Fifteen Years After Dodd-Frank, What Do The Data Tell Us About The Swaps Market?

The Dodd-Frank Act substantially reconstructed the legal architecture governing the over-the-counter derivatives markets. More than fifteen years later, however, an important empirical question remains unresolved: what effect did that reconstruction have on the actual use of swaps?

Has Dodd-Frank Improved or Impeded Swap Markets?.¹

Readers interested in derivatives regulation should read Professor Beylin’s original essay and underlying paper in full. The research is careful, data-intensive, and commendably restrained about what the available evidence can establish.

I approached the paper with a measure of personal interest as well. Professor Beylin and I share two institutional connections. I am a graduate of Seton Hall Law, where he now serves as an Associate Professor of Law, and we both practiced at Sidley Austin before our respective current roles. Professor Beylin’s work is particularly impressive because it reflects both strands of his background: an understanding of how derivatives markets operate in practice and a serious empirical effort to determine how those markets responded to regulation.²

His findings also warrant consideration alongside a broader body of empirical literature on Dodd-Frank. Much of that literature has examined particular mechanisms within the post-crisis regulatory structure, including central clearing, mandatory execution, and public transaction reporting. Professor Beylin asks a related, but materially different, question. Rather than focusing principally on whether regulation changed spreads, execution costs, liquidity, or counterparty risk, he examines whether the post-Dodd-Frank regime changed the extent to which banking institutions actually use swaps, particularly as risk-management instruments.

That distinction is rather important.

The existing literature contains considerable evidence that particular elements of Dodd-Frank improved certain dimensions of swap-market quality. Professor Beylin’s analysis suggests that the broader question of how the regulatory regime affected swap usage remains substantially more complicated.

I. Dodd-Frank’s Regulatory Intervention

Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act represented the principal U.S. implementation of the post-financial-crisis international commitment to reform OTC derivatives markets.³ The G-20 had agreed in Pittsburgh in 2009 that standardized OTC derivatives should be centrally cleared, traded on exchanges or electronic platforms where appropriate, reported to trade repositories, and subjected to higher capital requirements when not centrally cleared.⁴

Congress implemented that program through a statutory framework that imposed or authorized, among other requirements, mandatory clearing for certain swaps, execution requirements for certain cleared swaps, swap-dealer registration and business-conduct obligations, transaction reporting, and margin requirements for uncleared swaps.⁵

The CFTC’s initial clearing determination covered specified interest-rate swaps and credit default swaps, with mandatory clearing beginning for relevant market participants in 2013.⁶ Dodd-Frank also created swap execution facilities, or SEFs, intended to bring greater pre-trade transparency and multilateral execution into markets traditionally characterized by bilateral dealer relationships.⁷

The reform was enormous in scope, but its implementation was staggered.

That fact creates a central methodological difficulty for any attempt to determine what Dodd-Frank “did” to swap markets. There is no single implementation date against which the entire regulatory regime can sensibly be tested. Reporting, clearing, execution, margin, dealer regulation, cross-border requirements, and other components took effect at different times. Their application also differed by product, counterparty, institution size, and transaction structure.

Professor Beylin’s paper treats that difficulty as part of the substantive problem rather than attempting to abstract it away.

II. A Different Empirical Question

Much of the leading empirical literature following Dodd-Frank has examined market quality.

Professor Beylin examines market use.

Those inquiries overlap, but they are not equivalent.

Consider the evidence regarding central clearing. Yee Cheng Loon and Zhaodong Zhong examined voluntarily cleared single-name credit default swaps and found evidence that central clearing reduced counterparty risk and was associated with increased liquidity and trading activity. Their matched-sample analysis found that trading in cleared reference entities exceeded trading in comparable non-cleared entities following the introduction of clearing.⁸

Their subsequent work on index CDS markets similarly found that the commencement of public trade dissemination under Dodd-Frank was associated with greater liquidity. They also reported lower trading costs, price impact, and price dispersion for cleared transactions and transactions executed on exchange-like venues.⁹

