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July 24, 2007
Effective Date of Forex Dues and Assessments: Amendments to NFA Bylaws 1301, 1302 and 1303 and the Interpretive Notice Regarding Forex Transactions
National Futures Association has amended Bylaws 1301, 1302 and 1303 and the Interpretive Notice regarding Forex Transactions to increase Forex Dealer Member (FDM) dues, to adopt an annual fee for unregulated solicitors and account managers, and to collect an assessment fee. The amendments have been approved by the Commodity Futures Trading Commission and will become effective on October 1, 2007. FDM dues will continue to be payable on the FDM's membership renewal date. The following table shows the new amounts.
|Amount of annual Gross Revenue From Forex Transactions||Dues if NFA is the DSRO||Dues if NFA is not the DSRO|
|$500,000 or less||$50,000||$45,875|
|More than $500,000, but not more than $2 million||$75,000||$70,875|
|More than $2 million, but not more than $5 million||$100,000||$95,875|
|More than $5 million||$125,000||$120,875|
Bylaw 1301 also requires FDMs to pay an annual fee based on the highest number of unregulated solicitors and account managers that they were responsible for at any given time for the 12 month period preceding the Members' annual dues notice. The following table lists the fee levels.
|Number of Unregulated Entities||Annual Fee|
|100 or more||$50,000|
The invoice for annual dues, which is sent approximately 45 days before the Member's renewal date, will also include the fee for unregulated (non-Member) solicitors and account managers. This fee is computed from information in the FDM's weekly report. For the first invoice after the change becomes effective, NFA will look at September 1, 2007 forward to calculate the number of unregulated solicitors and account managers.
As of September 1, 2007, the weekly report form will be revised to include a column that identifies whether a listed solicitor and account manager is a Member or non-Member. Firms should confirm that the listed non-Member solicitors and account managers are only those that the FDM is responsible for under Rule 2-36(d). For example, firms should not report foreign entities that do not solicit U.S. customers or manage U.S. customer accounts. If an FDM includes non-Member solicitors or account managers that it is not responsible for under Rule 2-36(d) in its weekly report, then it may be charged a higher fee than would otherwise be due, and the firm will not receive a refund for the difference.
An FDM must ensure that its weekly report is accurate and up-to-date. A Member's failure to comply with its reporting obligations under Financial Requirements Section 13 could result in disciplinary action.
Amended Bylaw 1301 also provides for an assessment fee of .0001% of the notional value of each initiating forex transaction, or $.01 for each $10,000. For transactions with a notional value less than $10,000, the FDM may aggregate separate transactions and pay $.01 on each multiple of $10,000. For transactions of $10,000 or above, the firm should round to the nearest cent. Transactions with eligible contract participants are exempt from the fee. These transaction fees are payable monthly, and NFA will send each FDM a reporting form approximately 45 days before their due date.
The new amended Bylaws and the changes to the Interpretive Notice are included in the May 22, 2007 submission letter to the CFTC. That letter also provides a more detailed explanation of the new requirements. This letter can be accessed electronically at http://www.nfa.futures.org/news/newsRuleSubLetter.asp?ArticleID=1864.
Questions concerning these changes should be directed to Michael Saturley, Director, Treasurer's Office (firstname.lastname@example.org or 312-781-1386) or Jennifer Sunu, Director, Compliance (email@example.com or 312-781-2259).