In this paper the dynamic growth during the 1980s of both exchange and over-the-counter markets in foreign currency options is outlined. The relevant regulatory structures of U.S., U.K. and Japanese law are compared, and the author argues in particular that the so-called Treasury Amendment of the U.S. Commodity Exchange Act excludes the over-the-counter currency options market from regulatory jurisdiction and that this remains the proper policy choice. Finally, the legal doctrines of impossibility and the currency of damages are explored in the currency options context from a comparative point of view.
Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.