Notices to Members

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Notice I-07-23

May 15, 2007

Effective Date of New Financial Requirements Section 14: Assets Covering Liabilities to Retail Forex Customers

NFA has received notice that the Commodity Futures Trading Commission has approved a new [hyperlink updated 12-01-2021] Financial Requirements Section 14: Assets Covering Liabilities to Retail Forex Customers. The new section and a related change to the Interpretive Notice entitled "Forex Transactions" will become effective on July 1, 2007.

Section 14(a) requires Forex Dealer Members (FDMs) to calculate the amount owed to U.S. customers for forex transactions and to hold assets equal to or in excess of that amount at a qualifying institution in the United States or in a money center country (as defined in CFTC Regulation 1.49). Section 14(b) explains how to calculate the required amount; Section 14(c) lists the types of qualifying U.S. institutions; Sections 14(d) and (e) describe the requirements for holding funds in a money center country; and Section 14(f) defines "U.S. customer."

The Interpretive Notice has been amended to prohibit FDMs and their Associates and agents from representing that forex funds are more secure because of this new requirement.

Financial Requirements Section 14 and the changes to the Interpretive Notice are included in the February 23, 2007 submission letter to the CFTC. That letter also provides a more detailed explanation of the new requirements. You can access an electronic copy of the submission letter through this link: National Futures Association | News Center.

Questions concerning these changes should be directed to Sharon Pendleton, Director, Compliance, ( or 312-658-6540) or Lauren Brinati, Field Supervisor, Compliance ( or 312-658-6585).

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