Last week the Board of the Directors of the U.S. self-regulatory organization (SRO) for the financial industry, the National Futures Association (NFA), approved its new budget for fiscal 2017. The regulator will have $91 million to meet its obligations for the upcoming fiscal year.
NFA’s operating expenses are budgeted to increase by approximately 10 percent, due in large part to an increase in NFA’s staff. NFA’s fiscal year runs from July 1st through to the 30th of June.
The NFA will increase spending for NFA’s regulatory programs for swap dealers (SD) and major swaps participants (MSP) due to rising responsibilities for reviewing their activities. The SRO will be approving and monitoring initial margin models for uncleared swaps.
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Commenting on the new budget proposal approval, the Vice President of OTC Derivatives, Jamila Piracci, said: ”On January 6th, 2016, the CFTC published its final margin requirements for the uncleared swaps of SDs and MSPs.”
“These requirements allow SDs subject to the CFTC’s Margin Rules to choose between using either a standardized calculation for initial margin or an internal risk-based initial margin model that has been approved by the CFTC or NFA. Since early January, NFA staff has been developing and implementing a margin model approval and an ongoing monitoring process,” she explained.
NFA will also increase its expenses in the SRO’s Information Systems (IS) department by hiring new talent. The new employees will be dedicated to addressing the ongoing rebuilding effort of major systems that include NFA’s Online Registration System.