Much ink has been spilt in discussing the extent to which risks generated by over-the-counter (OTC) derivatives were implicated in the global financial crisis (GFC). Subsequent inquiries into the causes of the crisis have focused on, amongst other things, the substantial exemption of these financial instruments from regulatory oversight and an apparent lack of awareness amongst both market actors and regulators about the extent of risk involved. Following the GFC, a narrative has now emerged in both the United States and the European Union which emphasises the significance of systemic risk, comprising the aggregate consequences arising from failure of transactions as opposed to the risk associated with particular transactions. To address systemic risk, new regimes focus both on increasing the transparency of OTC derivatives transactions and on the imposition of new regulatory requirements.

It has frequently been claimed that over-the-counter (OTC) derivatives were, by and large, not directly regulated in the largest markets immediately prior to the global financial crisis (GFC). While there is an element of truth in this contention, it betrays the more complex interactions between public legislators and influential transnational private trade associations, most notably the International Swaps and Derivatives Association (ISDA), both prior to the GFC and in the wake of it. ISDA, its members and national governments interact on the basis of legal and policy tradeoffs which are ostensibly related to OTC derivatives' regulatory treatment but which, in reality, extend beyond this. The fact of these interactions between ISDA and nation states may raise less regulatory legitimacy challenges than some of the norms which are communicated. A prime example is the public transposition of ‘safe harbours’ which insulate OTC derivatives, including ‘purely speculative’ contracts, from the full force of gambling law. It is thus suggested that while the regulatory role and expertise of ISDA should be formally recognised and appropriately harnessed by public actors in the creation of a new public-private regulatory détente in the OTC derivatives markets, a review of the appropriateness of the current legal treatment of purely speculative derivatives should be a priority for any such regulatory regime.

This paper examines the contract interpretation strategies adopted by the International Swaps and Derivatives Association (ISDA) for its credit derivatives contracts in the Greek sovereign debt crisis. We argue that the economic function of sovereign credit default swaps (CDS) after Greece is limited and uncertain, partly thanks to ISDA's insistence on textualist interpretation. Contract theory explanations for textualist preferences emphasise either transactional efficiency or relational factors, which do not fit ISDA or the derivatives market. We pose an alternative explanation: the embrace of textualism in this case may be a means for ISDA to reconcile the competing political demands from state regulators and its market constituents. We describe categories of contracts susceptible to such political demands, and consider when and why textualism might be the preferred response.

The paper focuses on financial transactions, addressing over-the-counter (OTC) trading of derivatives, which many analyses of the recent financial crisis argue produced significant problems. This area of financial activity grew massively from the 1990s, facilitated by legal developments in both the US and the UK that ruled out any state regulation of the market whilst at the same time affirming that the contracts made in the area were fully legally enforceable in US and UK law. At the same time, the private association, the International Swaps and Derivatives Association (ISDA), developed the Model Contract and international private soft law agreements that were generally respected by national legal systems and provided an agreed framework for OTC contracts. The paper explores how this lack of public regulation was legitimated, and the interests which lay behind this legitimation process. It then considers how the financial crisis and the role of OTC derivatives forced a re-opening of the issue of how these markets should be regulated. The paper explores the interplay between what may be described as technical fixes to regulatory problems, on the one hand, and the efforts of private and public actors to defend their interests by shaping the new markets in particular ways, on the other.

The issue of whether and how to regulate short selling has vexed regulators for some time. While there are a number of potentially damaging consequences that are said to stem from short selling, there is also evidence that it can have beneficial effects on financial markets. In the wake of the collapse of Lehman Brothers in September 2008, and more particularly the falls in the prices of listed financial securities that followed, the regulation of short selling has come back onto the regulatory agenda with a vengeance. Various regulatory techniques, some temporary and some more permanent, have been adopted to deal with short selling. This paper explores those implemented in the US, the UK, Germany and France. The EU has also been developing its regulatory response and in March 2012 the final text of a Regulation dealing with short selling was published. This paper considers the arguments for and against the regulation of short selling, and considers the EU's Short Selling Regulation in the light of these arguments. It is suggested that although the provisions of the EU's Regulation introducing disclosure to the regulator are broadly sensible, as are the provisions designed to foster a stricter settlement regime, other provisions are more problematic and have the potential to cause damage to European financial markets.

Post-trading activities such as clearing and settlement (C&S) constitute a central element in the integration of European financial markets. However, unlike other areas of financial services, C&S has received little legislative and regulatory attention and, as a result, important barriers to the cross-border provision of C&S services persist in the European Union. In order to remove some of these barriers, the financial industry created, under the auspices of the European Commission, the European Code of Conduct for Clearing and Settlement, a self-regulatory instrument aimed at achieving a smoother provision of cross-border C&S services. This paper uses the concepts of input/output legitimacy to analyse the Code's representative nature and effectiveness. It shows that, first, the Code has not received input from all the relevant constituencies potentially affected by C&S, and second, that there are serious threats to future compliance with the Code related to the competitive pressures of European financial markets. The paper also identifies the proposals to regulate C&S facilities at EU level as well as the new European supervision authorities in the financial field as elements which may highly contribute to the input/output legitimacy of cross-border C&S rules in the EU.

The workforce in the EU is decreasing significantly compared to the US and Japan. This problem can to some extent be solved by having more women at the workplace. The European Commission is currently contemplating the introduction of obligatory quotas for women in the boardroom of private companies. In order to have a better understanding of the controversial and currently highly debated issue of obligatory gender diversity programmes in corporate governance, the Commission released a Green Paper on the EU Corporate Governance Framework in April 2011. By means of this Green Paper, the Commission invites all interested parties to submit their views on some important questions such as: should recruitment policies be more specific about the profile of directors to ensure that the board is suitably diverse? If so, how could that be best achieved and at what level of governance, i.e., national, EU or international? The present paper seeks to give an answer to these questions of the Commission. It examines at what level of governance gender diversity in the boardroom can be best achieved and also studies the effectiveness of obligatory and voluntary gender quotas in corporate governance as a tool to increase gender diversity in the boardroom.