Asian Banks Could Cut US Ties as Dodd-Frank Derivatives Rules Approach

Asian banks are reviewing relationships with their U.S. counterparts to avoid being caught by tough new American rules on derivatives trading that are about to come into force.

From the start of next year, non-U.S. banks that annually deal in at least $8 billion worth of products such as interest rate swaps with American counterparties are expected to be subject to new derivatives rules in the Dodd-Frank Act.

In practice that means they will need to register as swap dealers with U.S. regulators and abide by their rules on capital requirements and risk management, all of which adds to costs.

“If I have the choice, I just don’t want to deal with a ‘U.S person’,” said a treasury manager at a regional Asian bank.

“We’re still looking at our compliance situation, but it may mean that in future I need to ask all my U.S. counterparties if there’s a way they can change where they book their trades with us”.

A “U.S. person” as defined by the regulation is a relatively broad term, intended by regulators to apply to any person or entity that will have an effect on American commerce.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza