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July 26, 2012
Effective Date of Technical Amendments to NFA's Forex Requirements
NFA recently made several minor amendments to its forex requirements - amending NFA Financial Requirements Section 14 and the interpretive notice entitled Forex Transactions to conform the requirements to applicable CFTC Regulations and amending the interpretive notice related to bulk assignment and liquidation to clarify the reporting responsibilities of assignor/transfer or FDMs and assignee/transferee FDMs. These amendments, which are described more fully below, do not impose any additional or new obligations on FDMs and are effective immediately.
NFA Financial Requirements Section 14
NFA Financial Requirements Section 14 and CFTC Regulation 5.8(a) require FCMs/RFEDs to calculate the amount owed to retail forex customers and hold assets equal to or in excess of that amount in one or more qualifying institutions. Currently, Section 14 requires the calculation only with respect to U.S. customers while the CFTC requirement applies to all retail forex customers. Therefore, NFA is amending Section 14 to remove the reference to U.S. customers.
NFA's Interpretive Notice entitled Forex Transactions
In September 2011, as required by the Dodd-Frank Act, the CFTC implemented changes to its regulations to remove any references to relying on credit ratings. To keep NFA's requirements consistent with the underlying rationale of the CFTC's amendments, NFA is amending its interpretive notice entitled Forex Transactions to remove references to credit ratings as a factor NFA considers in determining whether to approve an FDM's affiliate or an unregulated person as a person which the FDM may use to hold firm assets or to cover forex transactions for purposes of calculating adjusted net capital.
NFA Interpretive Notice entitled NFA Compliance Rule 2-40: Procedures for Bulk Assignments or Liquidation of Forex Positions: Cessation of Customer Business
NFA is amending its interpretive notice on bulk assignments and liquidation of forex positions to clarify that immediately after the bulk assignment, liquidation or transfer, Assignee/Tranferee FDMs must provide NFA with a list of affected accounts and the value of each account as of the date of the transaction.
More information on this Interpretive Notice can be found in NFA's March 8, 2012 Submission Letter to the CFTC. Questions concerning these amendments should be directed to Rachel Brandenburg, Manager, Compliance at firstname.lastname@example.org or 312-781-1472 or Sarah Walsh, Manager, Compliance at email@example.com or 312-781-1202.