Foreign Affairs - 11.2019 - 12.2019

187

players, who do millions o trades per

second, often accommodating them in

ways that bene  t those players at the

expense o other participants in the

market. Although no playing     eld is

entirely level, today the market is much

more tilted toward a handful o ultra-

sophisticated traders than it ever was

during the days o the 
’s monopoly.

The state bodies monitoring the

exchanges suer from the same lack o

cohesion, with predictable results:

when an economic sector is governed by

multiple regulators, actors will con-

stantly engage in regulatory arbitrage,

rewarding the most lenient regulators

while diverting their activities away

from the most stringent. Before the

2008    nancial crisis, for instance, two

U.S. bank regulators—the Oˆce o

Thrift Supervision and the Oˆce o the

Comptroller o the Currency—com-

peted with each other to attract banks,

which could choose which agency’s

regulation to submit to. That never made

much sense, and lawmakers merged the

two as part o the 2010 Dodd-Frank

Wall Street Reform and Consumer

Protection Act. But to this day, the

Securities and Exchange Commission

(•) and the Commodity Futures

Trading Commission (•—˜•) compete

with each other to regulate markets.

(Blame congressional politics: the •—˜•

is governed by the House and Senate

Agriculture Committees, whereas the

• is governed by the House Financial

Services Committee and the Senate

Banking Committee.)

In earlier days, the concentration o

market power at the 
 made up for

this regulatory confusion. When it came

to stock trading, the exchange proved a

much more capable regulator than the

Innovation

and National

Security

Keeping Our Edge

Without an ambitious new

strategy, the United States risks

losing its leadership in science

and technology.

READ THE REPORT

cfr.org/KeepingOurEdge

INDEPENDENT TASK FORCE

REPORT NO. 77

FA 187_rev.indd 1 9/23/19 10:32 AM