Disputes between a licensed trader and a client on an interest rate swap may be referred to which forum?

• A. Arbitration panel
• B. Court
• C. SFC
• D. MPFA

Answer: (A)

Arbitration is the usual forum for private disputes arising from derivative contracts like interest rate swaps. When a licensed trader and a client enter into such agreements, the contract often includes an arbitration clause that designates a panel of arbitrators with specialized knowledge of financial instruments. This provides a private, faster, and more technically appropriate venue for resolving complex issues that can arise with swaps, compared to going to court. Regulators like the SFC are there to supervise and enforce rules, not to serve as a dispute-resolution body for individual contract disputes, and the MPFA handles retirement-related issues rather than derivative contracts. Court proceedings are available but less common when arbitration is specified or preferred for its expertise and efficiency.