Research concerning mandatory electronic execution reached comparable conclusions in the interest-rate swap market. Evangelos Benos, Richard Payne, and Michalis Vasios used transaction-level data to assess the Dodd-Frank SEF mandate and found liquidity improvements of approximately 12% to 19% for contracts experiencing the greatest movement toward centralized trading. They attributed much of the improvement to greater competition among dealers.¹⁰ In their earlier working-paper analysis, the authors estimated economically significant reductions in execution costs for end users following implementation of the mandate.¹¹

More recent work has added qualifications while generally preserving evidence that clearing can improve aspects of market functioning. Gregor Schoenemann, using a regression-discontinuity design, found that central clearing was associated with narrower absolute bid-ask spreads and greater gross trading volume in portions of the CDS market, although the positive liquidity effects were concentrated among contracts with relatively high fundamental and liquidity risk.¹²

Wenxin Du, Salil Gadgil, Michael Gordy, and Clara Vega, using confidential trade-repository data, found that counterparty credit risk has a significant effect on counterparty selection in the CDS market. Their work underscores the economic importance of the counterparty-risk problem that central clearing was designed, in part, to address, while also showing that the relationship between clearing and transaction pricing is more nuanced than some earlier work suggested.¹³

And Pierre Collin-Dufresne, Benjamin Junge, and Anders Trolle found that, despite regulatory efforts to promote more open trading, the post-Dodd-Frank index CDS market remained substantially two-tiered. Their research illustrates an important limit to any claim that the reforms completely displaced the traditional dealer-intermediated structure of OTC derivatives markets.¹⁴

Taken together, this literature provides substantial evidence that specific components of the post-crisis reforms affected liquidity, execution costs, transparency, counterparty relationships, and market structure.

Professor Beylin moves the inquiry one level higher.

Even if a rule improves execution quality for transactions that occur, what happens to the decision to enter into a swap in the first instance?

That is particularly important because swaps perform an economically significant risk-management function. A regulatory regime could improve the quality of executed transactions while simultaneously increasing the fixed or marginal cost of using the instrument. Conversely, a reduction in aggregate swap notional could reflect more efficient clearing and compression rather than a reduction in economically useful risk transfer.

Professor Beylin’s study attempts to distinguish among these possibilities.

III. The Cross-Asset Evidence Initially Appears Significant

Professor Beylin uses Federal Reserve data covering banking organizations from 2000 through 2025. He first examines changes across derivative asset classes.

The comparison is intuitively attractive because Dodd-Frank did not regulate every derivative category identically.

Standardized interest-rate swaps and credit default swaps absorbed some of the regime’s most significant structural interventions, including mandatory clearing and, for certain transactions, mandatory execution. Certain foreign-exchange products, by comparison, received materially different treatment.¹⁵

Professor Beylin observes substantial declines in outstanding notional for interest-rate and credit derivatives during relevant portions of the post-Dodd-Frank period, while FX and equity derivatives exhibited substantial growth.¹⁶

At first impression, the pattern appears consistent with a regulatory-burden hypothesis. Products subjected to the most consequential regulatory interventions declined; more lightly regulated products grew.

That comparison deserves our attention I think.

The global scale of these markets remains extraordinary. Bank for International Settlements data show approximately $846 trillion in OTC derivatives notional outstanding as of June 2025. Interest-rate derivatives represented approximately 79% of the total, while foreign-exchange derivatives accounted for approximately $155 trillion.¹⁷

Even relatively modest regulatory effects can therefore have considerable economic significance.

Yet the cross-asset comparison presents a serious measurement problem, and this is one of the strongest aspects of Professor Beylin’s analysis.

IV. Dodd-Frank Changed the Measurement Along With the Market

Outstanding notional is an imperfect measure of substantive derivatives activity.

A swap’s notional amount does not measure the economic value of the transaction, the amount of market risk transferred, the expected cash flows between the parties, or the counterparty exposure arising from the transaction. More importantly, central clearing, multilateral netting, and portfolio compression can materially reduce gross notional without eliminating the underlying economic risk-management function.¹⁸

This distinction is pretty fundamental, right?

