More specifically, in the three decades leading up to the crisis, a huge market in over-the-counter derivative contracts (i.e., those not traded on regulated exchanges) developed. In December 2000, Congress clarified that as long as these over the counter contracts (OTC) were between “sophisticated parties,” they did not have to be regulated as futures or securities—effectively shielding OTC derivatives from virtually all oversight.18 Over the next seven years, the OTC market grew quickly. By June 2008, the notional value of these contracts was $672.6 trillion.
