The US Commodity Futures Trading Commission (CFTC) decided today, in a 5-0 commissioners’ vote, to propose delaying implementation of certain Dodd-Frank Act swap rules scheduled to take effect on July 16 to (at least) the end of the year. The delay will allow more time for the regulators to finalize certain rules which are still a work-in-progress, such as defining which banks, hedge funds and other firms are to be defined as swap dealers.
The delay does not apply to new Dodd-Frank rules governing retail Forex transactions, also set to take effect on July 16. Those rules, it appears, will be implemented on time as expected. The main effect of the Dodd-Frank rules on retail Forex is the elimination from the US retail market of foreign licensed banks, which until now (or July 16, more precisely) have been allowed to take US retail clients without being licensed by the CFTC and NFA. From a practical perspective, this should not have a major effect on the US market landscape, as the only firms theoretically affected by this rule – i.e. foreign Forex firms which are organized as licensed banks – are Denmark-based Saxo Bank and the Swiss-based Forex firms such as MIG Bank and Swissquote (note that all three of these firms are also members of LeapRate’s Approved List of Forex firms). Saxo Bank does little (if any) direct business with US clients, preferring instead to indirectly do US business via White Label clients such as CitiFX Pro and more recently TD Ameritrade and Microsoft / MSN. The Swiss-based firms have done some US business, however we believe these amounts are small and relatively immaterial to their own operations, not to mention immaterial to the overall US market.
To see the CFTC’s fact sheet on the delay proposal see: