Major overseas banks may be made exempt from strict new US laws relating to derivatives, sources have indicated.
In the near future, regulators are planning to implement legal changes with the intention of cutting the risk associated with derivatives in order to reduce the likelihood of any repeat of the recent monetary crisis.
For instance, financiers will have to abide by more stringent business conduct standards and higher capital reserve requirements moving forward as the Commodity Futures Trading Commission (CFTC) seeks to overhaul the current system.
However, according to insiders with knowledge on the matter, the CFTC is now considering granting a temporary reprieve on these laws for large foreign banks and overseas subsidiaries of US lenders.
Speaking to the Financial Times, the sources indicated that such companies could be handed a pardon from these requirements if their own countries implement strong regulations.
This comes after the Federal Reserve announced that US banks are to be given until 2014 to fully comply with the incoming Volcker Rule.
By Asim Shah