FXall to Outsource SEF Regulation to NFA

The National Futures Association (NFA) and FX Alliance (FXall) have agreed to a preliminary framework for NFA to perform regulatory services for FXall's swap execution facility (SEF).

The agreement outlines provisions for the exchange of information and the development of technology standards that will enable FXall and NFA to develop, test and launch automated trade practice and surveillance systems, and develop procedures and processes necessary for FXall to fulfill its SEF self-regulatory obligations. Upon the issuance of the final SEF rules by the US Commodity Futures Trading Commission (CFTC), NFA and FXall anticipate that they will enter into a formal regulatory services agreement.

Under the Dodd–Frank Act and the rules and regulations currently being written by the CFTC, SEFs will have surveillance and other regulatory responsibilities. The CFTC has proposed allowing SEFs to contract with a registered futures association, such as the NFA or another registered entity, for regulatory services.

"This is a significant step forward as we engage in new regulatory activity on behalf of SEFs," says NFA president Daniel Roth. "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 FXall as we enhance our surveillance systems to assist FXall and other SEFs in meeting their regulatory responsibilities."