How have regulations changed for derivatives since the financial crisis?

The financial crisis of 2008 exposed significant weaknesses in the regulation of derivatives, particularly overthecounter (OTC) derivatives, and led to significant regulatory changes. The regulation of derivatives has been strengthened globally since then to reduce risk and increase transparency in the market.

In the US, the DoddFrank Wall Street Reform and Consumer Protection Act of 2010 was passed to reform the regulation of OTC derivatives markets. The law mandated the clearing of standardized OTC derivatives through central counterparties (CCPs) and required them to be traded on regulated exchanges or swap execution facilities (SEFs). It also mandated higher capital requirements for OTC derivatives dealers and required reporting of all OTC derivatives trades to a trade repository.

In Europe, the European Market Infrastructure Regulation (EMIR) was introduced in 2012 to regulate OTC derivatives markets. It requires the clearing of standardized OTC derivatives through CCPs and reporting of all OTC derivatives trades to trade repositories. EMIR also mandates that OTC derivatives trades are executed on regulated trading venues or SEFs.

Overall, the regulations seek to increase transparency, reduce counterparty risk, and prevent systemic risks associated with derivatives trading.