♪ emily: they started the company in a windowless closet at a warehouse in san francisco. now, 12 years later, along with their cofounder, renaud visage, they have turned eventbrite into a global business. racking up $10 billion in ticket sales. for the first 10 years, kevin served as ceo. now, julia is in the chief executive office driving the company towards an ipo. joining me today on "bloomberg studio 1.0," eventbrite cofounders julia and kevin hartz.

he founded a company at the same were planning a wedding together. that is a big risk for a future husband and wife. why did you decide to do it? julia: i have to say that when kevin and i first met, i did not know where this was going to lead. and it was part of a two-year-long evolution of getting to know each other and understanding how we might work together. ultimately, we had complementary skills. when you find yourself in that situation and you realize you can be a powerful duo, i think it is a shame if you don't go for it. emily: kevin, you were a tech investor, invested in paypal, founded a company called xoom, a money transfer company. kevin: i love technology. i had a front row seat to paypal and the great things that happened there. finding the right partner to do this, and we can't leave out renaud, our third cofounder, but it just felt very natural. we were not entirely sure how it

would work out, but it is 10 years later. here we are. emily: did you set ground rules, who does what? what happens if we get into a fight? julia: one of the best things we did was find renaud, our cofounding cto, and i like to say the bravest person on the planet. as we started to work together, we had this agreement that we would, first of all, divide and conquer, and that we would always check in. i was the customer support, marketing, and finance department. kevin was the product department. and renaud was the engineering department. we bootstrapped the company. we were just three founders for two years. emily: why events and ticketing? why did you think that the -- think that was a problem that needed to be solved or had so much potential? kevin: it was addressing this market that had been unaddressed and kind of left to itself. and what is exciting about eventbrite is we were meeting

-- we were enabling these people and creators who would come together and hosting these events they could not do before. so enabling this broad, many different categories of events, many different geographies, it was really a greenfield opportunity for us. emily: when you disagreed when kevin was ceo, how did that get resolved? julia: we always have the pact that the ceo is the final say. i could provided a divergent opinion. others on the executive team could provide their opinions, and ultimately kevin would make a decision. and at eventbrite, we benefited from coming at problems from different angles, so kevin may look at a problem from a product angle. i may look at it from a customer angle, but we meet in the middle, and similarly now i feel that autonomy. and i have the support of kevin and of our board. kevin is the chairman of our board, and my executive team, that i have not only recruited

and developed, but i have been in the trenches with some of them for up to seven years. emily: talking about the opportunity, when you guys started raising money, it was the middle of the financial crisis. it was not a good time. kevin: we said let's bootstrap this company. let's not not take outside funding. let's build an efficient and profitable business. emily: is that something you xoom? the challenges of dealing with investors? kevin: just seeing in the previous cycle the crash of 2000-2001 that it was dangerous to be reliant on capital and we have seen that consistently through this cyclical period. we are in the period of a ten-year expansion. right now everything is up and to the right, but we like to be the masters of our own destinies. emily: but at a certain point ?ou needed to raise money julia: yes, we chose the worst time to go out. going out in late 2008 was a

really special experience. it taught us a lot. we met with 27 or so venture capital firms and we were turned down by all of them. so that experience teaches you a lot, right, going into the room and having to answer really critical questions about your business model. sometimes it takes a down market to create that critical question asking moment. and i think if we had gone out during a frothier time, we would not have faced that. so what we did, and i attribute this to you, is we lost everybody to our 2009 annual plan. and we just came back towards the end of 2009 and showed our results, and that spoke for itself. it was a very different experience. it wasn't easy, but i think that people were surprised by how much traction we had in such a difficult market. emily: sequoia led your first round. kevin: that's right.

