Integral Development Corporation Announces Readiness for CFTC EBCS Ruling

The US Commodity Futures Trading Commission (CFTC) is set to implement new rules designated External Business Conduct Standards (EBCS) for swap dealers and major swap participants dealing with counterparties, under which a series of criteria must be met.

As part of the Dodd-Frank Act, the proposed rulings are intended to establish due diligence and disclosure obligations, as well as outright prohibitions against certain practices.

The proposed ruling will have an impact on ways in which swap dealers and major swap participants will deal with their counterparties in that due diligence and disclosure obligations generally would not apply to transactions initiated by a counterparty on a designated contract market or swap execution facility where the SD/MSP does not know the identity of the counterparty.

One FX trading solutions provider, Integral Development Corporation of FX trading, has upgraded its service to facilitate Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term provider compliance with the two most prominent requirements of the EBCS in time to meet the May 1st deadline.

The rules promulgated by the CFTC state that by that date, the Pre-Trade Mid-Market Mark (PTMMM) and the Static Material Economic Terms requirements will go into effect. Integral is the first of any FX solutions provider to proclaim readiness for both.

One of the requirements of CFTC regulation 23.43 mandates that Liquidity Providers Liquidity Providers A liquidity provider (LP) constitutes either individual and/or institution that functions as a market maker in a given asset class. Broadly speaking, liquidity providers will act as the both the buyer and seller of a particular asset, thus making a market. In the equities space, many stock exchanges rely on liquidity providers who make the commitment to provide liquidity in a given equity. These liquidity providers commit to providing liquidity in the hopes that they will be able to make a profi A liquidity provider (LP) constitutes either individual and/or institution that functions as a market maker in a given asset class. Broadly speaking, liquidity providers will act as the both the buyer and seller of a particular asset, thus making a market. In the equities space, many stock exchanges rely on liquidity providers who make the commitment to provide liquidity in a given equity. These liquidity providers commit to providing liquidity in the hopes that they will be able to make a profi Read this Term disclose a Pre-Trade Mid-Market Mark prior to trade execution in addition to bid/ask prices. Integral has made the necessary enhancements to all its trading applications.

“We are proud to announce that Integral has the technology solutions in place that enable liquidity providers on FX Grid to be in compliance ahead of stated deadlines,” said Harpal Sandhu, CEO, Integral Development Corporation.

Also an element of the EBCS, liquidity providers are required to publish their respective relevant static material economic terms when offering swap contracts. All Integral services and partner liquidity providers are in compliance ahead of the deadline.

A further matter of importance for high-risk complex bilateral swaps is that swap dealers and major swap participants would have to provide a scenario analysis designed in consultation with the counterparty to allow the counterparty to assess its potential exposure in connection with the swap. The characteristics of high-risk complex swaps would include one or more of the following criteria: the degree and nature of any leverage; the potential for periods of significantly reduced liquidity; and the lack of price transparency.

For bilateral swaps not available for trading on a designated contract market or swap execution facility that are not high-risk complex swaps, counterparties would be able to “opt-in” to obtain a scenario analysis for such swap.