NFA Gets CFTC Nod for Swap Dealer Capital Model Review Program

The Commodity Futures Trading Commission (CFTC) announced on 13 January 2021 that its Market Participants Division through delegated authority has approved the National Futures Association's (NFA) swap dealer capital model requirements and review program as they has determined the program is comparable with the CFTC's swap dealer capital model requirements and review program.

This approval means that the CFTC will accept a capital model approved by the NFA as an alternative means complying with CFTC Regulation 23.102. 

The Regulation 23.102 permits a swap dealer to obtain approval from the CFTC, or a registered futures association, to compute its regulatory capital by using internal market risk and/or credit risk models. Pursuant to the regulation, the CFTC is required to determine whether the NFA's model requirements and review process are comparable to those of the agency.    

Following the approval, Swap dealers doing business in the U.S. are required to comply with newly-adopted capital requirements within nearly 9 months by 6 October 2021.