Treasury Issues Notice of Proposed Determination on FX Swaps and Forwards
US Dept. of Treasury Dodd Frank Rulemaking
April 29, 2011
The Treasury Department on April 29 issued a "notice of proposed determination" exempting foreign exchange swaps and forwards from the central clearing and exchange trading requirements of the Dodd-Frank Act. "The FX swaps and forwards market is markedly different from other derivatives markets," Treasury stated in a fact sheet published on its website.
Treasury noted, however, that even if the products are exempted from the clearing and trading requirements, they will remain subject to Dodd-Frank's new trade reporting requirements and business conduct standards. Additionally, the Dodd-Frank Act makes it illegal to use these instruments to evade other derivatives reforms, Treasury stated. In addition, Treasury explained that the proposed determination would not extend to other FX derivatives such as FX options, currency swaps and non-deliverable forwards. Those products will be subject to the clearing and exchange requirements now being developed by the CFTC.
Cross References
Dodd-Frank Act, Title VII, Sec. 722