As regulators tighten rules on the U.S. swaps market, large American banks are maneuvering to take some of the business overseas, the Wall Street Journal reported today. Banks including Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are changing the terms of some swap agreements made by their offshore units so they don't get caught by U.S. regulations. The changes have generally focused on new trades between the London affiliates of U.S. banks, or between those units and non-U.S. banks, which combined constitute a large portion of swaps trading. The shift means the U.S. parent bank is no longer the guarantor of some swaps issued by its foreign affiliate. Instead, any liability for such swaps lies solely with the offshore operation.
