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Forex swaps, forwards win U.S. Dodd-Frank exemption

Nov 19 2012 Sarah N. Lynch, Reuters

Banks and other large market players that use certain derivatives to protect against currency fluctuations will be spared from the most costly new rules required by the 2010 Dodd-Frank Act, the U.S. Treasury Department said late Friday. Foreign exchange swaps and forwards, common types of contracts found in the $640 trillion over-the-counter marketplace, will not be forced onto regulated trading platforms or clearinghouses, which stand between parties to guarantee trades. They still will face some Dodd-Frank rules, such as data reporting and business conduct standards. The Treasury's decision will be a welcome announcement for large banks, which heavily lobbied for an exemption. The Treasury justified its decision by noting that the market is "markedly different" and already has an infrastructure in place to reduce risks. Although Treasury in April 2011 had signaled its support for such an exemption, its delay in releasing a final decision had left banks anxious because a key

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