Asian banks review US ties, August 21, 2012
Cost will rise when tough new rules on derivatives come into force
SINGAPORE: Asian banks are reviewing relationships with their US counterparts to avoid being caught by tough new American rules on derivatives trading that are about to come into force.
From the start of next year, non-US banks that annually deal in at least US$8bil worth of products such as interest rate swaps with American counterparties are expected to be subject to new derivatives rules in the Dodd-Frank Act.
In practice that means they will need to register as swap dealers with US regulators and abide by their rules on capital requirements and risk management, all of which adds to costs.
“If I have the choice, I just don’t want to deal with a US person’,” said a treasury manager at a regional Asian bank.