Regulatory Changes Coming Amid Vulnerabilities in FX, Swaps Compliance
- Lingering questions into the regulation of swaps and fx transactions have revealed vulnerabilities in oversight, leading to speculation that a series of changes may be on the horizon from the CFTC.


These feelings were underscored during last week’s release of a detailed questionnaire by the CFTC, seeking clarification on the proper implementation of swap-data reporting under the Dodd-Frank Act rules – the commission hopes to use this feedback to ultimately propose and foster changes for regulators to supervise the swaps market.
CFTC Fortifying Compliance on Multiple Fronts
Indeed, the US regulator has been involved in a number of actions and charges lately, specifically in clamping down on fraudulent forex transactions and other violations. However, the organization has recently cited an inability to fully grapple the oversight of swaps-market data, necessitating a complete overhaul and change in the way financial information and reporting methods are conducted, organizations such as the Depository Trust & Clearing Corp. (DTCC), CME Group Inc., among others.

According to Marisol Collazo, Chief Executive Officer of DTCC’s data repository in a statement on the request, “The DTCC is reviewing the agency’s request for comment and looks forward to continue working with the CFTC to support regulatory and industry efforts to enhance transparency.”
The DTCC is another US regulator whose paramount duty is the regulation and provision of clearing and settlement services across numerous asset classes, including equities, securities and OTC derivatives. CME Group is also an interesting case, given its status as one of the world’s largest derivatives and swaps exchanges – recently the group has aggressively pushed for a comprehensive FX swaps offering as well.
Forex Chatrooms Continue to Draw Ire of Regulators
With regards to the institutional forex realm, regulatory changes also appear to be in the works for the $5.3 trillion-a-day market. To date, a plethora of global regulators have launched probes into the operations of Forex Trading Forex Trading Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. The value of currencies, especially floating currencies, fluctuate to varying degrees. This constant volatility of exchange rates opens the door for speculators to invest in a certain currency against another. The Forex market is the world’s biggest and most liquid market, with over $5 billion turnover every single day, with the market being open 24 hours a day, 5 days a week.It goes without saying that forex trading is a very attractive market for not only banks and hedge funds, but even for the small individual trader, due to the low barriers for entry. One literally only needs a computer with an internet connection, and some money deposited with a forex broker. As a simple example, if you were very confident that the Euro (EUR) was going to gain strength against the US Dollar (USD) in the mid to long term, then you may decide to buy (or go long on) EUR/USD. If the EUR/USD was trading at 1.1500 at the time of purchase, a €10000 investment would have cost you $11500. As time goes by, if the EUR/USD gets stronger, e.g. its exchange rate moves to 1.2000 over the course of a few months, and you decided to close your trade there and then, you would have netted $12000, i.e. a profit of $500. No One-Size-Fits-All Approach to Forex Trading Whilst forex trading is easy to delve into, it’s notoriously difficult to master, especially for those without a financial background. A lot of time and effort is needed to practice trading on demo and eventually on real accounts. No doubt it takes dedication, discipline and patience, along with developing an edge to beat the market. That edge is gained by studying at least one of two fields, known as technical analysis and fundamental analysis. The former involves looking at currency charts, seeking out certain patterns using tools and software known as price action and indicators to help determine which way a particular forex pair may meander.By extension, the latter involves focusing on the latest news reports and geopolitical situation of the countries involved. Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. The value of currencies, especially floating currencies, fluctuate to varying degrees. This constant volatility of exchange rates opens the door for speculators to invest in a certain currency against another. The Forex market is the world’s biggest and most liquid market, with over $5 billion turnover every single day, with the market being open 24 hours a day, 5 days a week.It goes without saying that forex trading is a very attractive market for not only banks and hedge funds, but even for the small individual trader, due to the low barriers for entry. One literally only needs a computer with an internet connection, and some money deposited with a forex broker. As a simple example, if you were very confident that the Euro (EUR) was going to gain strength against the US Dollar (USD) in the mid to long term, then you may decide to buy (or go long on) EUR/USD. If the EUR/USD was trading at 1.1500 at the time of purchase, a €10000 investment would have cost you $11500. As time goes by, if the EUR/USD gets stronger, e.g. its exchange rate moves to 1.2000 over the course of a few months, and you decided to close your trade there and then, you would have netted $12000, i.e. a profit of $500. No One-Size-Fits-All Approach to Forex Trading Whilst forex trading is easy to delve into, it’s notoriously difficult to master, especially for those without a financial background. A lot of time and effort is needed to practice trading on demo and eventually on real accounts. No doubt it takes dedication, discipline and patience, along with developing an edge to beat the market. That edge is gained by studying at least one of two fields, known as technical analysis and fundamental analysis. The former involves looking at currency charts, seeking out certain patterns using tools and software known as price action and indicators to help determine which way a particular forex pair may meander.By extension, the latter involves focusing on the latest news reports and geopolitical situation of the countries involved. Read this Term and the potential manipulation of currency rates. Back in October, the Financial Conduct Authority (FCA) launched its own investigation, though noted that it would be unlikely to issue a verdict this year on its findings.

“There should have been controls over bank employees that conduct trades and are allowed to submit rates. It’s incredible that a bank should not know that traders having unmonitored access to private chat rooms to talk to a bunch of mates that they’ve had relationships with or worked with over the years. The surprise for me is that the banks did not check, did not do their homework, and look at how chat rooms were being used,” noted Martin Wheatley, Chief Executive Officer of the FCA in an interview with Bloomberg.
It is thus far unclear how many regulators will choose to tackle this issue. Numerous violations and accusations of collusion have stemmed from the use of private chat rooms, which facilitate outright collusion given the propensity to exchange such sensitive information. With new accusations seemingly being reported every week against banks and traders, the chances for stricter methods of oversight seem high.