Imagine a network of economically offsetting transactions among multiple dealers. Portfolio compression can terminate redundant contracts and replace them, where necessary, with a smaller number of positions reflecting the parties’ net economic exposures. Gross notional declines, sometimes substantially, despite little corresponding change in the economic risk transferred through the market.

The difficulty for empirical analysis is apparent: the regulatory reforms themselves encouraged mechanisms capable of reducing the metric being used to measure market activity.

A post-Dodd-Frank decline in notional therefore cannot automatically be interpreted as evidence that regulated institutions abandoned swaps.

Indeed, central clearing can generate substantial netting efficiencies. Research in other centrally cleared markets confirms the magnitude these efficiencies can attain. Federal Reserve Bank of New York researchers, for example, estimated in the Treasury context that broader central clearing could reduce dealers’ gross settlement obligations by hundreds of billions of dollars on high-volume days.¹⁹ Although the institutional setting differs from the swap markets Professor Beylin examines, the underlying point is relevant. Gross positions can change materially because the infrastructure through which transactions are cleared has changed.

The methodology therefore requires a comparison that does more than observe gross notional before and after regulation.

Professor Beylin supplies one.

V. The Cross-Instrument Analysis Complicates the Regulatory-Burden Account

Professor Beylin next isolates banking organizations that remained outside the fifty largest U.S. banking organizations throughout his 2000–2025 observation period.

The purpose of this restriction is important. Institutions of that size are considerably less likely to maintain significant derivatives-dealing operations. Their use of interest-rate swaps is therefore more plausibly associated with risk management rather than market making.

Professor Beylin compares those institutions’ use of interest-rate swaps against alternative risk-management instruments, including futures, options, and forwards.

If Dodd-Frank materially impaired the usefulness of swaps for hedging, one might expect regulated institutions to substitute those alternative instruments for swaps. Relative swap use should decline.

The data show the opposite.

Professor Beylin reports that swaps represented approximately 63% of relevant hedging-instrument notional before January 1, 2013 and approximately 73% afterward.²⁰

That finding is significant because it addresses a limitation inherent in examining absolute swap volumes.

Demand for hedging changes over time. Interest-rate environments change. Balance sheets change. Asset-liability mismatches change. Monetary policy changes. A decline in interest-rate swap activity could simply reflect a decline in the amount or character of interest-rate risk institutions seek to hedge.

A relative comparison partially controls for that problem. If an institution continues to face a need for interest-rate risk management but swaps become disproportionately costly because of regulation, one would expect some substitution toward competing instruments.

Professor Beylin does not observe that substitution in the aggregate. To the contrary, swaps gain relative share.

That result sits comfortably with portions of the earlier market-quality literature. If transparency, clearing, and multilateral execution reduced some transaction costs and improved liquidity for regulated swaps, then continued or increasing preference for those instruments among hedgers is economically plausible. The findings by Loon and Zhong and by Benos, Payne, and Vasios provide evidence consistent with that mechanism.²¹

But the relationship should not be overstated.

Those earlier studies generally examine particular regulatory interventions, products, and relatively concentrated implementation windows. Professor Beylin studies broader institutional usage across a considerably longer period. A finding that SEF execution reduced transaction costs in certain interest-rate swaps does not establish that the cumulative burden of clearing, execution, margin, documentation, reporting, compliance, capital, and related requirements had no deterrent effect.

This is where the third component of his analysis becomes particularly important.

VI. The Small-Bank Exemption Provides a Useful, If Imperfect, Comparison

The regulatory regime did not impose identical requirements on every banking institution.

Dodd-Frank authorized an exception to mandatory clearing for certain smaller financial institutions, and the CFTC established a $10 billion asset threshold for purposes of the relevant small-financial-institution exception.²² Smaller institutions consequently provide a potentially useful comparison group against institutions exposed to a broader set of regulatory costs.

The intuition resembles a treatment-control analysis.

If the post-crisis regime imposed sufficiently large costs on swap usage, institutions subject to those costs should become less inclined to use swaps relative to alternative instruments than otherwise comparable institutions eligible for exemptions.

