FRB Final Rule: Retail Foreign Exchange Transactions (Regulation NN) (Pre-Fed. Reg. Version)

The Board of Governors of the Federal Reserve ("FRB") is adopting a final rule to permit banking organizations under its supervision to engage in off-exchange transactions in foreign currency with retail customers. The rule establishes requirements for risk disclosures to customers, recordkeeping, business conduct, and documentation for retail foreign exchange transactions. Regulated institutions engaging in such transactions will be required to notify the Federal Reserve and to be well capitalized, and will be required to collect margin for retail foreign exchange transactions.

The following types of foreign exchange transactions are covered by the rule:

• futures or options on futures,
• over-the-counter options on foreign currency, and
• "rolling spot transactions."

The rule covers entities regulated by the Federal Reserve including state-chartered banks that are members of the Federal Reserve System, bank and savings and loan holding companies, Edge Act and agreement corporations, and uninsured, state-licensed branches and agencies of foreign banks.

Effective Date: May 13, 2013.