Good luck trying. Just remember ERM, and the G7 agreement of 1973, and ftm the Franco-British ''stability'' pact of 1924 when your new regulations fail to achieve their goals -- which they absolutely infallibly will. The only variable in their failure is how long they will take to fail.
The net bottom line on your ''regulations'' is that the chaps in the mkt are MUCH smarter than the clowns in the gov't...if you'd care to bet against this proposition, I'll take $10K of your wager, right now, with a 4-year time limit on when your regulatory scheme will fail badly in the practical world (and, no, the pronouncement of bureaucrats will not count in the settlement of our wager; we'll take our cue from the real world).
Care to play?
;^)
Regulations are never permanent, but that is not the purpose of the exercise. What it is trying to correct is not really volatility itself, it is trying to correct what amounts to a takeover of the market by an unstable system. It only seeks to fend off catastrophic volatility.
Hedge funds are a fairly new phenomenon, and as such follow a typical trend. At first, only a limited number of knowledgeable investors make big profits from the new gimmick, but then, as more and more clones of the concept come into play, the market becomes distorted by the expectations of unrealistic profits. In essence, imbalanced p/e ratios. But in this case, making money no matter if the market is bullish or bearish.
When too many investors try to have high earnings with low risk, disaster is not far away. So there will be regulation, the only question being will it be before or after the big correction that kills hedge funds like flies?
If it is wisely before, the very best that can be hoped for is that hedge funds look less attractive, so that many are culled due to lack of interest, and profits are more reasonable among the survivors. And thus, they lose their dominance of trades on the market as alternatives are sought and used.
Many will remain as fixtures, but more in balance with other systems in offering various degrees of risk and reward.
Regulation will come, one way or another, and despite the CATO Institutes aversion to it. The only question is will it be done proactively, to let the market restore its natural balance, or reactively, to pick up the pieces after a big collapse.