Which of the following is true of the Dodd-Frank Act with regard to derivatives?
A) The Dodd-Frank statute will standardize derivatives traded on exchanges to decrease transparency.
B) Derivatives must be routed through a subsidiary to ensure that companies using them post collateral.
C) Banks can continue to trade derivatives in-house based on interest rates and foreign exchanges, and for purposes of hedging risk.
D) Banks will have to spin off their riskier derivatives and trade them through a clearing house.

Question

Quizplus · Accepted Answer

The Dodd-Frank Act allows banks to continue trading derivatives in-house for interest rates and foreign exchanges, and for hedging purposes, but requires riskier derivatives to be traded through clearinghouses to reduce systemic risk.

Which of the Following Is True of the Dodd-Frank Act