The Dodd-Frank Act created a new and complex regulatoryregime for derivatives trading. Since the law's passage, regulatorshave adopted a myriad of new trading, reporting, recordkeeping,clearing, trade execution, margin, and anti-fraud rules. With thesenew rules come a plethora of opportunities for companies that tradederivatives to be held liable for violations. That's why everycommercial entity that uses the derivatives markets for riskmanagement purposes should implement a derivatives complianceprogram.

A compliance program will help create and preserve a culture ofintegrity within the organization. It will also demonstrate toregulatory and law enforcement authorities—and investors—that if aderivatives trading issue does occur, the event is anomalous anddoes not constitute wrongdoing by the company. Keep in mind that anorganization can be found liable for misconduct on the part ofindividual employees or other agents of the organization. Properinternal controls, including a well-designed derivatives complianceprogram, can help an organization avoid such liabilities.

A derivatives compliance policy should address regulatorycompliance issues in the following areas: