[President Obama's new budget by which taxpayers will help pay for policing derivatives.]

That's not been the message from advocates of Dodd-Frank, who argue that the increased transparency generated by the new regulations--by moving trades to exchanges and creating information repositories--will make the market more efficient and minimize counterparty risk. Both, they say, should help to drive trading costs down.

But Daniels and some other industry veterans aren't convinced.

"Although there is all this talk about transparency, it will do little to change things for regular corporate end-users of the OTC derivatives markets," says veteran banker Joyce Frost, who served as head of marketing for Chase Manhattan Bank's credit derivatives business in the mid-1990s and later in similar capacities for a number of other banks. Today she is a partner with Riverside Risk Advisors LLC, a boutique derivatives consultancy headquartered in New York City.