When the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law in July 2010, many corporate treasurers were satisfied that they had obtained an exemption from its derivatives provisions. Now, three years later, they have begun to reconcile with a different reality. They are engaging legal resources in evaluating their regulatory status, re-documenting their transactions, and working in new ways with their boards of directors. As they take these steps, treasurers are becoming increasingly aware that they are just beginning a journey that could extend for years.

Cross-border, margin, and Basel III regulations are not yet complete, which is creating uncertainty about their true regulatory impact. Additionally, it is becoming clear that navigating new regulations is not merely a compliance exercise. Corporate treasurers need to re-evaluate how regulations will impact their risk management strategies, operational processes, and systems. Rather than being outside of Dodd-Frank's reach, corporate treasurers are finding themselves in the splash zone of the act's enormous market changes.

Looming large among these uncertainties is cross-border regulation of swaps trading. Because of the global nature of the swaps market, end users in the United States regularly transact with European, Canadian, Asian, and Australian entities, just to name a few, and U.S. banks serve customers domiciled in every business center around the world. So far, neither Europe nor the United States has adopted final regulations governing the application of its rules to cross-border transactions. Early indications are creating concern about the potential for confusing, conflicting, and duplicative regulation.*