At first, Professor Beylin’s results provide little support for that hypothesis.

He reports that the average difference in relative swap usage between larger and exempt institutions was approximately 12.4 percentage points before the regulatory period and approximately 12.7 percentage points afterward.²³

The simple before-and-after comparison therefore does not suggest substantial substitution away from swaps among the institutions facing the heavier regulatory regime.

The time series, however, complicates the conclusion.

Professor Beylin identifies a divergence beginning later in the implementation period. Starting around 2016, larger institutions became less inclined to use swaps relative to competing instruments, while exempt institutions began moving toward greater relative swap use around 2017. By late 2018, the relative positions of the two groups had crossed.²⁴

The timing is consequential because uncleared-swap margin requirements were being implemented during approximately this period.²⁵

Margin rules impose economic costs of a different character than transaction reporting or execution transparency. Initial margin requires parties to dedicate collateral to support potential future exposure. Variation margin requires ongoing collateral transfers as positions change in value. Operational requirements surrounding collateral documentation, valuation, custody, segregation, dispute processes, and margin calls can also be substantial.

A decline in relative swap usage among institutions subject to those obligations, occurring while exempt institutions move in the opposite direction, therefore cannot be dismissed.

Professor Beylin appropriately stops short of causal attribution. The two populations differ along many dimensions other than regulatory treatment, and the staggered implementation of Dodd-Frank makes clean identification difficult.

The important point is narrower. The later data prevent the earlier cross-instrument evidence from resolving the question.

VII. The Literature and Beylin’s Findings Are More Complementary Than Contradictory

Viewed superficially, Professor Beylin’s study might appear to sit in tension with scholarship finding that Dodd-Frank improved swap-market liquidity.

A closer reading suggests otherwise.

The studies are measuring different margins of regulatory effect.

Loon and Zhong ask, among other things, whether central clearing and transaction transparency affect counterparty risk, liquidity, trading activity, and transaction costs.²⁶

Benos, Payne, and Vasios ask whether mandatory centralized execution changed liquidity and dealer competition.²⁷

Schoenemann studies clearing and liquidity in CDS markets.²⁸

Du, Gadgil, Gordy, and Vega examine the role of counterparty risk and clearing in transaction and counterparty selection.²⁹

Collin-Dufresne, Junge, and Trolle examine how the post-Dodd-Frank market actually organized itself and why important features of dealer intermediation persisted.³⁰

Professor Beylin asks whether, after all of these mechanisms and their associated costs are considered together, institutions appear to have materially altered their propensity to use swaps.

It is entirely possible for Dodd-Frank to have improved liquidity for certain swaps, reduced counterparty risk, lowered execution costs in some settings, increased transparency, preserved substantial dealer intermediation, imposed material compliance and collateral costs, and nevertheless produced an ambiguous aggregate effect on swap usage.

Financial regulation frequently operates along multiple margins at once.

That is one reason Professor Beylin’s findings are valuable. They resist reducing the post-Dodd-Frank experience to a binary account of regulatory success or failure.

VIII. The Silicon Valley Bank Experience Gives the Inquiry Continuing Importance

The question also carries significance beyond derivatives-market structure.

Professor Beylin appropriately identifies Silicon Valley Bank as a reminder of the importance of effective interest-rate risk management.

The Federal Reserve’s 2023 review of SVB concluded that the bank failed to manage fundamental interest-rate and liquidity risks. Among other findings, the Federal Reserve observed that SVB removed interest-rate hedges as its vulnerability to rising rates increased.³¹

The episode illustrates why the regulatory treatment of hedging instruments deserves careful analysis.

The post-crisis derivatives reforms were enacted in response to genuine weaknesses revealed during the financial crisis. The OTC derivatives market contained substantial interconnected counterparty exposures, inadequate transparency, and weaknesses in risk management and market infrastructure.³² Central clearing, reporting, margin, and execution requirements were intended to respond to those risks.

At the same time, derivatives themselves remain important mechanisms through which financial institutions manage interest-rate, currency, credit, commodity, and other exposures.

