In her excellent book, ‘The Watchman’s Rattle’, Rebecca Costa explains the tendency to substitute belief for science when problems become too complicated. The first sign of this is a cognitive threshold, or gridlock, where problems are just passed down from one generation to another with an increasing emphasis on treating short-term symptoms rather than underlying root causes. Whilst the book is not aimed at the global finance industry, it certainly could be. 2014 will see no let-up in the waves of regulation that are rolling across the industry as national regulators battle the extraterritorial ambitions of their neighbours and the consequences of their own and previous incumbents’ earlier efforts. Little wonder, then, that beliefs such as “lit is better than dark”, “preference retail outcomes over institutional ones” and “HFT is bad for markets” have slowly but surely crept into their lexicon and policy-making.

As a result, all that the current regulation seems to do is generate yet more regulation. Maybe a new approach is required that looks at the core of financial markets and what is really wrong (and right) with them. The inescapable truth is that financial markets, rather than being separate from the “real” economy are, in fact, at its epicentre. Any past and current failings of financial markets, then, are actually a reflection of society as a whole and perhaps this is where the regulators should be focusing their attention.