Ensuring Uncertainty? The International Political Economy of Over-The-Counter Derivatives Trading
Over-the-counter (OTC) financial derivatives are increasingly used in a globalising financial market as tools for risk management. However, the advent of large financial crises as a result of their use raises issue as to the risks derivatives themselves might pose to the players who use them, as well as to the international financial system as a whole. It is, therefore, a key question to ask what regulation might be apt for trade in OTC derivatives. This thesis considers how a post-structuralist account might offer important insight into how this question is understood. Post-structuralist, as well as broader social constructivist and non-rationalist critiques help illustrate some of the limits to objectivist rationalism in practices of financial risk management. This thesis argues that the danger of ignoring such critiques include a continued “illusion” of individual and state-actor control over macro-economic processes, such as the phenomenal volume of trade in OTC derivatives contracts today. In this light, therefore, the regulation of OTC derivatives is not just a political question of who does and should have explicit policy control over economic and regulatory processes; but it is also a political question over knowledge constructs, and how particular technologies and specialist discourses are developed that enable “experts” legitimacy and power where it is not necessarily justified.