The proper empirical question is therefore more demanding than whether regulation caused aggregate swap volumes to rise or fall.

A comprehensive assessment should ask whether the reforms reduced systemic and counterparty risk, improved price formation and liquidity, changed dealer concentration and market structure, increased the private costs associated with hedging, and affected institutions’ willingness or ability to transfer risk.

No single dataset is likely to answer all of those questions.

IX. Professor Beylin’s Most Important Finding May Be the Absence of a Simple One

The temptation in evaluating Dodd-Frank has long been to seek a single verdict.

Professor Beylin’s research provides good reason to resist it.

The cross-asset evidence is at least consistent with regulatory burden. Interest-rate and credit derivatives, which experienced some of the most significant regulatory intervention, declined materially in outstanding notional during relevant portions of the observation period, while certain more lightly regulated asset classes grew.

The measurement problem substantially weakens any causal inference from those data because clearing and compression can independently reduce notional.

The cross-instrument evidence then moves in the other direction. Among institutions whose derivatives usage is more likely to represent hedging, swaps became more prevalent relative to futures, forwards, and options after the principal Dodd-Frank reforms began taking effect.

The comparison between exempt and non-exempt institutions initially reinforces that finding, only to become substantially more ambiguous after 2016 as the two groups’ behavior diverges.

Meanwhile, a separate body of empirical scholarship provides meaningful evidence that particular components of the post-Dodd-Frank architecture improved liquidity, reduced certain trading costs, mitigated counterparty risk, or altered competition among dealers.

These findings can coexist, can’t they?

They also underscore a larger lesson for financial regulation. Statutes as consequential as Dodd-Frank do not produce a single market effect. They change incentives, transaction costs, institutional structures, risk allocation, information production, collateral requirements, counterparty relationships, and competitive dynamics simultaneously. Those effects occur against a background of changing monetary policy, market technology, capital regulation, bank balance sheets, macroeconomic conditions, and private innovation.

Professor Beylin’s twenty-five-year dataset captures more of that history than most studies of the swaps reforms. It also demonstrates why substantially more empirical work remains necessary.

For practitioners, regulators, and market participants, that may be the paper’s most useful contribution. Fifteen years after Congress fundamentally redesigned the regulatory architecture of the OTC derivatives market, there is substantial evidence that individual components of that architecture improved aspects of market quality. There is considerably less evidence permitting a confident conclusion about the cumulative regime’s effect on institutions’ willingness to use swaps as risk-management instruments.

Professor Beylin has provided an important empirical foundation for answering that question.

His research should be read directly, and it should become part of the broader discussion over how the United States evaluates the long-run consequences of post-crisis financial regulation.

Footnotes

1 Ilya Beylin, Has Dodd-Frank Improved or Impeded Swap Markets?, CLS Blue Sky Blog (Aug. 6, 2026); Ilya Beylin, Regulatory Burden or Market Reconfiguration? What Post-Dodd-Frank Swap Data Shows (forthcoming U. Pa. J. Bus. L.).

2 Professor Beylin is an Associate Professor of Law at Seton Hall University School of Law. Before entering academia, he practiced derivatives and financial-services law at Sidley Austin LLP and Sullivan & Cromwell LLP. See Ilya Beylin, Curriculum Vitae, Seton Hall University School of Law; see also Ilya Beylin, A Reassessment of the Clearing Mandate: How the Clearing Mandate Affects Swap Trading Behavior and the Consequences for Systemic Risk, 68 Rutgers U. L. Rev. 1143 (2016).

3 Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, tit. VII, 124 Stat. 1376, 1641–1802 (2010).

4 G20, Leaders’ Statement: The Pittsburgh Summit ¶ 13 (Sept. 24–25, 2009).

5 See, e.g., Dodd-Frank Act §§ 723, 727, 731, 733, 124 Stat. at 1675–82, 1696–1704, 1722–23; Commodity Exchange Act §§ 2(h), 4s, 5h, 7 U.S.C. §§ 2(h), 6s, 7b-3.

