Regulation changes relevant for the Foreign Exchange industry and the relevant technology suppliers.

1. ESSENTIAL
FX REGULATORY CHANGES
..andtheSolutionstoAddressThem

2. Agenda
Dodd-Frank
Documentation (ISDA/Credit Docs)
Trade Acknowledgements
Trade Confirmations
Trade Repository Reporting
Central Counterparty Clearing
Position Compression
Position Reval., Margin and
Collateral Management
Record Keeping
Eligibility and Disclosure (Business
Conduct Stds)
Overview of the Regulatory Changes
Implications for FX Market Participants
EMIR
Documentation (ISDA/Credit
Docs)
Trade Acknowledgements
Trade Confirmations
Trade Repository Reporting
Central Counterparty Clearing
Position Compression
Position Reval., Margin and
Collateral Management
Record Keeping
Software Solutions to Address the Regulatory Requirements

3. Overview of Regulatory Changes
Post 2008 Financial Crisis the Group of Twenty (G20) called for reform to improve practises in OTC
derivatives markets.
Identified need to strengthen international financial regulatory system.
New regulations aim to: -
bring about safer financial markets and address the risks of OTC trading across jurisdictions
enhance transparency, promote financial stability and support the detection and prevention of
market abuse
Regulators have aimed for consistency between jurisdictions <== ! ! !
Dodd Frank July 2010
EMIR (European Market Infrastructure Regulation) August 2012
Common goals
Electronic Trading platforms to ensure transparency
Reporting to Trade Repositories
Central Clearing
Risk Mitigation for non centrally cleared OTC Derivatives <== ! ! !
Margining and Collateral <== ! ! !
Reporting
Conduct of Business

4. Implications for FX Market Participants
Complicated jurisdictional overlap
US Regulatory Requirements WILL affect you
Complicated Product separation
Tier 1 banks must be able to comply to ALL of the regulatory requirements due to their
product range
Significant technology implications
new work flows
dramatic increase in data fields required
Trade
Client
Counterparty
Far reaching integration required
Deadlines to be compliant are already passed

5. Agenda Cont.
Dodd Frank
Documentation (ISDA/Credit Docs)
Trade Acknowledgements
Trade Confirmations
Trade Repository Reporting
Central Counterparty Clearing
Position Compression
Position Reval., Margin and Collateral
Management
Record Keeping
Eligibility and Disclosure (Business
Conduct Stds)
Overview of the Regulatory Changes
Implications for FX Market Participants
EMIR
Documentation (ISDA/Credit Docs)
Trade Acknowledgements
Trade Confirmations
Trade Repository Reporting
Central Counterparty Clearing
Position Compression
Position Reval., Margin and Collateral
Management
Record Keeping
Software Solutions to Address the Regulatory Requirements

6. Useful Definitions
NON EXEMPT FX SWAPS
Foreign Currency Options (including collared options)
Non- Deliverable FX Forward Contracts ('NDFs) involving foreign exchange.
EXEMPT SWAPS
FX Swaps
FX Forwards
NDF Non Deliverable Forwards
FC Financial Counterparty
(Entering into derivative transactions under EMIR identifies you as a counterparty.)
NFC Non Financial Counterparty
DCO Derivative Clearing Organisation
CCP Central Counterparty
ESMA European Securities and Markets Authority
CFTC Commodity Futures Trading Commission
UPI Unique Party Identifier
USI Unique Swap Identifier
UTI Unique Trade Identifier
LEI Legal Entity Identifier

7. Dodd Frank / EMIR – Implications
Documentation (ISDA/Credit Docs)
Trade Acknowledgements
Trade Confirmations
Trade Repository Reporting
Central Counterparty
Position Compression
Position Reval., Margin and Collateral Management
Record Keeping
Eligibility and Disclosure (Business Conduct Stds)

8. Documentation
Documentation must be more standard and participants are
required to homogenise terms
Documentation is required to be kept electronically
Documentation must be made available to Regulators on demand
The CFTC rules include detailed requirements for client relationship
documentation, including agreement on valuation methods.
US EU

9. Trade Acknowledgements / Confirmations / Trade
Repository Reporting
Trade Acknowledgement
New work flow (post trade)
Market Participants must now acknowledge trades after trades
have been executed (not by Dealers division)
Records of acknowledgements must be kept and made available to
Regulators on demand
US EU

10. Trade Acknowledgements / Confirmations / Trade
Repository Reporting
Trade Confirmations
Electronic confirmations (in trade cycle)
Unique Trade Identifiers (must be created, passed & stored)
Unique Swap Identifier (must be created, passed & stored)
Unique Product Identifier (must be stored)
Legal Entity Identifier (must be stored)
Trade Repository Reporting
All trades MUST be posted to a Trade Repository
Real time, trade by trade (Dodd Frank)
At the latest T+1 (EMIR) <== real time better
Information to be reported
Parties to the contract, type of contract, maturity, notional value, price, settlement date
All and any data must be made available to Regulators on demand
US EU

11. Central Counterparty Clearing / Trade Compression
Central Counterparty Clearing
ALL FX options and NDF trades must be cleared by a Derivatives Clearing Organisation
('DCO' e.g. CME) or a Central Clearing Counterparty ('CPP')
Either become Clearing Member or use a Clearing Broker
The DCO/CCP will determine margin calculation methodology for any positions cleared
(Bank needs to calculate for itself too)
Trade Compression
Trades must be compressed for more efficient clearing and margining
In relation to portfolios among swap dealers/participants, both must establish, maintain
and follow written policies and procedures for:
1. Terminating each fully offsetting swap in a timely fashion
2. Engage in bilateral portfolio compression when appropriate
3. Engage in multilateral portfolio compression exercises, where appropriate
US EU

12. Position Reval., Margin and Collateral Management
Products requiring margining and collateral
Cleared Swaps
FX Options and NDFs
Uncleared Swaps
FX exchange traded swaps and forwards
Margin Process
Revaluation is required to happen every day
Margin requirements established and held by the DCO/CCP
Margin must be exchanged with Corporate Users and Financial
Counterpaties
Margin is transferred above a threshold
Participants are required to reconcile their margin figures
All and any data must be made available to Regulators on demand
US EU

13. Record Keeping
Full, complete, and systematic records
Maintained from trade execution through to 5 years
after termination
Confirmations
Acknowledgements
Agreements
Changes in terms
Master and Credit Support Agreements
Electronically maintained and augmented
new requirements must be added gradually
US EU

14. Eligibility and Disclosure
(Business Conduct Stds)
Counterparty Verification of Eligibility
(eligible contract participant (“ECP”), Special Entity.)
Disclosure of Material Information
(Swap material risks and characteristics, conflicts of interest)
Scenario Analysis
provide Counterparty with term sheet

15. Agenda
Dodd Frank
Documentation (ISDA/Credit Docs)
Trade Acknowledgements
Trade Confirmations
Trade Repository Reporting
Central Counterparty Clearing
Position Compression
Position Reval., Margin and Collateral
Management
Record Keeping
Eligibility and Disclosure (Business
Conduct Stds)
Overview of the Regulatory Changes
Implications for FX Market Participants
EMIR
Documentation (ISDA/Credit Docs)
Trade Acknowledgements
Trade Confirmations
Trade Repository Reporting
Central Counterparty Clearing
Position Compression
Position Reval., Margin and Collateral
Management
Record Keeping
Software Solutions to Address the Regulatory Requirements