Trading participant application

An organisation can apply to be either:

• a standard Trading Participant, which is authorised to transact on behalf of clients as well as on their own behalf,
• or a Principal Trader, where a Principal Trader may only transact on their own account and not on behalf of clients.

Each applicant for Trading Participant status to the FEX Global market must demonstrate that they have established or are establishing clearing and settlement arrangements with a Clearing Entity recognised by both FEX Global and CME before their Trading Participant status will be enabled.

Where a Trading Participant wishes to be recognised by FEX Global as a market maker, a separate and additional arrangement to a Principal Trader agreement will need to be completed. This arrangement may be undertaken in parallel with a participant’s application to be a Principal Trader.

Introduction

The time taken to prepare and assess an application may vary greatly and will depend upon the individual circumstances of the applicant. Where an applicant needs to obtain an Australian Financial Services Licence (AFSL), or an exemption from holding an AFSL, from the Australian Securities and Investment Commission (ASIC), early contact with ASIC is recommended.

Applicants applying to become a Trading Participant need to be aware that approval of an application by FEX Global is in part reliant upon an assessment of the organisation being able to operate in accordance with the current ASIC Market Integrity Rules (Futures Markets).

It is reasonably accepted that an established broking organisation already operating under the Australian regulatory framework or an equivalent foreign regulatory framework will, in all likelihood, receive a smooth passage through the assessment process.

Step 1 – Products, Operating Rules and Business Model

In the first instance the FEX Global On-Boarding team will provide information on the products being offered on the market, a summary description of the FEX Global market, the FEX Global Operating Rules including contract specifications and will seek to understand the type of participation that the organisation wishes to establish.

Step 2 – Gathering of Business Information and Establishment of Arrangements

Once it has been determined the participation category an applicant wishes to apply for, the FEX Global On-Boarding team will forward the relevant Application Form(s) to the applicant and walk the applicant through the application process.

For a FEX Global Trading Participant application, a contractual arrangement needs to be established with a FEX Global Clearing Entity who is prepared to be nominated as the primary Clearing Entity. All trading activity undertaken by a Trading Participant will be allocated to the Nominated Clearing Entity of a Trading Participant in the first instance.

For a FEX Global Clearing Entity application, an arrangement needs to be established with CME. Having that clearing membership agreement in place is the primary requirement of the FEX Clearing Entity agreement. Where a Clearing Entity is already an established general clearing member of CME , the process to extend clearing arrangements to the FEX Global market is through execution of an annexure to the existing contract.

Where a clearing organisation is seeking to establish itself as a FEX Global Clearing Entity in parallel with a FEX Global Trading Participant application, the FEX Global On-Boarding team will work with both parties to ensure the applications are processed simultaneously.

Step 3 – Consideration of Application

All applicants must submit the appropriate completed Application Form(s)to the FEX Global On-Boarding team. Once the application meets all FEX Global requirements, the FEX Global On-boarding team will forward the completed application for formal consideration.

If the application has been successful, a formal letter of approval will be sent to the applicant. If it is considered that additional information or additional terms and conditions need to be put in place as part of the application approval, notification will be sent to the applicant . Applicants will then be required to formally confirm that they still wish to proceed with their application for admission.

In the event that the application is declined, the applicant will have the opportunity to appeal this decision or modify the application.

Step 4 – Establishing Operations

Applicants for participation in the FEX Global Market need to have in place operational solutions for real-time market message handling and Internet access as well as establishing direct communication channels (telephone, email and mailing address) and financial accounts. The FEX Customer Support team will assist you through this process.

Please contact the FEX Global Customer Support team or on +61 2 8024 5200