Treasury Aims Derivatives Rule Exemption for Foreign-Exchange Swaps and Forwards

The U.S. Treasury Department, Washington DC

As reported by The Wall Street Journal’s Victoria McGrane and Andrew Ackerman, the Treasury Department proposed excluding certain foreign-exchange instruments from new rules governing derivatives, a decision hailed by business organizations but criticized by some advocacy groups as creating a regulatory loophole.

Treasury officials said Friday that the instruments, known as foreign-exchange swaps and forwards, shouldn’t fall under the same rules as other derivatives. Doing so, they said, could expose the market to greater risk and instability.

The Treasury’s proposal to exempt the products “goes far in ensuring these markets will remain vital tools for business,” Tim Ryan, president and CEO of the Securities Industry and Financial Markets Association.

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