WASHINGTON (CN) – Banks insured by the Federal Deposit Insurance Corporation wishing to engage in retail foreign exchange trades must receive written consent from the FDIC, according to new regulations proposed to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Insured banks that already have a foreign exchange trade desk must file with the FDIC. The filing must include a description of the bank’s foreign exchange business, the manner in which it is conducted, the amount of the institution’s existing or proposed investment in foreign trades and description of the target customers for the retail foreign exchange business.
The proposed regulations expressly prohibit a bank’s traders from engaging in fraudulent conduct or from acting as counterparty to transactions that involve their own customers.
Consumer protections under the proposed rules are extensive, requiring that insured bank’s obtain signed acknowledgement from their customers that they understand the risks involved in foreign exchange trades.
Banks will have to maintain extensive records of their foreign exchange transactions including the name and address of each of their customers, ledgers of all credits, debits and charges against their accounts.