think that’s a big part of it.”
Also sitting on the panel were Laurence Meyer, co-founder and senior managing director at Macroeconomic Advisers; William O’Brien, chief executive officer of Direct Edge Holdings; and Mark Standish, co-chief executive officer of RBC Capital Markets.
Watch the full video of the panel above.
Duffy also sat down with Bloomberg’s Stephanie Ruhle while at the Bloomberg Summit to further discuss the current regulatory situation, and the debt ceiling discussions in Washington.
“The rules have yet to come out and be clear, so what happens is that keeps participants on the sidelines until they see what’s going to happen,” he said.
Asked what effect the debt ceiling debate in Washington would have on futures markets, Duffy said “We’ll have a little volatility leading up to it, and then we’ll just have to wait and see.”
Watch the full interview here.