Notices to Members

November 28, 2011

Effective Date of Amendments to NFA Bylaws 1301 and 1302 Regarding Forex Dues and Assessments and the Interpretive Notice entitled Forex Transactions

The Commodity Futures Trading Commission (CFTC) recently approved amendments to NFA Bylaws 1301 and 1302 and the related Interpretive Notice entitled Forex Transactions. These amendments, which modify the current dues and assessment fee structure applicable to Forex Dealer Members (FDMs) and non-FDM Forex Members, are effective February 1, 2012. In summary, the amendments modify NFA's current dues and assessment fee structure as follows:

• The annual membership dues of non-FDM NFA Members (i.e., IBs, CPOs and CTAs that are designated as a forex firm) will increase from $750 to $2,500.

• NFA will assess FDMs a fee of .002 on all order segments¹ processed through NFA's Forex Transaction Reporting Execution Surveillance System (FORTRESS).

• NFA will no longer assess FDMs a fee of .0002% on the notional value of each initiating (non-rollover) forex transaction.

• The annual membership dues for FDMs for which NFA is not the DSRO will increase from $13,500 to $25,000.

• The annual membership dues for FDMs for which NFA is the DSRO will be established pursuant to a graduated schedule based on the FDM's annual gross revenue for the previous year (as indicated in the firm's most recent certified financial statement) as follows:

  FDM Annual Gross Revenue	Dues Amount
  $5,000,000 or less	$125,000
  More than $5,000,000 but not more than $10,000,000	$250,000
  More than $10,000,000 but not more than $25,000,000	$500,000
  More than $25,000,000 but not more than $50,000,000	$750,000
  More than $50,000,000	$1,000,000

Application of New Dues and Assessments Structure

Current FDM Members

The application of the newly adopted dues and assessment structure will depend upon each FDM's annual membership renewal date. If an FDM's annual membership renewal date is on or after February 1, 2012, then NFA will invoice the FDM the full amount of the new membership dues for the following membership year at least thirty days before the FDM's renewal date, and the new membership dues amount shall be payable in equal quarterly installments during the course of the FDM's following membership year. For example, an FDM that has $15,000,000 in gross revenue and a renewal date of April 1, 2012 will owe $500,000 for the membership year from April 1, 2012 through March 31, 2013. NFA will invoice the FDM $500,000 at least thirty days before April 1, 2012, and the FDM may elect to pay the balance in full then or in equal quarterly installments of $125,000 on April 1, 2012, July 1, 2012, October 1, 2012, and January 1, 2013.

Since the current dues and fee assessment is effective on February 1, 2012, NFA will apply the new membership dues structure to a current FDM from February 1, 2012 until its next membership renewal date. Specifically, NFA will invoice an FDM with a renewal date after February 1, 2012 the pro rata amount of the dues increase for the remaining months of its current membership year. Recognizing that a portion of the membership dues already paid by an FDM for its current membership year are also for the time period between February 1, 2012 and the FDM's next renewal date, NFA's invoice will deduct this respective amount from the pro-rata amount of the additional dues amount owed.

For example, NFA will calculate the dues for the following FDMs as follows:

• An FDM that has $62,000,000 in gross revenue and a renewal date of September 1, 2012 will receive an invoice from NFA for 7/12ths of its new membership dues less 7/12ths of the membership dues already paid on its most recent renewal in September 2011. Therefore, the FDM will owe $510,417 in additional membership dues-$583,333 representing 7/12ths of the new membership dues amount (i.e. $1,000,000) for the FDM's current membership year minus $72,916, which represents 7/12ths of the dues already paid ($125,000) by the FDM for its current membership year.

• An FDM that has $35,000,000 in gross revenue and a renewal date of July 1, 2012 will receive an invoice from NFA for 5/12ths of its new membership dues less 5/12ths of the membership dues already paid on its most recent renewal in July 2011. Therefore, the FDM will owe $260,417 in additional membership dues-$312,500 representing 5/12ths of the new membership dues amount (i.e. $750,000) for the FDM's current membership year minus $52,083, which represents 5/12ths of the dues already paid ($125,000) by the FDM for its current membership year.

