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March 06, 2007
Effective Date of Amendments to Forex Requirements
NFA has received notice that the Commodity Futures Trading Commission has approved changes to NFA Bylaws 306 and 1507; Compliance Rules 1-1, 2-36, and 2-39; Code of Arbitration Section 1; Financial Requirements Sections 1, 11, and 12; and the Interpretive Notice Regarding Forex Transactions. Most of these changes ensure that NFA has jurisdiction over leveraged off-exchange foreign currency contracts when NFA Members act as counterparty to, solicit or introduce, or manage accounts on behalf of retail customers. The remaining changes are technical amendments that clarify the existing forex requirements. All of these amendments became effective on February 13, 2007.
The amendments adopt a new section (b) to Bylaw 1507 to define "forex" as any leveraged off-exchange foreign currency transaction offered to customers who are not eligible contract participants. The definition does, however, contain a limited exclusion for transactions that either 1) result in actual delivery within two days or 2) create an enforceable obligation to deliver between a buyer and seller who have the ability to fulfill that obligation in connection with their line of business (e.g., bona fide hedging activities). The amendments also incorporate this definition into NFA's other forex requirements by reference, eliminate language made superfluous by the new definition, and revise the introductory language to the Interpretive Notice to make it consistent with this definition.
Finally, the Board adopted several technical changes to the existing forex requirements. Those changes:
Questions concerning these changes should be directed to Michael Piracci, Senior Attorney (firstname.lastname@example.org or 312-781-1419) or Kathryn Camp, Associate General Counsel (email@example.com or 312-781-1393).
1 The submission letter does not reflect subsequent amendments to the requirements in effect at that time. The current requirements, as amended, have been incorporated into NFA's electronic rulebook, which is located at this link: National Futures Association | NFA Manual / Rules