There never was much doubt that the regulatory reform legislation being considered in the wake of the recent financial meltdown would change the way in which the over-the-counter (OTC) derivatives business is conducted going forward. From the outset, the Obama Administration proposed regulatory changes that would dramatically alter the way current market participants do business, making the registration and regulation of swap dealers -- and “major swap participants”-- as well as central clearing of “standardized” swaps keystones of its reform proposals. In recent days, however, the Congressional effort to reform OTC derivatives has taken a decidedly new turn from ushering in a new regulatory structure toward also rewriting the rules governing existing transactions. If Congress continues down this path, it could cause major, unintended upheaval in the OTC derivatives market, undermining the U.S. economy’s nascent recovery and increasing rather than curtailing risks for U.S. businesses. This Legal Alert addresses two areas where retroactive application of the proposed rules for OTC derivatives may have significant adverse consequences for end-users with existing trades.