Economist magazine which is the bastion of free markets / efficient markets / Ayn Rand / deregulation / etc has an opinion piece out where they point out that (1) derivatives should clear through an exchange and (2) end-users should not be exempt from the clearing requirement.  Coming from them I think their arguments carry a lot of weight:

Proposed legislation to encourage the trading of more derivatives on exchanges or through central counterparties deserves support, for it would make it easier to monitor what market participants were doing. Capital requirements need to be increased, so derivatives cannot be used as an easy way for banks to get around restrictions on gearing.

The trickiest issue concerns exemptions for end-users, such as manufacturers. Allowing companies to hedge their risks is the whole point of the instrument. But if the rules favour them over financial companies, trading will tend to migrate towards them, and away from banks. AIG, once the world’s biggest insurer, thought it was making “easy money” by using its strong credit rating to sell protection against credit defaults; in fact, it was digging its own grave.

These reforms may raise the price of using derivatives, but that would not necessarily be a bad thing. When fire and theft premiums rise, those who really need insurance still pay up.

Options have a future: Economies need derivatives, but reform is justified

The Economist – Editorial