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CFTC Rule 37.203

Requires swap execution facilities to implement and enforce comprehensive rules, surveillance systems, and compliance processes to detect, prevent, and discipline abusive and disruptive trading practices.

Rule Overview

Jurisdiction: United States

Regulator: CFTC

Topic: Surveillance

Overview
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Under this rule, Swap Execution Facilities (SEFs) must establish, enforce, and maintain a robust rule enforcement program that deters and addresses abusive or manipulative trading practices.

The regulation outlines specific prohibitions against misconduct such as front-running, wash trading, pre-arranged trading, and fraud, especially in customer-related transactions.

SEFs must have rules, staff, and systems in place to supervise market activity, conduct investigations, and take disciplinary action when necessary. These enforcement mechanisms must also include protections against market manipulation and ensure fair and transparent operations.

SEFs are also required to investigate potential rule violations in a timely manner, prepare detailed investigation reports, and impose appropriate disciplinary measures.

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