FX swaps are exempt from new derivatives regulations in the US. Not really a surprise. This language was in an earlier version of Dodd-Frank and the geopolitical issues surrounding FX make it a very hard to thing to regulate by a single country. Not to mention the usual argument that FX functioned fine during the credit crisis.
The FX exemption is good for end users – but they’re still likely to end up posting collateral on rates and credit transactions. Yes there is an end user exemption, but dealers trading with them bilaterally will face higher capital requirements (as bilaterally trades will be seen as risky) the cost of which will be passed on to the end user client. All of that said, a lot is still in the regulators hands:
“Regulators still hold all the control and can still change things at will,” said Kevin McPartland, a derivatives market analyst at the Tabb Group.