Fatca fears reach swaps market
US tax rules could leave compliant foreign firms out of pocket unless swap documentation is amended
Swap counterparties could be caught in the crossfire of controversial new US tax rules – possibly facing a nasty hit – when they come into force next year, lawyers say. A possible answer is to amend swap documentation, but only a fraction of derivatives users have so far made the change, raising fears of market disruption when the rules take effect.
The problem arises from the introduction of the US Foreign Account Tax Compliance Act (Fatca) from July 2014, which will require foreign financial
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