Things Fall Apart: Regulating The Credit Default Swaps Commons
Seton Hall University School of Law
March 16, 2010
University of Colorado Law Review, Vol. 82, p. 101, 2011
Seton Hall Public Law Research Paper No. 2010-23
Financial markets are an important national and international infrastructure resource that reflect attributes similar to the those that characterize commons, as described in property law literature. Through a case study examining the credit default swap market, this Article illustrates the analogy between financial markets and a traditional commons. After exploring the attributes of a commons, this Article examines the costs and benefits of the credit default swap market. Similar to a traditional commons, tragedy in financial markets occurs when market participants capture benefits while imposing the costs or negative externalities from their activities on other members of society. Commons scholars’ empirical research suggests three traditional approaches to tragedy in a commons - deregulation, privatization, and regulation by a central, external authority.
Number of Pages in PDF File: 92
Keywords: financial markets, regulation, derivatives, Dodd-Frank, SRO, stock exchanges, clearing houses, commons
Date posted: March 24, 2010 ; Last revised: November 20, 2010
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