As required by a Dodd-Frank Act amendment to the Commodity Exchange Act to enable state member banks, bank holding companies, savings and loan holding companies, Edge Act and agreement corporations and uninsured, state-licensed branches and agencies of foreign banks (“Banks”) to continue to engage in certain off-exchange transactions in foreign currency with retail customers, the FRB issued a final rule (the “Final Rule”) authorizing Banks to continue to engage in such activities. The Final Rule covers foreign exchange transactions that are futures or options on futures, over-the-counter options on foreign currency, so called “rolling spot” transactions and certain other types of transactions. The Final Rule, among other things, sets requirements for risk disclosures to customers, recordkeeping, business conduct, and documentation for retail foreign exchange transactions. The Final Rule is substantially the same as a proposed version of the Final Rule that was discussed in the August 2, 2011 Financial Services Alert.
The Final Rule becomes effective on May 13, 2013.