United States: NFA proposes changes to regulation of exchange brokers

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The NFA has proposed changes to Compliance Rule 2-49 (“Swap Brokers and Major Swap Participants Regulations”) to clarify that member swap brokers who violate the trade execution requirements of the Rule 37.12 (“Trade Execution Compliance Program”) or Part 50 (“Netting Requirement and Related Rules”) of the CFTC Rules will also have violated an NFA requirement.

The NFA explained that the proposed amendment incorporates trade execution and mandatory clearing requirements for swaps into compliance rule 2-49 that are not found in rule 3.3 (“Chief Compliance Officer”) or part 23. (“Swap Traders and Principal Swap Participants”) of the CFTC Rules.

Unless further reviewed by the CFTC, the proposed change will take effect 10 days after receipt by the CFTC.


In many ways, this is a very technical change. Many market participants are likely to expect that a violation of the Commodity Exchange Act or CFTC regulations by an NFA member will also be a violation of the NFA rules. At least when it comes to swaps, the latest change to the NFA would leave a very small subset of CEA / CFTC violations related to swaps that are not per se violations of the NFA rules.

Primary sources

  1. NFA Rule Submission: Proposed Amendments to NFA 2-49 Compliance Rule to Incorporate CFTC Regulations Regarding Mandatory Clearing and Mandatory Trade Execution Requirements

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