Jeff Horwich: This morning, federal regulators are expected to do something incredibly important: define the word ‘swap.’ That seemingly simple act should set in motion a series of new regulations.

From Washington, here’s Marketplace’s David Gura.

David Gura: The global derivatives market is huge, like $650 trillion huge, and swaps are a big part of the market. Companies deal in, say, interest rates.

John Jay: I am handing over a fixed rate.  You are giving me a floating rate.

That’s John Jay. He is with the Aite Group. 

Jay: There is an exchange of risks.

And for a long time that kind of exchange — swaps — went unchecked. Jim Angel teaches finance at Georgetown.

Jim Angel: One of the things we discovered in the financial meltdown was that nobody was watching the derivatives business.

Two parties could cut a deal without much oversight. Dodd-Frank set out to change that. Soon there will be dozens of new rules, but first, regulators have to take care of the basics. They have to define what they’re regulating.

Karen Petrou is with Federal Financial Analytics, and she says right now, the derivatives market is like a bazaar. It’s chaotic, you don’t know what you’re getting.

Karen Petrou: And we’re turning that into a grocery store, with labels, cans, prices, and cash registers.

That process has not been easy. Mark Young chairs the derivatives practice at the law firm Skadden, Arps.

Mark Young: It is a new frontier, and as a result there will be a host of unintended consequences that, as we sit here this morning, neither of us can predict.

In Washington, I’m David Gura, for Marketplace.