John Marshall Global Markets Law Journal


Yankun Guo


The 2008 financial crisis was a rude awakening for global financial regulators. The lack of transparency and regulation of the derivatives market was a major contributing factor to the global economic recession. As a response, world leaders pledged to bring economic and regulatory reform to their respective nations. In order to meet these goals, the United States proposed the Dodd-Frank Act and, in 2010, the Act was signed into law by President Obama. One of the purposes of Dodd-Frank is to allow financial regulators to police all derivative contracts that may affect the United States; unfortunately, the extraterritorial reach of Dodd-Frank was not well received by many foreign regulators. The Dodd-Frank Act was passed without the United States harmonizing its new regulations with other jurisdictions, resulting in regulatory fragmentation and leading to increased compliance burdens for derivative traders. The differences among each jurisdiction’s laws and a lack of harmonization between each jurisdiction could lead to regulatory arbitrage. This Article proposes a pause to the cross-border application of the Dodd-Frank Act until harmonization has been reached.