Archived News Release Caution: Information may be out of date.
U.S. DEPARTMENT OF
LABOR
EBSA Press Release: Labor Department Proposes
Class Exemption For Plan Foreign Exchange Transactions
[02/04/1997]
For more information call: (202) 219-8921
The U. S. Labor Department today proposed broadening a class exemption for purchases and sales of foreign currencies between employee benefit plans and banks or broker-dealers.
Unless the department grants an exemption under the Employee Retirement Income Security Act (ERISA), many banks and broker-dealers are prohibited from engaging in foreign exchange transactions with plans because of their prior relationships as service providers to such plans.
The proposal would create a new class exemption to allow plans to engage in certain foreign exchange transactions. Specifically, it would permit transactions executed based on standing instructions from an independent plan investment manager. Standing instructions are blanket authorizations giving permission to exchange currencies of different nations upon the occurrence of certain stated events which have been specified in instructions from a plan's fiduciary.
In 1994, the department granted Prohibited Transaction Exemption (PTE) 94-20, allowing foreign exchange transactions where the sale or purchase of currency is directed by a fiduciary independent of the bank or broker-dealer. The exemption was originally requested by the American Bankers Association in 1984.
PTE 94-20 did not, however, address transactions executed in accordance with standing instructions. If granted, the exemption would be retroactively effective to June 18, 1991 for certain transactions.
The proposed exemption is scheduled to be published in the Feb. 3, Federal Register.
Archived News Release Caution: Information may be out of date.