1. Structural Reform to Derivatives Market: General Aspects and Regulatory Framework
Ligia Catherine Arias Barrera
PhD Candidate- University of Warwick
Queen Mary University of London, Postgraduate Conference 2013: Reinvigorating Legal Thought in Times of Change
6th June 2013

2. Structure Part 1: Generalities Financial Derivatives Market structure
Relevance of the market

3. Structure Part 2: The issue Formal Regulators in US and UK
Informal Regulators: the role of ISDA
Private Law Integration

4. Generalities Definition
‘A financial instrument whose value is derived from the performance of an underlying asset`1
1. Alastair Hudson, Credit Derivatives: law, regulation and accounting issues (Sweet and Maxwell, 1999) 63

5. Regulated and Supervised
Market Structure
EXCHANGES
Standardised
Regulated and Supervised
OVER THE COUNTER
Non- Standardised
Self-Regulated

6. Relevance of the market
Concentration------Systemic Risk

7. The Issue Formal Regulators United States: Federal Reserve
Department of Treasury
Securities and Exchange Commission (SEC)
Commodity Futures Trading Commission (CFTC)

8. The issue United Kingdom Previously Financial Services Authority (FSA)
From April 2013:
Bank of England- Financial Policy Committee
Prudential Supervision Authority (PRA)
Financial Conduct Authority (FCA)

9. The issue Informal Regulator
International Swaps and Derivatives Association ISDA2
+ Association was founded in 1985 with the mission to work for safe and efficient OTC derivatives market
+ Membership was progressively broad up reaching over 840 members
2. accessed 3rd march 2013

10. The issue Functions Two forms of private law integration
The use of ISDA Master Agreement
Influence on national regulation3
4. The objective of safe harbours is to facilitate the smooth execution and settlement of OTC derivatives contracts irrespective of whether the intention of the parties to the agreement is to hedge or speculate and irrespective of whether one of the parties to the agreement becomes insolvent’ ibid
To facilitate the settlement of ‘safe harbours’ ISDA offers a Model Netting Law and implementation guide to assist national authorities. ‘The model addresses immunity from conventional insolvency procedures and exemptions from relevant gambling legislation.’ ibid 19.

11. The issue Techniques3 Legislative Method Common law Method
3. Biggins and Scott nominated them as Legislative Method and Common Law Method as part of the juridification of the Regulatory Space. John Biggins and Collin Scott, ‘Extending and contracting jurisdictions in a transnational private regulatory regime: efficiency, legitimacy, ISDA and the Derivatives Markets’ (2011) UCD Working Papers in Law, Criminology & Socio-Legal Studies Research Paper No. 51/2011, November 1, 6 accessed 2nd November 2012

12. The issue Fragmented regulatory space4 Three Questions: Effectiveness
Legitimacy
Accountability
Collin Scott, ‘Analysing Regulatory Space: Fragmented Resources and Institutional Design’ (2001). Public Law accessed 2nd November 2012

13. The issue Two important regulatory changes and challenges
ISDA representing significant regulatory force?
Greater prominence of Central Counterparties CCPs and Trade Repositories TRs

14. Ligia Catherine Arias Barrera
Thanks
Ligia Catherine Arias Barrera
PhD candidate- Financial Law
University of Warwick
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