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Release Date: 11/12/1998 Release Number:
99-6 Contact Name:Gloria Della Phone Number:202. 219.8921 |
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The U. S. Department of Labor today granted a
class exemption for purchases and sales of foreign currencies between employee
benefit plans and banks or broker-dealers. |
Under Prohibited Transaction Exemption (PTE)
98-54, plans may engage in certain foreign exchange transactions which are
normally prohibited under the Employee Retirement Income Security Act (ERISA).
ERISA prohibits foreign exchange transactions by plans because of their prior
relationships with banks and broker-dealers. |
The final exemption allows plans to engage in
certain foreign exchange transactions based on standing instructions from an
independent fiduciary of the plan. Standing instructions authorize banks and
broker-dealers to exchange currencies of different nations upon the occurrence
of certain stated events which have been specified in instructions from a
plans fiduciary. |
Among the prospective conditions which must be met
in order to obtain exemptive relief under PTE 98-54 are the requirements that
banks and broker-dealers:
have no discretionary control over investment of plan assets
involved in the foreign exchange transaction nor render advice to the plan
regarding those assets;
maintain written policies and procedures specifying when and how
foreign exchange transactions will be executed;
limit each transaction to no more than $300,000;
execute the transaction within specified time frames; and
provide written confirmations of the transactions to the
independent plan fiduciary. |
The final exemption, scheduled to be published in
the Nov. 13 Federal Register, provides relief for foreign exchange transactions
engaged in under standing instructions between June 18, 1991 and Jan. 12, 1999
under a modified set of conditions. |
U.S. Department of
Labor news releases are accessible on the Internet. The information in this
news release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing your
request. Call 202.693.7773 or TTY 202.693.7775. |
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