The Board of the NFA Approves $91m Budget for Fiscal 2017

Last week the Board of the Directors of the U.S. self-regulatory organization (SRO) for the financial industry, the National Futures Association (NFA), approved its new budget for fiscal 2017. The regulator will have $91 million to meet its obligations for the upcoming fiscal year.

NFA's operating expenses are budgeted to increase by approximately 10 percent, due in large part to an increase in NFA's staff. NFA's fiscal year runs from July 1st through to the 30th of June.

The NFA will increase spending for NFA's regulatory programs for swap dealers (SD) and major Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term participants (MSP) due to rising responsibilities for reviewing their activities. The SRO will be approving and monitoring initial margin models for uncleared swaps.

Commenting on the new budget proposal approval, the Vice President of OTC Derivatives, Jamila Piracci, said: ”On January 6th, 2016, the CFTC published its final Margin Requirements Margin Requirements A margin requirement is defined as the minimum equity sum that investors must keep in their margin account preceding a trading transaction. Margin requirements may be referred to as maintenance margin, minimum maintenance, or maintenance requirement. This is a requirement for broker trading in any asset class.In terms of equities, the New York Stock Exchange (NYSE) and Financial Industry Regulatory Authority (FINRA) have a fixed margin requirement of 25% of the sum value of the securities presen A margin requirement is defined as the minimum equity sum that investors must keep in their margin account preceding a trading transaction. Margin requirements may be referred to as maintenance margin, minimum maintenance, or maintenance requirement. This is a requirement for broker trading in any asset class.In terms of equities, the New York Stock Exchange (NYSE) and Financial Industry Regulatory Authority (FINRA) have a fixed margin requirement of 25% of the sum value of the securities presen Read this Term for the uncleared swaps of SDs and MSPs.”

“These requirements allow SDs subject to the CFTC's Margin Rules to choose between using either a standardized calculation for initial margin or an internal risk-based initial margin model that has been approved by the CFTC or NFA. Since early January, NFA staff has been developing and implementing a margin model approval and an ongoing monitoring process,” she explained.

NFA will also increase its expenses in the SRO’s Information Systems (IS) department by hiring new talent. The new employees will be dedicated to addressing the ongoing rebuilding effort of major systems that include NFA's Online Registration System.