Interbank FX Clearing Revisited
By CME Group - Thu May 31 13:29:00 CDT 2012 CT
Related Keywords: FX, Market Fundamentals
Interbank FX Clearing Revisited

Why FX Should be Included in Dodd-Frank

It is now been almost two years since the Dodd-Frank financial reform legislation (the "Act") was signed into law by President Obama in July 2010. Arguably, the most central of the many objectives of the Act is to mitigate systemic risks within the over-the-counter (OTC) derivatives industry. Thus, the legislation will mandate the application of a centralized counterparty (CCP) clearing process to many OTC swaps upon its eventual implementation, widely expected in late 2012.

But not all OTC risks may be addressed with the implementation of the mandatory clearing rules. In particular, the Act empowered the U.S. Treasury Department to consider, and possibly exempt, foreign exchange (FX) swaps and forwards from the CCP clearing mandate.

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