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Archived News Release--Caution:
information may be out of date.
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information may be out of date.
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