Treasury Exempts FX Swaps from Dodd-Frank

Department says FX swaps and forwards are already highly transparent.

The U.S. Treasury Department exempted foreign-exchange swaps and forwards from Dodd-Frank Act regulations intended to reduce risk and increase transparency in the derivatives market.

Foreign-exchange swaps and forwards are short-term transactions that already have high-levels of transparency and risk management, the department said in a statement late Friday announcing the exemption. Deutsche Bank AG, Bank of New York Mellon Corp., UBS AG and other banks urged Treasury Secretary Timothy F. Geithner to exempt the market. The exemption had been resisted by some regulators, Democratic lawmakers and advocates of tighter rules.

‘Unjustified’ Loophole

The council includes the CME Group Inc., the Chicago-based owner of the world’s largest futures exchange; Intercontinental Exchange Inc., the Atlanta-based futures market operator; and Decatur, Illinois-based Archer-Daniels-Midland Corp., the largest U.S. grain processor.

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