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Monday, November 19, 2012

Treasury Exempts FX Swaps & Forwards

The Treasury Department issued a final determination that exempts foreign exchange swaps and foreign exchange forwards from certain Dodd-Frank Act derivatives rules, including central clearing and exchange trading requirements.

Treasury explained that its final determination is narrowly tailored. "FX swaps and forwards will remain subject to the Dodd-Frank Act’s new requirement to report trades to repositories and rigorous business conduct standards," the agency said. "Additionally, the Dodd-Frank Act makes it illegal to use these instruments to evade other derivatives reforms."

The determination "does not extend to other FX derivatives, such as FX options, currency swaps, and nondeliverable forwards," Treasury said. "These other FX derivatives will be subject to mandatory clearing and exchange-trading requirements."

ABA had asked Treasury to promptly finalize the exemption in a September letter.

Read more.
Read the final determination.

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