WASHINGTON (AP) — Companies that trade derivatives solely to guard against volatile price swings won’t have to meet new federal collateral requirements.
The Commodity Futures Trading Commission advanced the exemption Tuesday as part of new regulations for derivatives, investments whose value depends on the future price of some other investment.
The rules, which were included in last year’s financial regulatory law, require banks and businesses that trade derivatives to put up millions of dollars to cover their losses. The aim is to cut down on the kind of risky trades that contributed to the 2008 financial crisis.
But airlines, oil companies and farmers are among hundreds of businesses that won’t be required to do so, if they use derivatives to control unforeseeable costs, such as extreme weather that damages crops.
Copyright 2011 The Associated Press.