Years into the Dodd-Frank revolution, the sansculottes are finally being heard. On March 11 central clearing became mandatory for major bank dealers and most other active U.S. users of swaps, complex derivatives through which counterparties exchange cash flows based on movements in an underlying asset. The occasion arrived amid a much-publicized shift toward “futurization” of the swaps market, with several exchanges now offering hybrid swap futures contracts as a cheaper alternative to cleared swaps.

“It’s the natural order of things for some realignment to take place,” said Commodity Futures Trading Commission chairman Gary Gensler at a January public roundtable he hosted to herald these developments. Gensler called for more input from the end users of swaps, especially nonfinancial companies, whose business hedging needs these derivatives were originally designed to serve.

Those users replied with vigor. They are not, on the whole, happy. At stake is the question of whether swaps will remain a market with some real-world economic utility or evolve into a purely financial one for speculators and trading firms. “The reason the swaps market has become so big is precisely because of its ability to be customized,” says Tom Deas, treasurer of FMC Corp., a Philadelphia-based chemicals producer that uses over-the-counter swaps to hedge its natural-gas exposure. The regulators “have taken what had been a balanced situation, and they’ve exacerbated it and made it unbalanced.”

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