ABSTRACT
This chapter identifies the shortcomings in adopting a risk-based approach to regulation of Central Counterparties (CCP) in the US. It discusses the relevant concerns related to the implementation of risk-based approach to regulation by US regulatory agencies. The rhetoric surrounding financial regulation and the call for reform after crises is usually inspired by the detection of serious malfunctions and the need for correction of certain market failures. Particularly in the case of the over-the-counter (OTC) derivatives market, the global financial crisis (GFC) demonstrated a regulatory failure in a fragile market infrastructure, along with several market failures. The Dodd-Frank Act imposes (DFA) the most consequential change to derivatives regulation, which is mandatory central clearing for swaps and for security-based swaps. As central to financial stability reform as it was acclaimed in aftermath of the GFC, the DFA still reveals the issues associated with the phenomenon called 'delegated legislation'.
