Futures Industry Association

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FIA
Industry Finance
Founded 1955
Headquarters Washington, DC, U.S.
Website https://fia.org

FIA (formerly the Futures Industry Association) is a trade association representing the cleared derivatives industry. Its membership base is made up futures commission merchants, which are financial intermediaries analogous to brokers; they are entities that accept orders and payment for commodity futures for execution on a futures exchange.[1] FIA's membership includes more than more than 15,000 industry professionals and market participants representing clearing firms, exchanges, clearinghouses, trading firms and commodities specialists as well as technology vendors, lawyers and other professionals serving the industry.[2] FIA's membership is responsible for an estimated 85% of the customer business transacted on US futures exchanges.[3] FIA’s mission is to support open, transparent and competitive markets, protect and enhance the integrity of the financial system, and promote high standards of professional conduct.

Structure[edit]

FIA is a global organization representing futures, options and cleared swaps markets. FIA has regional offices in the Americas, Europe and Asia and its membership spans more than 48 countries. [4]

FIA has 2 types of members: Primary Members are limited to clearing members that hold customer funds and thus contribute substantially to the safety and soundness of the market infrastructure. Associate Members of FIA support the overall ecosystem of the cleared derivatives markets, including clearing organizations, exchanges, global and regional intermediaries, principle trading firms, technology vendors, legal services and other professional service providers. [5]

FIA has 3 divisions and 9 working groups and committees that focus in depth on policy work and best practices on a range of industry concerns.

Market Technology Division[edit]

The FIA Market Technology Division studies how technological solutions can be used to enhance efficiency in member operations and provides a forum for discussion and knowledge-sharing. Members may participate in various committees including Automated Trading, Business Continuity Management, Market Access, Events & Communications, Financial Regulation/ Operations & Risk Management, and Technology Standards & Sound Practices committees.

Operations Americas Division[edit]

The FIA Operations Americas Division promotes industry cooperation and the exchange of ideas among members in Chicago and New York and across the Americas. The division attracts executives from all areas of brokerage firms as well as exchanges, industry service providers, law firms, and technology vendors. Five active committees meet on a regular basis: brokerage, clearing, deliveries, finance, and events/activities.

Law and Compliance Division[edit]

The FIA Law and Compliance Division monitors legal and regulatory developments affecting the futures and derivatives industry, assisting FIA in providing information to help relevant regulators and courts make decisions that affect the futures exchanges community. The division discusses issues with U.S. and International regulators and exchanges and prepares comment letters, position papers, and court briefs when appropriate.

Working Groups and Committees[edit]

FIA working groups and committees include: APAC Commodities Working Group APAC Law, Risk and Compliance Committee APAC Operations Committee E-Trading Working Group Power Trading Committee Metals Working Group Energy & Emissions Working Group Compliance Committee EU Operations Committtee

History[edit]

FIA was founded in 1955 in New York as the Association of Commodity Exchange Firms. It was originally established to provide a forum to discuss issues, work with exchanges, represent the public customer, study ways to reduce costs, eliminate the abuse of credit, cooperate on educational efforts and protect firms from fraudulent warehouse receipts.

In 1973, the New York association expanded to include Chicago FCMs. It was renamed the Futures Industry Association in 1978 and moved to Washington "in recognition of the truly national scope of the futures industry." The FIA broadened its reach again in the mid-eighties when international organizations were invited to become members.

Meanwhile, FIA Europe was founded in 1993 in London as the Futures and Options Association, just over a decade after the birth of financial futures in Europe.

FIA’s Asia office was originally set up in 2005 to provide a forum for members to discuss issues relating to the futures and options industry in the Asia-Pacific region, becoming a formal branch – FIA Asia – in Singapore in 2012.

In 2013, FIA, FIA Europe and FIA Asia formed an affiliation strengthening their influence on cross-border issues, substantially increasing the coordination and information flow between regions and providing a powerful global voice to express the views of their members.

In January 2016 the merger of FIA, FIA Europe and FIA Asia into a single organization took effect. [6]

Work[edit]

FIA produces thought leadership, best practices, industry data, and advocacy work on behalf of its members. Resources include industry-standard agreements and other documentation to support trading and clearing functions.[7] FIA also provides business continuity tools, legal opinions, regulatory guidance, and operational and technological guidance.[8]

FIA collects and publishes data on the volume and open interest for futures and options traded and/or cleared at exchanges worldwide, as well as a monthly report on volume and market share trends on swap execution facilities.

FIA's advocacy work is intended to support open, transparent and competitive markets, protect and enhance the integrity of the financial system and promote high standards of professional conduct. [9] Key issues for the association include: ·Brexit and its impact on the cleared derivatives industry ·Capital requirements for banking organizations ·Commodity market health ·Cross-border coordination of financial regulations ·Cybersecurity ·Mandatory central counterparty clearing and its effect on systemic risk ·Protection of customer funds ·The implementation of MiFID II in Europe

Affiliates[edit]

FIA Principal Traders Group (FIA PTG)[edit]

The FIA Principal Traders Group (FIA PTG) is a forum for firms trading their own capital[10] to identify and discuss issues confronting their community. While FIA PTG members do not all trade in the same way, many of them rely on automated trading technology and high-speed connections to exchanges,[11] providing a service to market participants by making investing more autonomous, transparent, faster and much less expensive, according to experts and studies.[12][13]