and we were really excited -- i was excited to work again with a person i knew from paypal. he worked with us at xoom and eventbrite, and he has been fantastic. ♪ julia: most people we talked to, they say, i can't imagine working with my spouse. i can't imagine it. we would kill each other. ♪ emily: so kevin you step down

as ceo in 2016 due to health issues. how are you feeling? how are you doing? kevin: i am feeling great. i am 100%. serendipitously, kind of oddly, it was really a great transition because we had a founder in the

building in julia that had been in a really had this great insight about the business, who has really great perspectives, and she stepped up during an incredibly tough time personally where she really was kind of taking care of me at that point, but also really took the baton and has been fantastic. emily: i know this was a moment for you, julia. there was a vacuum and leadership to fill, but you also have this personal situation in your life you had to deal with it. julia: it is hard for me not to get emotional when we talk about it. it is like i am right back there again. it was difficult. the most difficult part was the notion that we would not be sitting side-by-side every day. i know that sounds cheesy, but we actually have sat at desks next to each other by then for a full decade, and so that was

probably the scariest part. for some people, or most people we talk to, they say, i can't imagine working with my spouse. i can imagine it. we would kill each other. that is what we hear all the time. if you can imagine that was the , normal for us. that was our normal. i was terrified of what it would do to us as a partnership when we didn't work together every day. it was sort of the opposite. and so i think that is the thing i was afraid of most, and i have to say that now almost two years into this new normal we have really found our stride as being, co-operating in this new contract. -- this new construct. emily: i want to talk about how you became ceo. because it wasn't actually obvious. it wasn't an automatic now julia is going to be ceo. in fact, you had to propose this idea. julia: it was important for us to be very objective and to rely

on our board to make the right call, but i did need to tell kevin that i was ready, and that was scary, because you just don't know what is on the other side of that. emily: how did you tell him? julia: we were on an airplane. and i had a glass of wine. [laughter] julia: i said i think it might be ready. i think this is something i would like to propose to the board, but i want to the board -- but i wanted the board to know they had the space to make the decision if they wanted to run a process, if they wanted to take time. emily: kevin, how did you react when she told you she wanted to be ceo? kevin: i thought it was an ideal situation, not just because she is extremely talented, but also because typically when you have the ceo transitions, the first job of the new ceo is to explain how horrible the past ceo was, but because we live together she kind of could not get away with

that. so this is how you unload to the board all these challenges, and unfortunately she was restricted from doing that. julia: i was also there for the 10 years, so any mistakes we have made or lesson we have learned is something i was a part of. emily: you are one of few female ceos and founders, and i know when you took the job there were nerves about whether people would take you seriously. how did you overcome that? julia: i put my head down and focused on what we needed to do as a business. this has been a tremendous growth period for eventbrite and i had to get to work. and so i sort of let all of that fall away and i just focused on building the right team for the future, on executing, on making sure the culture, which is global, right? everyone understood we were going to be ok, because i think these big moments of transition

can be unnerving and create uncertainty, even if there is nothing wrong, and so i needed them to know that i was aware of that and that we were all in this together. and then as you take the helm, i felt the difference of being ceo. that made me really respect some of the founder-ceos that i know and the women that i have watched grow their companies. it is sort of like when you have your first baby and you go back to work and you have immense respect for the women who have children and work. i felt the same way about taking the reins of ceo. emily: the company eventbrite is actually pretty solid when it comes to gender diversity. i am curious to hear from both of you how you did that. julia: we are actually still almost 50-50 despite -- we have acquired some companies that have different gender ratios. we have always been focused on

trying to build a company that looks like our community, and our community of creators is global, right, so diversity has to be embedded in what we do. so me being a female ceo certainly provides a great embedded role model at eventbrite, but inclusion is entirely a choice. and you can have great diversity and really not great inclusion. kevin: i think just as a company needs a competitive advantage, whether a technology or a network, there is a recruiting advantage that needs to be built, and all the great companies have come up with specific recruiting advantages, whether it was microsoft recruiting from young students out of college in the 1980's. we saw this unfortunate bro culture here in this very competitive san francisco environment and we saw all this

talent available, so for us, hiring moms and looking broader than people that looked just like ourselves was a competitive advantage. emily: so how did you do that? kevin: there is the stereotype of the 20-something male engineer and you have these incredibly talented women in the bay area that have maybe had children and maybe unconsciously get written off. we saw that as our competitive advantage. julia: the maternity leave is a great time to recruit someone, by the way, because you have this moment of reflection and there is a varying degree of which companies decide to support people who are going through such an important milestone, and don't even get me started on it. this is a great subject for me to pontificate on. it is very curious to me that especially in the u.s. corporate culture we basically penalize

