Meta-regulation of OTC derivatives contracts post reform

Purpose – The purpose of this paper is to examine the probable structure of bilateral derivatives contracts following international regulatory reforms. Design/methodology/approach – The theoretical context of the paper is private and meta-regulation, which the author applies to a case study and current industry analysis. Findings – While regulations are still being written, it is likely that elements of oversight for the bilateral derivatives market will involve enforced self-regulation. When combined with more specific outcome-oriented regulatory requirements, the industry is well-suited to this type of coordinated regulatory regime. Practical implications – In light of the uncertainty of derivatives regulation and the future size of the bilateral, over-the-counter (OTC) derivatives market, practitioners should consider a likely broader range of regulation structures. Originality/value – The paper fills a gap in the literature about non-traditional governance structures for the derivatives markets following the financial crisis. Rather than considering regulation on a light/heavy axis, the paper examines whether this segment of the market can sustain a process-oriented regulatory arrangement.