Dodd Frank exempts inter-affiliate swaps
A new bill impacting inter-affiliate swaps has been passed under the Dodd Frank Act.
Financial derivatives that move risk around will be able to be traded more easily between companies under the same corporate ownership.
Under the new bill these risk swaps would have to be reported, but margin, capital requirements, and real-time reporting requirements, would not have to be followed.
Randy Beckie, managing director of Frontrunner Captive Management LLC, argued it is highly likely this was intended to apply to captives.
“I wouldn’t be surprised if it was specifically announced that this applies, as the legislators know it is a big question of whether Dodd Frank applies to captives.”
A second bill passed was the Business Risk Mitigation and Price Stabilization Act. It will exempt companies that use derivatives to hedge risk from some of the new derivatives requirements under Dodd-Frank.
Businesses that qualify for exemption under the new bill would not have to post margin in order to make trades.