6 Clearing Requirement Determination Under Section 2(h) of the CEA, 77 Fed. Reg. 74,284 (Dec. 13, 2012).

7 Commodity Exchange Act § 5h, 7 U.S.C. § 7b-3; see also 17 C.F.R. pt. 37.

8 Yee Cheng Loon & Zhaodong Zhong, The Impact of Central Clearing on Counterparty Risk, Liquidity, and Trading: Evidence from the Credit Default Swap Market, 112 J. Fin. Econ. 91, 91–115 (2014).

9 Yee Cheng Loon & Zhaodong Zhong, Does Dodd-Frank Affect OTC Transaction Costs and Liquidity? Evidence from Real-Time CDS Trade Reports, 119 J. Fin. Econ. 645, 645–72 (2016).

10 Evangelos Benos, Richard Payne & Michalis Vasios, Centralized Trading, Transparency, and Interest Rate Swap Market Liquidity: Evidence from the Implementation of the Dodd-Frank Act, 55 J. Fin. & Quantitative Analysis 159, 159–92 (2020).

11 Evangelos Benos, Richard Payne & Michalis Vasios, Centralized Trading, Transparency and Interest Rate Swap Market Liquidity: Evidence from the Implementation of the Dodd-Frank Act, Bank of England Working Paper No. 580 (2016).

12 Gregor Helmut Schoenemann, The Man in the Middle: Liquidity Provision Under Central Clearing in the Credit Default Swap Market: A Regression Discontinuity Approach, 42 J. Futures Mkts. 446, 446–71 (2022).

13 Wenxin Du, Salil Gadgil, Michael B. Gordy & Clara Vega, Counterparty Risk and Counterparty Choice in the Credit Default Swap Market, 70 Mgmt. Sci. 3381 (2024).

14 Pierre Collin-Dufresne, Benjamin Junge & Anders B. Trolle, Market Structure and Transaction Costs of Index CDSs, 75 J. Fin. 2719, 2719–63 (2020).

15 See Determination of Foreign Exchange Swaps and Foreign Exchange Forwards Under the Commodity Exchange Act, 77 Fed. Reg. 69,694 (Nov. 20, 2012).

16 Beylin, supra note 1.

17 Bank for International Settlements, OTC Derivatives Statistics at End-June 2025 (Dec. 8, 2025).

18 Beylin, supra note 1; see also Ilya Beylin, A Reassessment of the Clearing Mandate: How the Clearing Mandate Affects Swap Trading Behavior and the Consequences for Systemic Risk, 68 Rutgers U. L. Rev. 1143 (2016).

19 Michael J. Fleming & Frank M. Keane, The Netting Efficiencies of Marketwide Central Clearing, Fed. Rsrv. Bank of N.Y. Staff Rep. No. 964 (2021).

20 Beylin, supra note 1.

21 See Loon & Zhong, supra note 9; Benos, Payne & Vasios, supra notes 10–11.

22 Commodity Exchange Act § 2(h)(7)(C)(ii), 7 U.S.C. § 2(h)(7)(C)(ii); End-User Exception to the Clearing Requirement for Swaps, 77 Fed. Reg. 42,560, 42,572–73 (July 19, 2012).

23 Beylin, supra note 1.

24 Id.

25 See Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants, 81 Fed. Reg. 636 (Jan. 6, 2016); Margin and Capital Requirements for Covered Swap Entities, 80 Fed. Reg. 74,840 (Nov. 30, 2015).

26 See Loon & Zhong, supra notes 8–9.

27 Benos, Payne & Vasios, supra notes 10–11.

28 Schoenemann, supra note 12.

29 Du et al., supra note 13.

30 Collin-Dufresne et al., supra note 14.

31 Bd. of Governors of the Fed. Rsrv. Sys., Review of the Federal Reserve’s Supervision and Regulation of Silicon Valley Bank 1–4, 24–28 (Apr. 2023).

32 See Fed. Rsrv. Bank of N.Y., Over-the-Counter Derivatives (discussing counterparty exposure, transparency, and operational weaknesses revealed by the financial crisis); Dodd-Frank Act tit. VII, 124 Stat. at 1641–1802.