Futures Commission Merchant Regulation - Comment Letter - National Futures Association - January 18, 2011

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Protection of Cleared Swaps Customers Before and After Commodity Broker Bankruptcies
January 18, 2011

NFA believes that the Commission’s regulations should “ensure that DCOs have the flexibility to offer those alternative structures and that counterparties receive adequate disclosures regarding the residual risks of the structure offered by the DCO. With respect to the alternative models discussed by the Commission, NFA urges the Commission to consider how each model would affect:

  • An end user’s incentive to conduct due diligence before choosing (or remaining with) an FCM
  • The effect on competition among FCMs (including whether a model will eliminate smaller FCMs and decrease the number of FCM players);
  • An end user’s willingness to post excess margin collateral
  • The ease and likelihood of portfolio margining
  • The effect on an end user’s choice to clear or not clear certain swap transactions
  • An FCM’s willingness to maintain excess net capital


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