Private Regulation in the Credit Default Swaps Market : The Role of ISDA in the New Regulatory Scenario of CDSs

The derivatives market speedily sailed along the deregulatory waves rocking the early 90s financial markets. This article assesses the central role of the International Swaps and Derivatives Association (ISDA), the private-standard-setting body of the derivatives industry, which ruled in the absence of public regulation. Specifically, through six different lenses – legitimacy, accountability, quality, effectiveness, enforcement, and independence – the article examines ISDA's role in increasing efficiency and reducing transaction costs in the derivatives market, as well as the pivotal role ISDA played in the transition between the pre- and the post-crisis derivatives market. Finally, this article evaluates whether greater coordination and cooperation between public regulators and private-standard-setting bodies is needed to assess financial innovation