Back to News

Bloomberg Markets: SIFMA CEO on Trends in Capital Markets

During SIFMA’s 2024 Annual Meeting in New York City, SIFMA president and CEO Kenneth E. Bentsen, Jr. joined Romaine Bostick on Bloomberg: The Close to talk about the issues and opportunities that matter most for the capital markets.

They discuss:

  • The strength of the U.S. capital markets, the return of deal volume
  • Industry initiatives, including a shortened settlement cycle and Treasury clearing mandate
  • The upcoming elections and their impact on the financial regulatory environment
  • And more

“We fund 70% of commercial activity in the U.S. through the capital markets,” says Bentsen. “That’s the inverse of that in Europe and Asia, and that’s what they’re trying to build. If you look at how quickly the U.S. responded form the pandemic, the March 2020 period, U.S. corporates were able to repair balance sheets, and enter the markets we had record corporate bond issuance. That’s a virtue of our markets that makes our economy stronger than any other economy in the world.”

Transcript

Romaine Bostick: We come back here to New York City where SIFMA is hosting its annual meeting, discussing the issues and opportunities that matter most for the capital markets. They have already had some very high-profile guests speaking today including SEC Chair Gary Gensler and Blackrock’s Larry Fink who sat down in a fireside chat with Ken Ken Bentsen the President and CEO of SIFMA. Take a listen to what he had to say.

Larry Fink [on video]: This is my message to every politician. We need to be unlocking growth from the private sector. The u.s. is in the best position of any country in the world because of the scale of our capital markets. After spending two weeks out of the last three weeks in Europe, the fact that they do not have a banking union or capital markets union is a lot more daunting in europe.

And so I look to the U.S. as a great position but we cannot take that position for granted. We need to be unlocking the capital markets, unlocking the opportunity we have in the private sector to grow above trendline.

Romaine Bostick: That is Larry Fink, Chairman and CEO over at Blackrock. The man who was asking him questions, you are going to see him right here. Kenneth Bentsen is the President and CEO of SIFMA. Great to have you here in New York. Let’s start off with what Larry fink was talking about because he seemed to be pretty bullish on the idea of the structure of the U.S. capital markets relative to maybe what investors have in Europe.

Ken Bentsen: Absolutely. We fund 70% of commercial activity in the U.S. through the capital markets. That’s the inverse of that in Europe and Asia, and that’s what they’re trying to build. If you look at how quickly the U.S. responded form the pandemic, the March 2020 period, U.S. corporates were able to repair balance sheets, and enter the markets we had record corporate bond issuance. That’s a virtue of our markets that makes our economy stronger than any other economy in the world.

Romaine Bostick: What is the mood with regards to the participants? Are they feeling relatively confident not just about economic conditions but also about government conditions, if you will, heading into 2025?

Ken Bentsen: I think in terms of financial conditions, people are feeling good about it. The markets seem to be doing well. We may have bouts of volatility but, upward trajectory in the markets, we are seeing deal volume come back into the business which is good. I think that is positive. There’s questions about short-term situations, election outcomes. Obviously, the global situation with war in the middle east, war in europe, pressures of that on different parts of the economy but overall, the business is looking positive. There is a lot of undertaking the industry is having to do. We just shortened the settlement cycle in the US and it was a big undertaking. Europe and the U.K.. will do that pretty soon. We are talking a lot about bringing central clearing to the treasury markets. A huge undertaking with an impact on the most important market in the world so there is a lot of work ahead of us.

Romaine Bostick: On this issue of clearing because this will be a big topic and a lot of investors have talked about it and there was a story last week even that the proposal — clearing certain things off outside the U.S. basically over there in London. Is this something you heard particularly from some of the regulatory guests you have today?

Ken Bentsen: The regulatory guests are bullish on us getting it done but what we tried to convey is the regulators still have work to do. The SEC and the CFTC, they have acknowledged that they have work to do as it relates to the so-called done-away model. We produce standardized documentation for the done-with model. The other thing that is important is all of the training, all of the engagement with clients, counterparties to do this, and to get done by beginning next spring and into 2026, that is a huge undertaking so we need to be very careful as we move forward. We are doing the work that needs to be done but regulators need to pay attention to make sure we don’t do anything that breaks a market that should not be broKen.

Romaine Bostick: The participants at the conference heard from Rostin Behnam at the SEC and Gary Gensler, not necessarily the most popular guy in financial markets and there is an expectation that if Kamala Harris were elected, he might be part of the administration as well. How does that sit right now with the participants at this conference who are going to face potentially a regulatory environment that is either as strict or potentially stricter than what it is now?

Ken Bentsen: We don’t really know. However the election turns out, there’s going to be a new administration. If it is the Harris administration, it will be different from the Biden administration so we will probably have new players we will have to engage with. As I’ve always said, we are going to say the same thing to the people — the importance of capital markets and making sure markets continue to operate efficiently and help the economy grow and are really the envy of the world and let’s be careful not to overdo it and break something that is not broken.

Romaine Bostick: Do you have confidence that what we are seeing in capital markets with regards to price discovery and all the elements that go into that, that that is healthy right now?

Ken Bentsen: It is as healthy as it has always been and I think it always gets — it only gets more healthy. We are seeing the embracing of technology. This has always been a technologically driven market. And even before so that is always improving the market. The equity markets are fully electronic and that is going to continue.

Romaine Bostick: There has been talk about broadening out our financial system on a geographic basis and we were talking with Rob Holmes in Texas who used to be a representative in the state of Texas. They are trying to set up a financial markets exchange as well as a few other things. Do you think that will gain enough traction to have a meaningful impact?

Ken Bentsen: We will see. There are a lot of exchanges out there. Volume is always tricky. And we will see what happens but there is a lot going on in Texas. I’ve been down there twice in the last 2 weeks, to Houston and the lower Rio Grande valley. There is alot happening there.

Romaine Bostick: That is the whole point. You have a huge influx of major companies moving there and our course major investors moving there. In theory, it would make sense to create some sort of financial market system that would accommodate them.

Ken Bentsen: Right it’s the 2nd most populous state in the nation and very dynamic. We will see what happens.

Romaine Bostick: When we get back to the conference, and I know you have to get back there, is there a sense coming out of this that as we head into 2025, all of the unresolved issues come up Basel III, which god knows when that is going to get done, but some of the other overhangs, if you will, about asset caps, do they have some sense that that will be resolved next year?

Ken Bentsen: There is some uncertainty. We would hope they would be results but they should not be resolved in a bad way so it is a good thing they are looking to re-propose Basel III it needs to be re-proposed. Regulators need to be thoughtful and methodical in their approach.

Romaine Bostick: Allright Ken, I really appreciate you running over here. I know you are a busy guy. Ken Bentsen, he is the President and CEO of SIFMA at that organization’s annual meeting today. When we come back, we will count you down to the closing bell.

Related Resources

More News