FIA Responds to CFTC’s Concept Release on Risk Controls and System Safeguards for Automated Trading (Dec. 11, 2013)
FIA on Dec. 11 submitted an extensive response to the Commodity Futures Trading Commission’s Concept Release on Risk Controls and System Safeguards for Automated Trading. The response describes the many risk controls and system safeguards that are currently in use in the futures industry, and outlines several principles for the CFTC to consider as it examines ways to further strengthen those controls and safeguards. The response also contains detailed responses to specific questions posed by the CFTC in its concept release, and draws on the collective expertise of nearly 100 individuals from members of FIA and the FIA Principal Traders Group.
FIA Comments on CME Request to Amend Rule 538 Governing Exchange for Related Positions (Dec. 6, 2013)
On Dec. 6, FIA submitted a comment letter to the Commodity Futures Trading Commission regarding the CME Group’s amended request for approval to amend Rule 538, which governs exchange for related position transactions. In the letter, FIA offered several recommendations and asked for further changes to the CME filing. In particular, FIA opposed the CME’s proposed requirement that confirmations on cash FX transactions reflect the carrying clearing member and account number of an account controller’s customers. FIA also expressed concern about the adverse effects of CME’s proposal to prohibit swaps executed on a swap execution facility from constituting a permissible component of an EFRP transaction.
FIA Statement on CFTC Customer Protection Rule (Oct. 31, 2013)
The Futures Industry Association today issued a statement regarding the Commodity Futures Trading Commission’s final rule on customer protections.
FIA Comments on CME’s Proposed Elimination of EFRP Trades (Oct. 25, 2013)
On Oct. 25, the Futures Industry Association filed a comment letter with the Commodity Futures Trading Commission in response to a proposal from CME Group to eliminate the use of transitory exchange-for-related-position (EFRP) transactions and make various other changes to CME’s Rule 538. In its letter FIA asked the CFTC to defer consideration of CME’s proposal until after the CFTC issues rules implementing the trade execution requirement in Core Principle 9 as well as rules related to block futures trades. By considering all of these rules together, regulators will be better able to coordinate the rules and avoid inhibiting access to futures markets, particularly with respect to less liquid markets.
FIA Comments on Capital Treatment of Bank Exposures to Central Counterparties (Sept. 27, 2013)
The Futures Industry Association on Sept. 27 filed a comment letter on a consultative document issued by the Basel Committee on Banking Supervision regarding capital treatment of bank exposures to central counterparties. FIA said the proposed approach would “substantially overstate” actual exposures to default funds and would undermine efforts to promote central clearing. To reduce the disincentives for clearing, FIA recommended using a different methodology that takes into account the risk of loss in a more appropriate way, or alternatively, by reducing the risk weighting of default fund contributions.