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People and media want to get more regulation to the finance sector. And politicians, of course, promise to do it. And many cases demonstrate that the existing regulation hasn’t work properly and many innocent people have lost their money. But I think the question is, whether we need more regulation, or better regulation, or more transparency. Often more regulation also means more complex structures that are more difficult to control and understand.

Hedge funds, different kind of derivatives, and several other new instruments are complex to understand, measure, and manage. And especially for investors they are like black boxes. One day they bring a lot of money, and another they take all your money. I believe there will be always new instruments in finance, we cannot stop it. But should regulators actually focus to support more transparent and open ways to make investments.

Peer-to-peer finance is a good example of openness. It can mean micro-loans, peer-to-peer lending, and open platforms to finance companies. It is not risk free. But it has much less complexity to understand and manage. People can also see, where is their money, and also understand their personal risk better. And if one company fails, it doesn’t cause a huge chain effect. Of course, all people are not willing or able to manage their own investments, but more and more people are able to do it, and willing to do it.

An issue is that more regulation can actually make this kind of transparent model more difficult to implement, because more regulation can mean more complex structure requirements, more control structures, and much higher costs. I really hope that politicians and regulators around the world understand this issue. The internet, more educated people, and general requirement for openness (2.0 world) should also mean more transparency in the finance sector. And the regulation should actually support to create more open and simpler finance instruments and models.