National Futures Association (NFA) and MarketAxess Holdings Inc. (Nasdaq: MKTX) today announced that they have entered into an agreement that paves the way for NFA to perform regulatory services for MarketAxess’ planned swap execution facility (SEF). The Agreement establishes a preliminary framework for the exchange of information and the development of technology standards that will enable MarketAxess and NFA to develop, test and launch automated trade practice and surveillance systems and also to develop procedures and processes necessary for MarketAxess to fulfill its SEF self-regulatory obligations. Upon the issuance of the Commodity Futures Trading Commission’s (CFTC) final SEF rules, NFA and MarketAxess anticipate that they will enter into a formal Regulatory Services Agreement.
According to the rules and regulations under the Dodd-Frank Act, as currently understood, SEFs will have surveillance and other regulatory responsibilities. The CFTC has proposed to allow SEFs to contract with a registered futures association, such as 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. For over ten years, NFA has been successfully performing trade practice and market surveillance functions on behalf of futures exchanges,” said NFA President Daniel J. Roth. “We look forward to working with MarketAxess as we enhance our surveillance systems to assist SEFs in meeting their regulatory responsibilities.”
Jim Rucker, credit and risk officer, MarketAxess, said: “We’re pleased to partner with the NFA to help MarketAxess prepare for the anticipated compliance and surveillance requirements under the Dodd-Frank Act. MarketAxess is fully committed to registering as a SEF as soon as the regulations permit, and working with the NFA will facilitate our preparations in this regard.”