people for procreating, which pregnancy is a medical condition. emily: it is a disability. julia: despite anybody's broad religious beliefs, i'm pretty sure were supposed to be procreating on some level as humans, so that i think is curious. when you look at it and say this is not only a moment where somebody is going through a major life transition, and this is for men and women, but they are also fearful of what their life is going to look like. are their careers going to go off track? are their peers think about them differently? are they not going to be able to juggle or put the jigsaw puzzle together? there is always a piece missing under the couch, right? just life, balancing kids and career. and so all of our sort of policies around that are great, but it is really about how we treat each other.

it is about how we show up for each other, and so part of that is identifying that talented candidate, especially in competitive markets, may be reflecting on what their experience is at their own company, right, during that leave period. emily: what do you think the biggest risks, challenges that lie ahead? we hear about things like scalping, or the fact that you can't get a ticket to hamilton if you are just a regular joe. kevin: if you just look at the blockchain, there you have a means of actually assigning ownership and having clarity of who actually owns a ticket and being able to transfer that properly, and not have it end up in the hands of a scalper that then the artist does not benefit, the creator doesn't benefit. it is a third party taking a big cut. it is a scalper taking a big cut on a third-party platform, so

there are lots of ways technology can address that. it is up to us to build or lose to a competitor. so it is on our shoulders and that means continuing to build the best team we can do. emily: you have been straightforward about going public. you have said it will happen. when will it happen? julia: when i think about what we have accomplished in the last decade plus, right, we have had in excess of $10 billion in gross ticket sales flow through eventbrite, and we are just getting started. so if you are sitting in my seat and looking out over the horizon, you are really thinking about how do i build this for the long term? and we have never shied away from saying that when the timing is right, if eventbrite is ready and it is the type of company that can be a successful public company, we will go for it. kevin: i would just add that we are in an environment -- someone

said -- that after six quarters of revenue growth, it was time to go public. that was the sentiment of tech in the 1990's, that you would be out really quickly, and now we have swung in the other direction where companies are staying private for a long time. that can have a detrimental affect because you don't have the light, the sunshine of the public markets to shine in and breathe more accountability and a lot of bad things can happen, so i see personally a lot of benefits to going public, and the company is ready when julie is ready to make that call. ♪ emily: you invested in paypal, you invested in youtube. you invested in pinterest, pretty good hit record. what is your secret? ♪ emily: kevin, i want to talk to

talk a little bit about your investing career. when you stepped down as a ceo, you became a partner at the founders fund, and in fact you have been investing for a really long time, starting with paypal. kevin: i have always seen investing as a sort of selfish endeavor in one sense. i love to learn from bright, talented founders who can give me a new perspective, but what i love about it is helping to pay it forward. emily: you did this on the side, right? kevin: it was pretty natural. instead of going to some type of club or playing golf, it was working with young founders and new companies. i could pattern match and learn a lot. emily: so you invested in paypal. you invested in youtube. you invested in interest.

-- in pinterest. kevin: paypal, airbnb, pinterest, uber. emily: a pretty good track record. what is your secret? kevin: what is my secret? again, i am just looking for really talented people that look at the world in a different way and are so impassioned about what they do and want to have a positive impact on the world. emily: i think you said something like you met with 900 companies your first year? kevin: i think it was 951 companies. emily: wow. you met with 951 companies in one year. that is dedication. kevin: obviously we did not fund most of those companies, but i think what is exciting about this period is that the capital available is a wide variety, whether it is synthetic proteins, space travel, this is an incredible period to build and really impact society.

emily: how did you end up going with founders fund, which is one of the more controversial funds? peter thiel known for his support of donald trump, but investing in out of this world ideas. why did you choose that? kevin: i knew peter while at stanford. i was involved in student politics. this is where i give the disclaimer. i was chair of the standford democrats and peter was staunchly conservative libertarian, but i loved the diversity of opinion that existed there, and while i did not agree with a lot of his views i was keen to hear his perspectives because they are insightful. i would say it is unfortunate. it feels like there is a bit of groupthink in the valley right now that maybe muffles or dims other perspectives that we could be more open-minded to.

