Foreign exchange was not the only market that spent most of 2009 operating under the dark cloud of threatened legislation but it was probably the only one that really had no idea why it was being targeted.
| "The proposal would have an adverse effect on the functioning of the options market and highly restrictive US regulation will tend to drive some FX business to offshore locations" Isda |
As a December 2009 International Swaps and Derivatives Association briefing, Impact of Treasury’s OTC derivatives legislation on the foreign exchange market, pointed out: "Since its development more than 2,000 years ago in the earliest trading centres, the foreign exchange market has become perhaps the largest and most liquid financial market in the world." Isda added: "For much of this period, foreign exchange trading has been an integral part of the business activities of regulated commercial banks. As economic activity has become increasingly global in nature, the importance of the deep and liquid over-the-counter FX market has continued to grow. Notably, the FX market has withstood many market disruptions throughout its long history, from the rise and fall of governments to the more contemporary currency crises in the 1990s and the financial crisis of last year."