FX Alliance (FXall) has announced that the National Futures Association (NFA) will provide regulatory services for its swap execution facility (SEF).
The preliminary agreement between the two parties sets the foundation for technology standards development and a free exchange of information. FXall and NFA will now develop and test surveillance systems and automated trade processes, and anticipate that the final approval of the SEF rules by the Commodity Futures Trading Commission (CFTC) will lead to a formal regulatory services agreement.
"While SEF rules are still in development, our agreement with NFA is a step in the right direction toward our readiness for SEF registration with the CFTC," says Wayne Pestone, chief regulatory officer at FXall. "We are committed to meeting the new regulatory responsibilities that will be expected of SEFs. NFA's experience and customized surveillance systems will allow us to prepare for quick deployment once SEF requirements are finalized."
SEFs, under the proposed Dodd-Frank Act rules and associated laws, will hold regulatory and surveillance responsibilities as a condition of operation. The CFTC has proposed that firms be allowed to subcontract these regulatory services to registered associations such as the NFA.
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