the second reason is really how this is a partnership, a group of real dreamers truly investing in really world-changing ideas, whether it was an initial investment in facebook or being the first institutional backers of spacex and elon musk, it is great to see these independent thinkers that take risks in this manner. emily: peter has caught a lot of slack for supporting donald trump. founders fund has been dragged into that to a certain extent. what is it like to weather that behind-the-scenes given that we are in the heart of the left-leaning west coast? kevin: i try not to get caught up in the drama of the headlines, salacious headlines. emily: it was never a distraction? kevin: perhaps here and there.

i would not over exaggerate it. emily: so peter is now moving to l.a., as we understand, because of this groupthink and his dissatisfaction with that. what does that mean for founders fund? kevin: that is peter's choice. founders fund is a partnership. so i think often incorrectly it is viewed as peter, but it is made up of a diverse set of investors. and we will continue and work along with peter, but there are other great team members, whether it is scott or lauren or brian, it is a partnership and not around one person. emily: what is it like being married to a venture capitalists -- a venture capitalist now? julia: what is it like being married to kevin? sometimes you feel under accomplished just by the sheer number of meetings he takes, and then to realize that even

despite him meeting somehow 951 companies in the first 12 months, he is a 50-50 partner to me at home. we co-raise our children together. kevin: we co-raise our parents. julia: we also co-raise our parents, sorry mom and dad. and just how involved he is, so i do have to say, i don't know where you find the time, but it has been great to watch him. kevin: it pales in comparison to what julia has done over these last two years at eventbrite as ceo and how the company has grown and expanded, and i am so excited for the future. emily: kevin and julia hartz, cofounders of eventbrite, thank you so much for joining us on "bloomberg studio 1.0." ♪ mom, dad, can we talk?

sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around.

♪ nejra: mifid ii two months on we look at how they are living with the a good landmark legislation and what's next. the fed chair makes his first testimony to first houses of congress. record and the city. how leaving the eu could impact london. welcome to "bloomberg markets: rules and returns." we dive into the regulatory will challenges of financial markets around the globe.

let's get a round-up. ed: the securities and exchange commission in the u.s. is expanding a broad crackdown on initial coin offerings. this according to a person with direct knowledge of the matter. the sec has confirmed for months that some ico's are raising money for businesses that don't even exist. the agency has issued subpoenas to individuals behind specific offerings. japan's financial supervisors is laying down the overhaul and could lead to a shakeup of the nation's $10 trillion banking industry. the agency is examining how to change the legal framework so that all providers of financial services are subject to the same rules. a move that would allow emerging companies, like technology startups, to compete directly with traditional institutions. -- with financial institutions. they could in the monopoly on deposit taking and lending. u.k. consumers will save as much as 1.3 billion pounds a year on

interest-- on lower credit card debt under the new rules. and under the new rules. the fca said the rules will help customers in consistent debt or arden group four dollars rose as her at the risk of financial difficulties. nejra: thank you so much. traders across europe are bracing for mifid ii's big bang, the limits on dark trading. after two months of delays, the european securities and markets authority is set to publish crucial data about equities traded in private venues. what does it mean for investors? regulators will have the power to suspended trading on stocks which breached the cap in dark halls. multilateral trading, richard said this is one of the biggest changes under mifid ii. it will alter trader behavior as suspended stocks moved to alternative venues. he also expects stock suspensions to start for march 12. they have yet to assign a date. how exactly will all of this affect firms? how does mr. to -- how does

mifid ii affect them in general right now? joining me is philip chapelle and dan marcus. welcome to you both. it's great to have you on the program. dan, let me start with you. you provide brokerage services primarily in derivative markets. what has been the impact of mifid ii on your business so far? dan: we have to look at regulation and a variety of regulatory environments. in a sense mifid ii has come in place for or five years after dodd-frank, which in itself was four or five years after the g20 pittsburgh, which was reactive to the crisis. from our perspective as a platinum-plated venue, we tried to deliver better execution. what you now see from regulation is there is more transparency, surveillance, assistance, controls to make sure that we can deliver that execution and

