The New Regulation of Swaps: A Lost Opportunity

The U.S. regulatory system has multiple regulators on the federal and state level, many with overlapping jurisdiction. The result has been both overregulation and underregulation – in some cases, the same entity may be subject to different (and perhaps inconsistent) regulation for the same activity, while in other cases certain activities may remain unregulated in the midst of a complex regulatory patchwork. Regulatory reform in the United States provided a unique opportunity for reform of this archaic and byzantine regulatory structure. Yet, remarkably, the drafters of Dodd-Frank Act – an 849-page bill that includes 398 rulemaking requirements, implicates 25 regulators and creates 2 new ones – perpetuated many of these flaws. This article focuses on one of the clearest examples of complication in the U.S. regulatory structure exacerbated by the Dodd-Frank Act – the division of the regulation of securities, futures and (now) swaps between the Securities and Exchange Commission and the Commodity Futures Trading Commission.