Futures Industry Association

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. It's membership base is made up futures commission merchants, which are financial intermediaries that are analogous to brokers; they are entities that accept orders and payment for commodity futures for execution on a futures exchange.[1] FIA also represents exchanges, clearinghouses and customers from more than 25 countries 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

FIA is a global organization representing futures, options and cleared swaps markets in the Americas, Europe and Asia.

Since 2013, the regional associations of FIA, FIA Europe, and FIA Asia have been working closely together under an affiliated global structure, FIA Globa l, which enabled the independent organizations and their boards to better coordinate policies and priorities.[4] In January 2016, the regional affiliates will officially merge into a single organization: FIA.

History

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. In 1988, FIA established a non-profit educational foundation, Futures Industry Institute, to further develop and implement the FIA's educational goals.[5]

Affiliates: Futures Industry Association Principal Traders Group (FIA PTG)

The FIA Principal Traders Group (FIA PTG) is a forum for firms trading their own capital[6] 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,[7] providing a service to market participants by making investing more autonomous, transparent, faster and much less expensive, according to experts and studies.[8][9]

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.[10] 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.[11]

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.[12] The recommendations have been cited by exchanges such as the IntercontinentalExchange (ICE)[13] and the CME Group[14] and regulators, including the Commodity Futures Trading Commission’s Technology Advisory Committee, as “an excellent guide” to preserving the integrity of markets.[15] These reports include:

•Market Access Risk Management Recommendations (April 2010)[16]

•Recommendations for Risk Controls for Trading Firms (November 2010)[17]

•Software Development and Change Management Recommendations (March 2012, in conjunction with the FIA European Principal Traders Association)[18]

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.[19][20]

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.[21] 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.[22] 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.[23]

References

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