These feelings were underscored during last week’s release of a detailed questionnaire by the CFTC, seeking clarification on the proper implementation of swap-data reporting under the Dodd-Frank Act rules – the commission hopes to use this feedback to ultimately propose and foster changes for regulators to supervise the swaps market.
CFTC Fortifying Compliance on Multiple Fronts
Indeed, the US regulator has been involved in a number of actions and charges lately, specifically in clamping down on fraudulent forex transactions and other violations. However, the organization has recently cited an inability to fully grapple the oversight of swaps-market data, necessitating a complete overhaul and change in the way financial information and reporting methods are conducted, organizations such as the Depository Trust & Clearing Corp. (DTCC), CME Group Inc., among others.

According to Marisol Collazo, Chief Executive Officer of DTCC’s data repository in a statement on the request, “The DTCC is reviewing the agency’s request for comment and looks forward to continue working with the CFTC to support regulatory and industry efforts to enhance transparency.”
The DTCC is another US regulator whose paramount duty is the regulation and provision of clearing and settlement services across numerous asset classes, including equities, securities and OTC derivatives. CME Group is also an interesting case, given its status as one of the world’s largest derivatives and swaps exchanges – recently the group has aggressively pushed for a comprehensive FX swaps offering as well.
Forex Chatrooms Continue to Draw Ire of Regulators
With regards to the institutional forex realm, regulatory changes also appear to be in the works for the $5.3 trillion-a-day market. To date, a plethora of global regulators have launched probes into the operations of Forex Trading Forex Trading Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. The value of currencies, especially floating currencies, fluctuate to varying degrees. This constant volatility of exchange rates opens the door for speculators to invest in a certain currency against another. The Forex market is the world’s biggest and most liquid market, with over $5 billion turnover every single day, with the market being open 24 hours a day, 5 days a week.It goes without saying that forex trading is a very attractive market for not only banks and hedge funds, but even for the small individual trader, due to the low barriers for entry. One literally only needs a computer with an internet connection, and some money deposited with a forex broker. As a simple example, if you were very confident that the Euro (EUR) was going to gain strength against the US Dollar (USD) in the mid to long term, then you may decide to buy (or go long on) EUR/USD. If the EUR/USD was trading at 1.1500 at the time of purchase, a €10000 investment would have cost you $11500. As time goes by, if the EUR/USD gets stronger, e.g. its exchange rate moves to 1.2000 over the course of a few months, and you decided to close your trade there and then, you would have netted $12000, i.e. a profit of $500. No One-Size-Fits-All Approach to Forex Trading Whilst forex trading is easy to delve into, it’s notoriously difficult to master, especially for those without a financial background. A lot of time and effort is needed to practice trading on demo and eventually on real accounts. No doubt it takes dedication, discipline and patience, along with developing an edge to beat the market. That edge is gained by studying at least one of two fields, known as technical analysis and fundamental analysis. The former involves looking at currency charts, seeking out certain patterns using tools and software known as price action and indicators to help determine which way a particular forex pair may meander.By extension, the latter involves focusing on the latest news reports and geopolitical situation of the countries involved. Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. The value of currencies, especially floating currencies, fluctuate to varying degrees. This constant volatility of exchange rates opens the door for speculators to invest in a certain currency against another. The Forex market is the world’s biggest and most liquid market, with over $5 billion turnover every single day, with the market being open 24 hours a day, 5 days a week.It goes without saying that forex trading is a very attractive market for not only banks and hedge funds, but even for the small individual trader, due to the low barriers for entry. One literally only needs a computer with an internet connection, and some money deposited with a forex broker. As a simple example, if you were very confident that the Euro (EUR) was going to gain strength against the US Dollar (USD) in the mid to long term, then you may decide to buy (or go long on) EUR/USD. If the EUR/USD was trading at 1.1500 at the time of purchase, a €10000 investment would have cost you $11500. As time goes by, if the EUR/USD gets stronger, e.g. its exchange rate moves to 1.2000 over the course of a few months, and you decided to close your trade there and then, you would have netted $12000, i.e. a profit of $500. No One-Size-Fits-All Approach to Forex Trading Whilst forex trading is easy to delve into, it’s notoriously difficult to master, especially for those without a financial background. A lot of time and effort is needed to practice trading on demo and eventually on real accounts. No doubt it takes dedication, discipline and patience, along with developing an edge to beat the market. That edge is gained by studying at least one of two fields, known as technical analysis and fundamental analysis. The former involves looking at currency charts, seeking out certain patterns using tools and software known as price action and indicators to help determine which way a particular forex pair may meander.By extension, the latter involves focusing on the latest news reports and geopolitical situation of the countries involved. Read this Term and the potential manipulation of currency rates. Back in October, the Financial Conduct Authority (FCA) launched its own investigation, though noted that it would be unlikely to issue a verdict this year on its findings.

“There should have been controls over bank employees that conduct trades and are allowed to submit rates. It’s incredible that a bank should not know that traders having unmonitored access to private chat rooms to talk to a bunch of mates that they’ve had relationships with or worked with over the years. The surprise for me is that the banks did not check, did not do their homework, and look at how chat rooms were being used,” noted Martin Wheatley, Chief Executive Officer of the FCA in an interview with Bloomberg.
It is thus far unclear how many regulators will choose to tackle this issue. Numerous violations and accusations of collusion have stemmed from the use of private chat rooms, which facilitate outright collusion given the propensity to exchange such sensitive information. With new accusations seemingly being reported every week against banks and traders, the chances for stricter methods of oversight seem high.