US Official Says Treasury ‘Very Close’ To Decision On FX Swaps, Forwards

By Jessica Holzer and Jamila Trindle, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- A senior U.S. Treasury official said the Treasury is “very close” to deciding whether to exempt foreign exchange swaps and forwards from a raft of new rules for the over-the-counter derivatives market.

Asked about the decision at a U.S. Senate hearing Tuesday, Assistant Treasury Secretary Mary J. Miller said she regretted that she didn’t have a decision to announce yet.

Last year’s Dodd-Frank law aimed to push over-the-counter derivatives transactions onto trading platforms and route them through clearinghouses, which guarantee trades. Today, swaps are mostly customized transactions between two counterparties conducted off exchanges and away from regulatory scrutiny. The law gives the Treasury secretary authority to exempt all foreign exchange swaps and forwards from the new regulations.

Sen. Richard Shelby of Alabama, the Senate Banking Panel’s top Republican, pressed Miller about whether there is a need for more regulation of such foreign exchange transactions. “Are you aware of any failures in that area that would justify further regulation?” he asked.

“I think there were many parts of that market that were under severe financial stress during the financial crisis and some parts of it will be subject to Dodd- Frank regulation,” Miller said.

-By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@ dowjones.com

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