European lender bars customer from hedging with US banks

Contract indicates fear that hedges with a US person could drag non-US lender into Dodd-Frank's swap dealer regime.

US markets

One European bank has barred a borrower from hedging its loan with a US bank, apparently over fears that the hedge could drag the lender into the Dodd-Frank Act's swap dealer regime in the event of the borrower defaulting. It is not clear how common the practice is, but the loan terms – seen by Risk – provide new evidence of the extent to which swap regulation is dividing the market into US and non-US segments.

"It's the first time we've seen this. We're assuming the lending bank is trying to

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