Intermediaries

An intermediary is a person who acts on behalf of another person in connection with futures, swaps, or options trading. Intermediaries are generally required to register with the Commission and, depending on the nature of their activities, may be subject to various financial, disclosure, reporting, and recordkeeping requirements. Intermediaries defined in the Commodity Exchange Act and Commission regulations include:

Futures Commission Merchant (FCM)

  • Solicits or accepts orders for futures or options contracts traded on or subject to the rules of an exchange; and
  • In or in connection with such solicitation or acceptance of orders, accepts money, securities, or property (or extends credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result or may result.

Introducing Broker (IB)

  • Solicits or accepts orders for futures or options contracts traded on or subject to the rules of an exchange; and
  • Does not accept any money, securities, or property (or extend credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result or may result.

Commodity Pool Operator (CPO)

  • Engages in the operations of a collective investment vehicle; and
  • In connection therewith, solicits or accepts funds, securities, or property for the purchase of interests in the collective investment vehicle.

Commodity Trading Advisor (CTA)

For compensation or profit:

  • Engages in the business of advising others, either directly or through publications, writings, or electronic media, as to the value of or the advisability of trading in, any futures or options contract traded on or subject to the rules of an exchange, or any commodity option; or
  • As part of a regular business, issues or promulgates analyses or reports concerning any of the activities referred to above.

Swap Dealer (SD)

  • Holds itself out as a dealer in swaps; 
  • Makes a market in swaps;
  • Regularly enters into swaps with counterparties as an ordinary course of business for its own account; or
  • Engages in any activity causing the person to be commonly known in the trade as a dealer or market maker in swaps.

Major Swap Participant (MSP)

  • Maintains a substantial position in swaps for any of the major swap categories as determined by the Commission, excluding:
    • Positions held for hedging or mitigating commercial risk; and
    • Positions maintained by an employee benefit plan for the primary purpose of hedging or mitigating any risk directly associated with the operation of the plan;
  • Whose outstanding swaps create substantial counterparty exposure that could have serious adverse effects on the financial stability of the United States banking system or financial markets; or
  • Is a financial entity that is highly leveraged relative to the amount of capital it holds and that is not subject to capital requirements established by an appropriate Federal banking agency; and maintains a substantial position in outstanding swaps in any major swap category as determined by the Commission.

The Division of Swap Dealer and Intermediary Oversight (DSIO) oversees the compliance activities of the futures industry self-regulatory organizations (SROs), including the U.S. futures exchanges and National Futures Association (NFA), with respect to financial and other requirements applicable to intermediaries.  DSIO conducts periodic reviews of SRO programs.

SRO OVERSIGHT REPORTS

Public Report on the Registration Program of the National Futures Association (June 2010)