Sharing global regulatory space: transatlantic coordination of the G20 OTC derivatives reforms1

The regulatory overhaul of the OTC derivative market prompted by the G20 has transformed what used to be a relatively harmonious and transnational legal regime into a global regulatory space characterised by regulatory conflicts, overlaps and gaps. In the light of the hypotheses developed in Chapter 1 of this book, this chapter evaluates the implementation and coordination of the derivative reforms in and between the United States and the European Union. Both jurisdictions have applied a mix of regulatory strategies: (1) extraterritorial applications of rules outside their borders; (2) conditional deference strategies (substituted compliance in the US; an equivalence regime in the EU); and (3) direct and indirect forms of protectionism. The chapter shows that these strategies, which respond to risks of regulatory arbitrage and regulatory competition, contribute to a centralisation and consolidation of regulatory structures, particularly in the EU.