TraderTools foreign exchange blog

The FSFDF mystery part II

By Aharon Haber, VP, Strategic Services, TraderTools
October 28 , 2012

The Forex Swaps Forwards Dodd-Frank mystery remains as foggy as ever since this post. However, this post quotes a “banking industry source” saying the Treasury will resume its push to exempt fx forwards and swaps after the November 6 election. A “banking industry source” (the same one?) said it expected action by the end of the year consistent with their proposal of last year. The post further says:


The Treasury proposal does not exempt foreign exchange swaps and forward contracts from trade reporting and external business conduct rules in the Dodd-Frank Act.


In case you were wondering what that might mean (I was), here is the quote from the proposal that should clear things up a little:


Even if the Secretary determines that foreign exchange swaps and forwards should not be regulated as ―swaps under the CEA, that determination would not affect the application of other provisions of the CEA that will prevent evasion by market participants and improve market transparency … all foreign exchange transactions would remain subject to the CFTC‘s new trade-reporting requirements, enhanced anti-evasion authority, and strengthened business-conduct standards. Notably, the creation of a global foreign exchange trade repository, plans for which are already underway, will dramatically expand reporting to regulators and the market more broadly.


In other words forwards and swaps would be exempt from being traded on SEFs but would need to comply with reporting rules and “business conduct standards.”


If this post is correct I expect we will see movement from the Treasury beginning immediately after the election as time is running out – again. We will keep you posted.

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