the regulators and the clients can see what the market is doing so they can size and control it. this made it more costly for you? has made business more difficult? what is going on under the hood? dan: it has made it significantly more costly to put this new layer of compliance surveillance in place. in some sense that's good. it attaches a certain level of theity to the execution venues attracted to them. in other ways, it does limit competition by putting barriers in place for entry and continuation. it is that sort of balance that the regulars have to get right, particularly if they are regulating national or regional basis rather than global, which is how markets operate. nejra: let me bring you in here. you work in a very different business to dan. i want to talk to you about the research aspect, which got a lot of attention in the run-up to mifid ii. interestingly, there been reports that there have been increases and demands for certain types of expert networks.

explain what these are and what the demand has been. >> there is a fundamental change in how research is consumed and paid for. because of this, people need to pay for research, it can't be bundled up. what we see is if people are paying for research, they will look at different methods. we have seen expert networks reach out and try to fill some of the space that the banks have been leaving. some of the questions of whether the banks are going to be able to -- nejra: they connect funds with research in specific areas, that is what they do? philip: we see a variety of different methodology. sometimes you hear about the traditional setting up the core with an expert and sometimes it will be a case of arranging a seminar with someone from a company or someone related to a company. it does raise challenges compared to more traditional research. there are compliance concerns. you definitely have heightened

awareness and some investors aren't keen on it. nejra: are they concerned about insider trading? is that the ultimate concern? philip: potentially. i think most of the networks do have compliance in place. for example, we historically haven't used the network because we get investor feedback. we are hearing that some people are more now because it's a more valid way of getting detailed perspectives of research. also, sometimes, there is fear the banks won't have the same coverage if they are charging for research. will they provide research for hot companies? i think people are taking a wider view as to where the research comes from. nejra: have issues around research had any kind of feed -- had any reader across into your business with clients and the way they might want to trade or what they might trade?

dan: as a broker, we have not provided research to our clients. what it does is potentially add more clarity to this point of best execution. what the client is looking at is the cost of execution of what particular financial instrument they are looking to trade without any ancillary costs. from our perspective, there is a level of clarity. in terms of the impact on users, that is a matter for the end-user. in many instances, that might not be as efficient as it was before. when they went to a bank, they went for a wholesale service, which provided a range of services rather than pure execution. nejra: are you concerned that european fund managers might be at a disadvantage to u.s. peers? philip: definitely. it is something we see in european regulation that caused this before. some of the feedback we had from the u.s. investment community was around if i have a european-based manager, they are handcuffed. they have to have insurance. then need to have regulatory capital.

we do find when they are looking at a fund managed european manager compared to the u.s. manager, there's a difference in cost. with mifid ii there is not the same level of unbundling in states compared with europe. is there going to be more cost? is it going to hit the investor? luckily, for us, most of our research is primary in nature. we don't pass the cost on to investors. most people are not in that position because of the research they consume. when you compare a london-based manager with a connecticut-based managers, there could be a cost different cost base. nejra: not so much with managers that operate globally? philip: if you have a global manager who is u.s. entities in -- u.s. entities and europe, they have to have mechanisms and how they consume data in europe. they can't use it as a pass-through for research. they can't consume the research

in the u.s. and pass into europe without unbundling. nejra: the sec has tried to make it easier for u.s. firms to comply? phillip: they have made it easier, but there were conflicts in terms of what you could pay -- of whether you could pay for research. a u.s. manager wasn't allowed to pay for the research. it was an issue. the manager was becoming a broker. we've seen them provide clarification around that. it does not allow them to funnel the research into europe and not unbundle it. nejra: any final thoughts? perhaps i regulatory arbitrage? dan: one of the matters you were discussing is different under mifid ii and the u.s. rules. how they go together and attempted equivalents. again, this goes back to the essence of what has been reactive regulatory reforms as a result of the crisis. the regulators have different

