The Impact of Dodd-Frank on the Post-Crisis Derivatives Markets

The new regulatory framework for over-the-counter derivatives in the Dodd-Frank Wall Street Reform and Consumer Protection Act is designed to overhaul the industry in three primary ways. First, Dodd-Frank aims to substantially reduce systemic risk at both the participant and the product levels. The new law also seeks to structurally deleverage the OTC derivatives markets through the imposition of regulatory capital and margin requirements. Finally, Dodd Frank attempts to bring transparency to the markets through enhanced price discovery, mandatory exchange-trading and required derivatives portfolio disclosures.