CFTC Approves FX SEFs - Integral and 360T

FX technology provider, Integral and German-based FX ECN 360T, have both been granted Swap Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term Facility (SEF) approval by the US financial watchdog this week.

The Commodity Futures Trading Commission (CFTC), the financial regulatory authority that implements legislation administered under the Dodd-Frank Act, regulates SEFs. The new trading venues, SEFs, will offer trade execution and clearing of 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, these include NDFs and FX Options.

Integral and 360T join a range of financial firms offering swaps, such as, BGC, ICAP and Bloomberg. Under the new rulings, which were first introduced to the US government in July 2009, certain OTC derivatives products will face mandatory clearing in a bid to increase transparency, and prevent major shortfalls in the liquid asset classes.

FX products have been facing mixed views regarding their classification as swaps. Initially all products, except Spot transactions, were to be administered under Dodd-Frank OTC derivatives clearing rules, however, the CFTC made changes which exempted FX Forwards and FX Swaps, after much lobbying by industry organizations, in November 2012.

The CFTC has approved the two firms before the October 2nd deadline, and under the current approval, firms need to show the regulator their adherence to all principles and procedures.

The CFTC stated in a notification about the temporary registration, “Integral and 360T will be required, as will all future temporarily and fully registered SEFs, to demonstrate continued compliance with all applicable provisions of the CEA and CFTC regulations, including part 37, and any future regulations, amendments, guidance and interpretations issued by the CFTC.”