Regulatory reform through Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") and Basel III is about transparency, making the derivatives world less opaque, and more standardization. While the end goal of the derivatives provisions is less risk and greater stability in the market, these new standards come at a potentially considerable cost for all derivatives users—not just dealers and financial services companies.

Corporate End Users will pay more for over-the-counter ("OTC") derivatives as banks pass along the increased cost of their own compliance to customers. Beyond the actual costs of the derivatives themselves, corporates will also incur the costs to comply with certain elements of the new trading regulations—including the increased recordkeeping and reporting requirements.

The majority of non-financial services companies using OTC derivatives to hedge and mitigate commercial risks are likely to be defined by the Act as End Users. End Users may be able to bypass some complexities of the Act by applying for exemptions, notably from trading on an exchange and using a clearinghouse so they can continue to trade OTC derivatives. Still, they'll be impacted by increased costs and margin requirements, and they'll have to meet the recordkeeping, reporting and business conduct rules applicable to all users, plus annually file their End User election with the regulators.