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Banks Take New Tack to Keep Swap Trades Private

Wall Street is interpreting a footnote in July CFTC guidance to mean that swap trades booked by a foreign affiliate of a U.S.-based bank can escape many CFTC rules.

By Robert Schmidt and Silla Brush, Bloomberg | Updated on October 23, 2013

Wall Street, trying to preserve profits from swap trading in the face of tougher scrutiny from Washington, has found a new way to keep some of its overseas deals private. It’s called Footnote 513.

Banking lawyers have seized on the wording of the footnote, contained in an 84-page policy statement issued in July by the main U.S. regulator of derivatives. The largest banks told swap brokers in late September that the language means certain swaps still don’t fall under the agency’s new trading rules, according to three people briefed on the discussions.

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