Section 716: The do-nothing approach

Dodd-Frank’s swaps push-out rule takes effect for non-US banks in July 2013, but many are said to be doing nothing to prepare – a gamble that the requirement will be repealed before it can force them to restructure their business. Peter Madigan reports

The ostrich has long been defamed by the rumour that it sticks its head in the sand when confronted with danger. A nonsensical myth – if only from an evolutionary standpoint – it is nevertheless the tactic that derivatives dealers are said to be adopting in the run-up to the implementation of section 716 of the Dodd-Frank Act.

The rule – known colloquially as the swaps push-out or the Lincoln amendment, after former Arkansas senator Blanche Lincoln, who introduced the measure – forces banks