WASHINGTON, June 5 (Reuters) - The U.S. National Futures Association said on Thursday it would cut its fees because increased trading volume and a broader revenue base had swelled the coffers of the agency that self-regulates the futures and swaps industry.
The Chicago-based watchdog said that effective Oct. 1 it would halve the fee it raises on futures contracts, and options on futures contracts, to $0.01 for each side of the trade.
“Our assessment fee revenue is tied to public trading volume,” NFA President Dan Roth was quoted as saying. “(This) has increased over the past five years, with double-digit volume growth in the last two years.”
The NFA regulates futures trading, and is itself supervised by the Commodity Futures Trading Commission, a federal agency. Trading takes place on platforms at the CME Group Inc and the Intercontinental Exchange Inc.
Both agencies were given massive new responsibilities under the Dodd-Frank law, which put them in charge of the U.S. part of the global $710 trillion market for interest rate swaps, credit default swaps and other complex derivatives.
For the NFA, this also means extra revenues. It is projecting income of $108 million for this year, against expenses of some $70 million. Two years ago, revenues stood at $56 million, and last year at $68 million.
The spike in 2014 is partially because of higher trading volume in the futures market, but also because the NFA collected membership fees from swap dealers.
Unlike firms trading futures, which pay per trade, swap dealers pay a fixed membership fee, which for the largest banks stands at $1 million per year.
For next year, the NFA projects revenues of $85 million and expenses of $82 million. The new fees still need to be approved by the CFTC, and they can change again in the future. (Reporting by Douwe Miedema; Editing by Tom Brown)