Exchanges urge US to keep forex swaps and forwards under Dodd-Frank
The World Federation of Exchanges has urged US Treasury secretary Tim Geithner to keep forex derivatives under Dodd-Frank to block banks from using the exception for interest rate derivatives transactions. But a senior Westpac banker and rival trade associations disagree.
Foreign exchange swaps and forwards should also be mandated for central counterparty (CCP) clearing as with any other swaps defined under the US Commodity Exchange Act, as exempting the $53.12 trillion forex derivatives market would create a regulatory loophole that could be exploited by users of interest rate derivatives wanting to skirt central clearing, according to the World Federation of Exchanges (WFE).
In a letter sent to US Treasury secretary Tim Geithner on November 29, the WFE stated
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