Furthermore, I don’t believe that smaller and regional institutions are risk-free per se; instead, every individual credit institution requires robust regulation for the benefit of all. What this means is that even small market players cannot expect a regulatory free pass – they, too, are not exempt from regulation.
As I have noted previously, the fact that the OTC markets function quite effectively without the benefits of the Commodity Exchange Act provides a strong argument for development of a less burdensome regime for exchange-traded financial derivatives. Of course, notional values are not meaningful measures of the risks associated with derivatives.