‘OTC’, ‘Financial’ Innovation, and Food Commodity Speculation

Abstract

This chapter takes issue with the popular presentation of the OTC market as a ‘regulatory vacuum’. The analysis demonstrates that the OTC market did not emerge spontaneously in response to the risk management needs of commercial actors, nor was it created through financial ‘deregulation’. Governments in the UK and the US were influential in the construction of the market and in the creation of a new private law centred approach to the regulation of finance in the years leading up to the global financial crisis and the global food crisis. Subsequent parts of the chapter challenge the dominant characterization of the products traded within this market as being the result of ‘financial’ innovation. Highlighting some of the significant developments in contract law that have furnished market actors with the capacity to develop new derivative contracts, the chapter ultimately demonstrates that contract law has played an active role in the emergence of a new market logic oriented towards financial accumulation.