Reforming financial regulation after the global financial crisis : the case of over-the-counter derivative market regulation.

Summary In the aftermath of the worst global financial crisis since the 1930s, several governments under the umbrella of the G20 agreed to reform the international financial system. The regulation of financial markets was extended to new territories. However, if the crisis is a condition for change, it does not show the extent or the sequence of events that explain this shift in public policy. The question then arises: what are the elements that can explain this shift in international financial regulation? This paper demonstrates that domestic policy in the United States and major European Union countries directly influenced this policy shift. Focusing on OTC derivatives markets, this research will demonstrate that the extension of financial regulation to new markets is the product of increased public attention or "policy salience" in internationally influential countries. However, the unique historical trajectories that characterize these states inform us about the unique contours of these new regulations that are not written on a blank page. In particular, this research examines the evolution of financial regulation in the credit derivatives or "credit-default swaps" markets in the United States with the passage of the Dodd-Frank Act and in Europe with the passage of the European Market Infrastructure Regulation (EMIR). This argument and empirical study contribute to the study of the evolution of state preferences in international financial regulation.