Swap Dealers Required by CFTC to Submit Risk Exposure Reports

The Commodity Futures Trading Commission (CFTC) has announced the procedures to be used by swap

dealers and major swap participants for submitting Risk Exposure Reports and Chief Compliance Officer

Annual Reports.

The Commission’s Regulations provide as follows:

• Commission Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term 3.3(f) requires that each SD and MSP furnish electronically to the Commission

a copy of the Annual Report of the SD’s or MSP’s Chief Compliance Officer not more than 90 days after

the end of the fiscal year of the SD or MSP.

• Commission Regulation 23.600(c)(2)(ii) requires that each SD and MSP furnish copies of its Risk

Exposure Reports to the Commission within five (5) business days of providing such reports to its senior

management.

Established companies in North America will no doubt be looking at this closely in the near future,

as their own effort to adapt to the ever increasing regulatory demands is instrumental to their

development and sustainability in this fiercely competitive market.

FXCM and GAIN Capital are two of the most recent companies to register with the

NFA as swap dealers, and will most likely be subject to the new CFTC rules in terms of risk exposure and

the reports which will be required to be submitted by their compliance officers.

In February this year, a panel of government lawmakers engaged in a hearing at the Senate Committee chaired by SEC Chairman Elisse B Walker

in order to relate a detailed testimony on how to implement laws set out in the Dodd Frank Act. During

the hearing, OTC Derivatives were high on the agenda and the senate committee heard the regulator’s

proposed implementation of including security-based 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 as a category for mandatory regulation.

The reports have been published on the CFTC website and all participants are expected to become fully

versed in the new rulings, as well as to submit their reports to the CFTC online.