NFA proposes amendments to the Interpretive Notice regarding Forex Transactions
Felix Shipkevich - December 3, 2009NFA Bylaw 1301(e) requires Forex Dealer Members to pay annual dues that are
graduated according to the firm’s gross annual revenue from customers (e.g.,
commissions, mark-ups, mark-downs) for its forex activities. Profits and losses
from proprietary trades are not to be included. To calculate dues:
• Start with the FCM dues imposed by NFA Bylaw 1301(b)(ii);
• Add $44,375 if [...]
NFA proposes amendments to Financial Requirements Section 15 regarding FDM internal financial controls
Felix Shipkevich - December 3, 2009Financial Requirements Section 15 currently requires firms to provide NFA with an internal control report prior to acting as an FDM. This report must be prepared by an independent public accountant registered with the Public Company Accounting Oversight Board and must include representations by the accountant that the FDM’s internal financial controls have no material [...]
Members must retain a registered Principal over whom NFA has jurisdiction
Felix Shipkevich - June 9, 2009Failure to retain at least one Principal registered as an “associated person” will henceforth be regarded by the NFA as a request to withdraw from NFA membership, unless membership is in the contract market category.
Prohibition of loans by commodity pools to CPOs and affiliates
Felix Shipkevich - May 27, 2009NFA Compliance Rule 2-45 prohibits direct or indirect loans or any advance of pool assets between a pool and its CPO or any other affiliated person or entity, though participants, including a CPO’s principal, may barrow against their equity interests in a pool. Exemptions are to be handled on a case by case basis.
Articles of Incorporation amended to “provide NFA with additional flexibility regarding FCM representation” on its Board
Felix Shipkevich - May 18, 2009Effective May 18, the NFA’s Articles of Incorporation will mandate that the FCM Nominating Committee fill the NFA’s eight FCM dedicated Board seats by drawing two representatives from top ten ranked FCMs, two from non-top ten FCMS, and four at large.
Offsetting transactions, Compliance Rule 2-43(b)
Felix Shipkevich - May 5, 2009The NFA will require that FDMs close trades on a first-in first-out basis beginning July 31, 2009. This effectively prevents them from facilitating the practice known as hedging, where a trader opens two canceling positions in the same account. Rule 2-43(b) is as follows:
Forex Dealer Members may not carry offsetting positions in a customer
account but [...]
Price adjustments, Compliance Rule 2-43(a)
Felix Shipkevich - April 13, 2009FDMs will bear the burden of invalid prices generated by their own software, traders, matching systems, or user interfaces.
New security deposit requirements cap leverage
Felix Shipkevich - February 23, 2009FDMs must collect security deposits of 1% of notional value on major currency pairs and 4% on other currency pairs. FDMs that maintain 150% of their capital requirement will be exempted. The Interpretive Notice cites customer safety as a reason for the leverage restrictions. It also notes that the new standards bring security deposit requirements [...]
New capital requirements for FDMs
Felix Shipkevich - February 23, 2009In addition to the $20 million required by the CFTC Reauthorization Act of 2008, FDMs with over $10 million in customer liabilities and will be subject to capital requirements that take into account their total liabilities. FDMs that execute customer transactions exclusively via STP will be exempted. In general, the following formula will apply:
Amount required [...]
Forex News
Felix Shipkevich - September 4, 2008NFA Announcement: Definition of a Forex Dealer Member:
Proposed Amendments to NFA Bylaw 306, NFA Financial Requirements
Section 11(a), and the Interpretive Notice Regarding Forex Transactions
http://www.nfa.futures.org/news/PDF/CFTC/Bylaw306_FR11a_c082208.pdf
