NFA preparing to oversee swaps

National Futures Association President and CEO Dan Roth speaking at the New York CTA Expo on Thursday said that the futures industry self regulatory agency faced many challenges but was prepared to meet them.


Roth says the NFA is forming a swap dealer advisory committee to study regulating swap markets, which will include swap market participants. The Commodity Futures Trading Commission (CFTC) has proposed that swap dealers and swap market participants need to become members of a registered futures association — and since the NFA is the only such organization, presumably members of the NFA.

Roth emphasized that they need to “keep the self in self regulation,” adding that means, “Making sure all the various subgroups are adequately represented on the board.”

Roth says that involves making sure new registrants are fairly represented so that the futures side does not roll over the interests of the swap participants or visa versa. It also involves making sure that the cost of regulation is borne by the sector being regulated. “Each [subgroup] pays their own way,” Roth says, “The fees paid on futures business [will] not subsidize swap activity.”

Roth pointed out that the Dodd-Frank Act also altered the definition of commodity pools and commodity trading advisors to include swaps. He isn’t sure yet whether they will create additional registration categories or adjust existing one’s to include the new participants.

While there are a lot of changes on the horizon, Roth said some things won’t change, specifically their role, which Roth defines as “”Helping members comply [with regulation] and getting rid of those that don’t.”

Roth acknowledged that there is a lot of uncertainty regarding implementation of the Dodd-Frank Act but added the NFA is focused on being ready.

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