The NFA and TeraExchange have announced that they have signed an agreement where the NFA will provide regulatory services for TeraExchange’s swap execution facility (SEF). The agreement finalizes TeraExchange’s evolvement from an Exempt Board of Trade (EBOT) to a SEF. Founded in 2011, New Jersey based TeraExchange provides an anonymous central limit book for Interest Rate, FX, Energy, Agriculture, and Equity swaps and derivatives. In FX, the exchange provides coverage for USD/CNH, USD/BRL, USD/COL, USD/RUB, USD/KRW, USD/PEH, USD/MYR, USD/TWD, USD/PHP, and USD/IDR forwards.
Under new Dodd-Frank rules, the CTFC has provided framework for SEFs to act as self-regulating organizations (SRO), based on the development of industry standards. The self-regulating obligations include the implementation of trading and pricing surveillance systems and testing standards. In addition, the Dodd-Frank Act provided rules to allow SEFs to contract with a registered futures association, such as the NFA, for regulatory services.
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CEO of TeraExchange, Christian Martin, commented on the news “we are pleased to be working with the outstanding team at NFA to build a platform for market participants with best-in-class governance and compliance controls. It is core to our mission to deliver the best swap trading venue for the long-haul. With our NFA partnership in place, we know market participants will feel secure trading swaps on Tera again and again.”
NFA President Daniel J. Roth added “this is a significant step forward as we engage in new regulatory activity on behalf of SEFs. For over 10 years, NFA has been successfully performing trade practice and market surveillance functions on behalf of futures exchanges. We look forward to working with TeraExchange as we enhance our surveillance systems to assist SEFs in meeting their regulatory responsibilities.”