• An FDM that has $4,000,000 in gross revenue and a renewal date of May 1, 2012 will receive an invoice from NFA for 3/12ths of its new membership dues less 3/12ths of the membership dues already paid on its most recent renewal in July 2011. Therefore, the FDM will owe $6,250 in additional membership dues-$31,250 representing 3/12ths of the new membership dues amount (i.e. $125,000) for the FDM's current membership year minus $25,000, which represents 3/12ths of the dues already paid (i.e. $100,000) by the FDM for its current membership year.

• At least 30 days before February 1, 2012, NFA will invoice current FDMs the additional dues amount owed for the current membership year, which will be payable on or before February 1, 2012. FDMs will no longer pay a fee of .0002% on the notional value of each initiating (non-rollover) forex transaction for transactions occurring after January 31, 2012. FDMs will, however, be assessed a fee of $.002 on all order segments processed through NFA's Forex Transaction Reporting Execution Surveillance System (FORTRESS). Beginning on February 1, 2012, NFA will calculate the number of each FDM's order segments processed through FORTRESS and invoice each FDM for this amount on a monthly basis.

New FDMs Post February 1, 2012

Any FDM becoming a member after February 1, 2012 will be assessed initial dues of $125,000. Any existing Member (in another category) that becomes an FDM after February 1, 2012 will be assessed membership dues of $125,000 less the amount of membership dues already paid by the Member for the current membership year. For subsequent years, the FDM will be invoiced membership dues as described above based on the FDM's annual gross revenue indicated in its most recent certified financial statement.

Non-FDM Forex Designated Members (i.e., IBs, CPOs, CTAs)

Similar to FDMs, the application of the newly adopted dues structure will depend upon each IB, CPO, and CTA's annual membership renewal date. If a firm's annual membership renewal date is on or after February 1, 2012, then NFA will invoice the firm the full amount of the new membership dues for the following membership year at least thirty days before the firm's renewal date, and the new membership dues amount shall be payable in full on or before the firm's membership renewal date.

Since the current dues and fee assessment is effective on February 1, 2012, NFA will apply the new membership dues structure to a current forex IB, CPO, and CTA from February 1, 2012 until each firm's next membership renewal date. Specifically, NFA will invoice a firm with a renewal date after February 1, 2012 the pro rata amount of the dues increase for the remaining months of its current membership year. Recognizing that a portion of the membership dues already paid by the firm for its current membership year are also for the time period between February 1, 2012 and the firm's next renewal date, NFA's invoice will deduct this respective amount from the pro-rata amount of the additional dues amount owed.

For example, NFA will calculate the dues as follows-an IB, CPO, or CTA that has a renewal date of July 1, 2012 will receive an invoice from NFA for 5/12ths of its new membership dues less 5/12ths of the membership dues already paid on its most recent renewal in July 2011. Therefore, the IB, CPO or CTA will owe $730 in additional membership dues-$1,042 representing 5/12ths of the new membership dues amount (i.e. $2,500) for the firm's current membership year minus $312, which represents 5/12ths of the dues already paid (i.e. $750) by the firm for its current membership year.

At least 30 days before February 1, 2012, NFA will invoice currently designated forex IBs, CPOs, and CTAs the additional dues amount owed for the current membership year, which will be payable in full on or before February 1, 2012.

Additional information on these amendments is available in NFA's September 2, 2011 submission letter to the CFTC. Questions concerning the new dues and assessment fee structure should be directed to Michael Saturley, Director, Treasurer's Office at msaturley@nfa.futures.org or 312-781-1386 and/or Matt Saxinger, Sr. Analyst, Treasurer's Office at msaxinger@nfa.futures.org or 312-781-1417.

¹ An "order segment" is a record of any line of data associated with an order. Each of these is a separate segment: (1) an order is added, (2) an order is modified, (3) an order is cancelled or filled. In addition, any unfilled open orders that are carried over by the system are considered a new order segment the next day.