Treasury monitoring swaps loopholes at U.S. banks: WSJ


(Reuters) – The U.S. Treasury Department is monitoring banks that are shifting some of their trading operations overseas to avoid tough swaps rules in the country, the Wall Street Journal reported, citing a source from the department.

Swaps are contracts in which two parties agree to exchange payments based on fluctuations in interest rates or other benchmarks. If firms in separate countries have comparative advantages on interest rates, then a swap could benefit both firms.

The Treasury is keeping an eye on the practices to determine if they pose any risks to parent companies in the United States, the report said. (

Banks like Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz), Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz), JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) have revoked their policy of guaranteeing some swaps issued by foreign affiliates, primarily in London, eliminating ties to their U.S. parent, the report said.

Representatives of the Treasury were not immediately available to a mail seeking comments outside regular U.S. business hours.

(Reporting by Arnab Sen in Bangalore; Editing by Gopakumar Warrier)



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