OCC Proposed Rule: Retail Foreign Exchange Transactions

The Office of the Comptroller of the Currency (OCC) issued a proposed rulemaking to amend its retail foreign exchange rule for transactions with collective investment funds (CIFs) and insurance company separate accounts. The OCC's retail forex rule, which was adopted in July 2011 and which governs retail forex transactions with federal depository institutions regulated by the OCC, is modeled after a CFTC rule governing retail forex transactions by CFTC registrants.

The proposed amendments reflect provisions in the joint CFTC/SEC entities rule that treat certain investment pools as retail customers if any of their investors are retail customers. The OCC is proposing to treat CIFs and insurance company separate accounts as if they were NOT retail customers under the retail forex rule because these funds are prudentially regulated, have prudentially regulated sponsors (namely, federal depository institutions or insurance companies), and do not cater to retail investors. The OCC believes this action will mitigate disruption to federal depository institutions’ forex business with CIFs and separate accounts. In addition, the proposed rule offers guidance regarding how a regulated entity can determine whether a given counterparty or foreign fund is a retail customer and whether a foreign fund is a retail customer.

Federal Register Notice of Proposed Rulemaking - Retail Foreign Exchange Transactions.See also: OCC Proposed Rule Amendments to Retail Forex Rule; OCC Retail Forex Rule (2011); CFTC/SEC Entities Rule.

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