U.S. regulators approved a set of rules Tuesday that is expected to kick in motion much of the reform designed to bring greater oversight to derivatives markets in the wake of the financial crisis.

The US Commodity Futures Trading Commission (CFTC) voted to approve a final rule establishing definitions for certain derivative products, which ultimately determines what falls under CFTC oversight, and what will be overseen by the US Securities and Exchange Commission (SEC), and facilitates other aspects of US regulatory reform.

The SEC said that it had approved its own rules in this area, too. The SEC says that the rules and interpretations, which were written jointly with the CFTC, implement provisions of the post-crisis regulatory reform in the United States, known as the Dodd-Frank Act, that establishes a comprehensive framework for regulating over-the-counter derivatives. Once both agencies adopt the final rules, they will become effective in 60 days.

“Approving the product rules and interpretations is another foundational step in the establishment of a new regulatory regime for derivatives,” said SEC chairman, Mary Schapiro.

Following today’s meeting at the CFTC, Tim Ryan, president and CEO of the US trade group, the Securities Industry and Financial Markets Association (SIFMA), noted that all of the derivatives-related rules being issued by the CFTC and the SEC are fundamentally dependent on these definitions.

“Now, with product definitions finalized, although still subject to interpretation, a number of major CFTC rules will go into effect, including swap dealer and major swap participant registration, external business conduct requirements, transaction reporting requirements, and position limits, to name a few. These definitions will have a broad affect on the marketplace by triggering many other rules and we will work with our members to ensure these definitions and the implementation deadlines they trigger are workable and that the market can continue to serve as a key source of risk management tools,” he said.

Ahead of today’s vote at the CFTC, in a research note, BMO Capital Markets indicated that the ultimate impact from all of this new regulation is unknown. But, broadly, it’s expected to impose added costs on institutions that operate in these markets, and effectively take funds out of the US financial system.

“Granted this cash will be taken from productive uses and put towards safe haven uses to reportedly protect the financial system. This is the tradeoff: mitigating risk with money that could be used to generate growth,” it notes.

“In a healthy economy, Dodd-Frank wouldn’t pose as big of a threat to growth. In an economy that’s growing 1.5-2.0%, the risk is magnified. After today’s vote, the clock also starts ticking on whether this massive new regulatory structure creates a drag significant enough to pull the US economy into a recession,” it says.