global views as to how to deal with it. naturally, different countries have different views as to how to reform the financial markets to make them operate effectively. that means you don't have natural equivalents. equivalents have to be created. from a venue perspective, in 2013, dodd-frank created blue chipping venues for execution. they attach an execution mandate to them, which is not the same as the requirements for mifid ii, which is four or five years later. again, there have been attempts at equivalents, and in some cases they work, but there are issues around transaction reporting, trade reporting, and transparency that need to be addressed. nejra: does mifid ii just need to go global to make it easier for everyone? dan: regulation is a regional requirement. it can't go global. people try to create global codes of conduct. they have market standards boards. in many instances, they are

industry initiatives to have global consistency, because whether we like it or not markets are global. nejra: thank you so much to dan marcus and phillip chapel. coming up, bitcoin, brexit, and the future of finance. we will look at how to regulate cryptocurrencies and once next forfend tech after britain leads the european union. this is bloomberg.

♪ nejra: this is "bloomberg markets: rules and returns." i'm nejra cehic. u.k. lawmakers are launching an inquiry into cryptocurrencies to investigate how the new

technology should be regulated. the treasury commission will examine the impact of bitcoin on its peers on banks and consider if they could replace traditional money. britain is spearheading the financial technology industry, where it's estimated to be worth $28 billion each year. brexit threatens to change the face of fintech in europe, just as they are set to address legislation to foster growth. let's bring in sarah jane and ed robinson from bloomberg news. ed let me come to you first. great to see you. what exactly are our lawmakers looking into with bitcoin and cryptocurrency? ed: it's a comprehensive review. under the chair, the treasury select committee will be looking at all aspects of cryptocurrencies, that includes bitcoin, ethereum, ripple, all of the dozens of other tokens that have come out in the last few months. they will look at the impact of the underlying technology,

blockchain technology, distributing ledger technology. they will be covering what consumers see and how institutions are affected by this technology, from commercial banks and touching on the bank of england. nejra: we've got a quote from nicky morgan. she said people are becoming aware of cryptocurrencies, such as bitcoin, but they may be unaware they are unregulated in the u.k. striking the right balance to provide adequate protection for consumers and businesses while not stifling innovation is crucial. she summed it up quite nicely there. is the u.k. behind at looking into this compared to other countries? ed: other countries took decisive steps to rein in cryptocurrency or to say they will. you have seen china crackdown on initial coin offerings last september. south korea has been going back-and-forth on banning all trading across the board. we have seen the sec in the u.s.

issuing dozens of subpoenas. clearly signals the crackdown. in the u.k., it's been a watchful approach. they say they are aware of this and i see the potential, but we are not going to run in with any decisive measures until we thoroughly understand the ramifications of these technologies. that is clearly what nicky morgan is doing now. saying we are going to bring everything together. nejra: have we seen that kind of watchful approach that we were just referring to? does it have anything to do with the u.k. wanting to not be too tight on the regulatory side since brexit? sarah jane: they are pressing ahead with trying to nurture the fintech industry. it is accelerating because of brexit, i believe on march 7 it will issue an action plan. they will be excluded from that. the u.k. is taking steps as well to nurture its own fintech industry.

we have seen even after the referendum on brexit in 2016, investment in the u.k. has been exploding. last year it was $1.8 billion in investment into the industry, which was a 153% rise. investment is not lacking at the moment. nejra: how much of a risk is there that fintech companies struggle to access the single market in an exit? sarah jane: the risk isn't as big as you might think. it is not as they as the banking sector, for example. payment services rely to a lesser extent on the passporting regime. in the event of a hard brexit, they would not struggle so much to access the eu single market. the u.k. could also join up with a single payment market which would facilitate access to clients in the rest of the eu. nejra: what about attracting talent? sarah jane: i don't think will be much of a problem in the u.k.

because the industry is highly digitalized and remote working is perfectly feasible. is perfectly feasible. it must also be membered that european nationals already resident in the u.k. will probably be allowed to stay. also, the government has found -- has vowed it will be increasing in special tech visas from 1000 to 2000 in order to lure tech talent into the u.k. it is making big steps. nejra: do we know when we might hear back on this inquiry? is there a date yet? ed: they did not announce timings on that. we don't know when the hearings will commence.

