US and Japanese Authorities to Cross-Monitor Derivatives Trading

The US Commodity Futures Trading Commission (CFTC) and the Japan Financial Services Agency (JFSA) issued a joint statement focusing on cross-monitoring of derivatives trading venues. The news comes as a welcome initiative for the industry, which is already subject to a slew of regulatory oversight.

The announcement focuses on the comparability of certain derivatives trading venues in the US and Japan. The CFTC today announced the issuance of an order exempting certain derivatives trading facilities which are already regulated by the JFSA from the requirement to register as a Swap Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term Facility (SEF) in the US.

At the same time, the JFSA also announced that it aims to facilitate the authorization process its has for Authorized Electronic Over-the-Counter Derivatives Transactions for CFTC-authorized firms.

Commenting on the news, the JFSA’s Commissioner Toshihide Endo stated, that the Japanese regulator intents to facilitate the authorization process of Foreign ETP Operators. The reasoning behind the move is that the requesting platforms are subject to a comparable 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 and supervision under the CFTCs rules.

“Last month, G20 Leaders declared in Osaka that they welcomed the work on market fragmentation, and would address its unintended, negative effects, including through regulatory and supervisory cooperation. We will continue to strengthen our regulatory and supervisory cooperation with overseas authorities,” Endo elaborated.

CFTC Exemption Powers

The CFTC is allowed to grant exemptions from the SEF registration rules when the firm is already subjected to comparable regulatory supervision by the SEC or the relevant governmental authorities in the home country of the facility.

ETPs using the exemption can be used by swap counterparties to comply with the trade execution requirement under the US Commodities Exchange Act. Before the announcement, the CFTC already made similar arrangements with certain European Union and Singapore-based derivatives platforms.

Commenting on the matter, CFTC Chairman J. Christopher Giancarlo stated, “The order issued today follows an outcomes-based approach, meaning the regulatory framework evaluated was found to achieve comparable regulatory outcomes.”

“Deference arrangements like these not only support the cross-border activities of participants in the financial markets, but also help avoid market fragmentation, protectionism, and regulatory arbitrage. The global nature of today’s markets requires that regulators work cooperatively across borders to promote growth and innovation while supporting financial stability,” Giancarlo elaborated.