The FIA PTG is a group affiliated with the Futures Industry Association (FIA), the trade organization for the futures, options and OTC cleared derivatives markets.[14] Membership in the FIA PTG is limited to firms that trade for their own account, known as principal traders, rather than on behalf of customers. The FIA PTG membership page maintains the most up-to-date list of current members.[15]

FIA and the FIA PTG have designed a number of reports offering specific guidance to electronic trading firms regarding risk management and best practices. These market safety and soundness recommendations for industry participants have become the de facto standards for some firms.[16] The recommendations have been cited by exchanges such as the IntercontinentalExchange (ICE)[17] and the CME Group[18] and regulators, including the Commodity Futures Trading Commission’s Technology Advisory Committee, as “an excellent guide” to preserving the integrity of markets.[19] These reports include:

Market Access Risk Management Recommendations (April 2010)[20]

Recommendations for Risk Controls for Trading Firms (November 2010)[21]

Software Development and Change Management Recommendations (March 2012, in conjunction with the FIA European Principal Traders Association)[22]

The FIA PTG was created to articulate the role of principal traders to policy makers and the public. This includes defining common positions on public policy issues, advancing the group’s collective interests through the FIA, explaining the group’s views to policymakers, speaking to media and issuing research. The organization will also work to improve the public’s understanding of the constructive role played by principal trading groups in the exchange-traded derivatives markets, and promote cost-effective, equal and transparent access to markets.[23][24]

The trading activities and strategies of principal trading firms can vary depending on trading objectives and the structure of the markets in which they participate.[25] Firms engage in automated, manual and hybrid methods of trade generation and execution encompassing various strategies and are active in cash and derivatives in a variety of asset classes, such as equities, foreign exchange, commodities and fixed income.[26] Principal traders have a vested interest in well-functioning markets with effective risk controls, clear error trade policies that focus on trade certainty, and a strong regulatory framework.[27]

FIA European Principal Traders Association (FIA EPTA)[edit]

FIA European Principal Traders Association (FIA EPTA) represents more than 25 principal trading firms that, on a combined basis, are responsible for significant volumes of trading in many asset classes on European regulated markets and multilateral trading facilities (MTFs). FIA EPTA supports transparent, robust and safe markets with a level playing field for all. Members engage in automated, manual and hybrid methods of trade generation and execution encompassing a wide variety of strategies.

FIA Technology Services (FIA Tech)[edit]

FIA Technology Services, Inc. (FIA Tech) is a for-profit subsidiary of FIA. FIA Tech collaborates with the global futures industry to improve operational efficiency via web based software systems. FIA Tech provides three main services: EGUS, eGAINS and eRECS. These systems are designed to integrate with each other and help firms efficiently settle and reconcile their give-up brokerage. Its OCR Data Service works as a means for participating firms and their clients to ensure that account data reported to the CFTC is complete, accurate, and properly formatted for review by industry regulators.

The Institute for Financial Markets (IFM)[edit]

The Institute for Financial Markets (IFM), founded in 1989, is a nonprofit educational foundation. The purpose of the IFM is to increase public awareness and understanding of the importance of financial markets and the financial service industry to the global economy, and to improve the technical competence of those in the industry who deal with the public. The Institute engages clients in activities such workshops, conferences, course dissemination, course development and research.

References[edit]

  1. ^ "CFTC Glossary". Cftc.gov. Retrieved 2013-03-01. 
  2. ^ "FIA 'About'". 
  3. ^ FIA Website 'Member Types'
  4. ^ "FIA 'About'". 
  5. ^ "FIA 'Membership Types'". 
  6. ^ "FIA 'About'". 
  7. ^ "FIA 'Documentation'". 
  8. ^ "FIA 'Resources'". 
  9. ^ "FIA 'About'". 
  10. ^ Lambert, Emily (2010-08-17). "High-Frequency Traders Get A New Name". Forbes. 
  11. ^ "FIA PTG Hearing Statement" (PDF). Futures Industry Association. 
  12. ^ "Equity Market Trading in Europe: The Case for Refinement Over Revolution". BlackRock. 
  13. ^ Tabb, Larry (2012-12-28). "Mergers That Benefit Market Structure". The New York Times. 
  14. ^ Lambert, Emily (2010-08-17). "High-Frequency Traders Get A New Name". Forbes. 
  15. ^ https://ptg.fia.org/membership-2
  16. ^ Chapman, Peter. "Cover Story: Glitch!". Traders Magazine. 
  17. ^ https://www.theice.com/publicdocs/circulars/12018%20attach.pdf
  18. ^ Weitzman, Hal. "Infinium fined $850,000 for computer malfunctions". Financial Times. 
  19. ^ "Compilation of Existing Testing and Supervision Standards, Recommendations and Regulations" (PDF). CFTC. 
  20. ^ http://www.futuresindustry.org/downloads/Market_Access-6.pdf
  21. ^ http://www.futuresindustry.org/downloads/Trading_Best_Practices.pdf
  22. ^ http://www.futuresindustry.org/downloads/Software_Change_Management.pdf
  23. ^ Lambert, Emily (2010-08-17). "High-Frequency Traders Get A New Name". Forbes. 
  24. ^ Schmerken, Ivy. "FIA Principal Traders Group Hires Overdahl As Spokesman". Advanced Trading. 
  25. ^ "The fast and the furious". The Economist. 2012-02-25. 
  26. ^ Rosenbush, Steve. "More Asset Classes to See High-Frequency Trading". Institutional Investor. 
  27. ^ http://www.futuresindustry.org/downloads/Trading_Best_Practices.pdf