nejra: given what sarah jane has just said about fintech, you cover this sector for bloomberg news, from your sources, do you hear any concerns about brexit or are people quite buoyant because of the approach they've taken? ed: what i've been hearing is consistent with the research, i think at first online lenders, peer-to-peer lenders being quite concerned. they were worried about credit erosion among borrowers, they were worried that growth would be stifled, that investors would not bring money. those concerns went away two to three quarters in. now you see peer-to-peer lenders like funding circle, which is growing quarter over quarter. they are planning for an ipo this year. clearly, they are not seeing any kind of blowback from brexit. nejra: interesting. thank you so much. next, the new fed chief makes his first appearance in congress. what impact will he have on financial regulation? we will discuss. this is bloomberg. ♪

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nejra: this is "bloomberg markets: rules and returns." i am nejra cehic. jerome powell was positioned as a continuity candidate in the run-up to the selection as fed chair. investors are starting to mull the possibility that he might take a more hawkish approach then janet yellen as u.s. gdp grows at 2.5%. moving away from monetary policy, what clues have we had about how powell will approach financial regulation. joining us is ben elliott, a government analyst from bloomberg intelligence. thanks for being with us. it was noted that jerome powell did not shy away from giving a personal touch in his testimony. does that have any read across to how he might tweak his view on financial regulation? ben: the personal touch question is more important in the

monetary policy world where the fed chair has been a dodd amongst many and has tried to disguise from the markets which he represents. in regulatory policy, we have better guidelines. we have statutes which the fed chair has to follow, that's the dodd frank act. we have public comments from the chair, which delineate his priorities in the regulatory space. we have a pretty good idea of where the fed is heading, in that direction. nejra: what are some of his priorities? ben: he has laid out four top priorities in terms of rolling back or recalibrating dodd frank regulations. among those are changing the way the leverage ratio is calculated by exempting some categories of assets from the denominator, which would allow some companies to engage in less risky wholesale activities like custody activities or clearing.

the fed wants to bring greater transparency to its stress testing process. there is a role making in progress to give them more information about the models they use to test banks every year. those models end up deciding how much capital banks can return to their shareholders in the forms of buybacks and dividends. another priority is to reduce the burden around resolution planning. finally, they want to change the definitions in the volcker rule to allow banks to more effectively use securities. nejra: in terms of those priorities, do they actually reflect what jerome powell, what we know of his concerns in regulation? ben: i think they do. jerome powell is a known quantity for us. for the past five years, he has been working side-by-side with former chair yellen, signing off on her rulemaking initiatives.

powell was probably a voice of restraint in the background at the fed, but not a voice of dissent. he voted affirmatively for most of the dodd-frank regulatory infrastructure that is in place today. nejra: we talked a little bit about how the dynamic might work between jerome powell and randal quarles. what is your view on that? ben: my view is the view of the chair is most important. i think given the place that the economy is in today, chair powell will focus on monetary policy and look to raise rates three or four times through 2018. i think he will allow quarles to take the lead going after the industry, seeing what banks they supervise and feel the most important recalibrations to the dodd-frank act. ultimately, i think they will move forward with whatever chair powell is comfortable with.

nejra: ben, what impact might they have? ben: he was appointed by obama. she will probably be a voice of restraint again. she will ensure that the fed doesn't pull back too much from the dodd-frank infrastructure that is in place now. she will be concerned about financial stability. she will be concerned about loosening the leverage ratio too much in building up risk. more interesting is mark, he was a top lieutenant of the former fed governor, who chair yellen allowed to take point on implementing the dodd-frank act.

if there is a regulatory hawk out there, it is him. he came on as the new general counsel at the end of yellen's term as chair. chair powell brought him and had him sitting right behind him at his first public hearing on the state of monetary policy. we can expect that he will be a strong influence there. he will ensure that nothing too drastic takes place in terms of rolling back or recalibrating dodd-frank rules. nejra: interesting dynamics to keep an eye on. thank you so much to ben elliottt from our bloomberg intelligence team. that is it for this edition of "bloomberg markets: rules and returns." if you have any comments, questions, or feedback, you can email us. this is bloomberg. ♪

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