US derivatives regulator, the Commodities Futures Trading
Commission (CFTC), has warned Derivatives Clearing Organizations (DCOs) against the risk involved in the expansion of their clearing services into digital assets. DCOs are firms that match and settle derivatives contracts based on underlying assets such as stocks, bonds or currency.
“In the past several years, [CFTC] Division of Clearing and Risk (DCR) has observed increased interest by DCOs and DCO applicants in expanding the types of products cleared and business lines, clearing models, and services DCOs offer, including related to digital assets,” the derivatives watchdog warned in a staff
advisory published on its website on Tuesday.
In the statement, CFTC emphasized that its DRC would remain focused on the potentially heightened risks
associated with certain clearing activities even as registrants and applicants are expanding into new lines of business, changing business models, or offering new and
novel products.
“DCR expects DCOs and applicants to actively identify new, evolving, or unique risks and implement risk mitigation measures tailored to the risks that these products or clearing-structure changes may present,” CFTC said.
According to the
announcement, the staff advisory is in light of the increase in cyber security
and other risks related to digital assets.
“Today’s staff advisory specifically notes that because of the increased cyber and other risks that may be associated with digital assets, DCR will emphasize DCO applicant and registrant comply with the DCO Core principles related to system safeguards, conflicts of interest, and physical delivery,” the derivatives watchdog explained.
CFTC Heightens Scrutiny across Industries
Meanwhile, CFTC sued 14 retail FX dealers in April for allegedly fraudulently
claiming to be registered with the agency. The accused entities, which include Trade FX, Bit Block FXtrades, Bit Trading, and Bitfinmarket.com, were charged
by the regulator for claiming to be members of the National Futures Association (NFA).
Furthermore, CFTC is not sparing the
big players either in its efforts to sanitize the industry under its purview. Most recently, the
commission fined the HSBC Bank USA $45 million for ‘manipulative
and deceptive trading’. The
agency also accused the lender of failing to maintain a record of its business
calls.
In the cryptocurrency
space, CFTC in March sued Binance, the top crypto exchange by trading volume, for
allegedly breaching the Commodity Exchange Act (CEA) and the CFTC regulations. Under the case, Binance’s Founder, Changpeng Zhao, is also facing scrutiny.
Huobi HK launches; US approves Eurex BTC Futures; read today’s nuggets.
US derivatives regulator, the Commodities Futures Trading
Commission (CFTC), has warned Derivatives Clearing Organizations (DCOs) against the risk involved in the expansion of their clearing services into digital assets. DCOs are firms that match and settle derivatives contracts based on underlying assets such as stocks, bonds or currency.
“In the past several years, [CFTC] Division of Clearing and Risk (DCR) has observed increased interest by DCOs and DCO applicants in expanding the types of products cleared and business lines, clearing models, and services DCOs offer, including related to digital assets,” the derivatives watchdog warned in a staff
advisory published on its website on Tuesday.
In the statement, CFTC emphasized that its DRC would remain focused on the potentially heightened risks
associated with certain clearing activities even as registrants and applicants are expanding into new lines of business, changing business models, or offering new and
novel products.
“DCR expects DCOs and applicants to actively identify new, evolving, or unique risks and implement risk mitigation measures tailored to the risks that these products or clearing-structure changes may present,” CFTC said.
According to the
announcement, the staff advisory is in light of the increase in cyber security
and other risks related to digital assets.
“Today’s staff advisory specifically notes that because of the increased cyber and other risks that may be associated with digital assets, DCR will emphasize DCO applicant and registrant comply with the DCO Core principles related to system safeguards, conflicts of interest, and physical delivery,” the derivatives watchdog explained.
CFTC Heightens Scrutiny across Industries
Meanwhile, CFTC sued 14 retail FX dealers in April for allegedly fraudulently
claiming to be registered with the agency. The accused entities, which include Trade FX, Bit Block FXtrades, Bit Trading, and Bitfinmarket.com, were charged
by the regulator for claiming to be members of the National Futures Association (NFA).
Furthermore, CFTC is not sparing the
big players either in its efforts to sanitize the industry under its purview. Most recently, the
commission fined the HSBC Bank USA $45 million for ‘manipulative
and deceptive trading’. The
agency also accused the lender of failing to maintain a record of its business
calls.
In the cryptocurrency
space, CFTC in March sued Binance, the top crypto exchange by trading volume, for
allegedly breaching the Commodity Exchange Act (CEA) and the CFTC regulations. Under the case, Binance’s Founder, Changpeng Zhao, is also facing scrutiny.
Huobi HK launches; US approves Eurex BTC Futures; read today’s nuggets.
- SEO Powered Content & PR Distribution. Get Amplified Today.
- PlatoAiStream. Web3 Data Intelligence. Knowledge Amplified. Access Here.
- Minting the Future w Adryenn Ashley. Access Here.
- Buy and Sell Shares in PRE-IPO Companies with PREIPO®. Access Here.
- Source: https://www.financemagnates.com//institutional-forex/cftc-warns-derivatives-clearinghouses-against-expansion-into-crypto/
