The conference will conclude tomorrow with a discussion of regulatory requirements in Treasury markets. Many point to post-crisis regulation as a key factor driving any recent decline in liquidity. Although regulation seems to have had little to do with the events of October 15, I would agree that it is one factor driving recent changes in market making.
The same regulations have also greatly strengthened the major banks and made another financial crisis far less likely. In my view, we should be prepared to accept some increase in the cost of market making in order to improve our overall financial stability. That said, these regulations are new, and we should be willing to learn from experience.