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September 24, 2009
Effective Date of Amendments to NFA Financial Requirements Sections 11 and 12 and the Interpretive Notice Regarding Forex Transactions
NFA has received notice that the Commodity Futures Trading Commission has approved changes to NFA Financial Requirements Sections 11 and 12 and related changes to the Interpretive Notice titled "Forex Transactions." The amendments adopt an alternative net capital requirement for Forex Dealer Members (FDMs) and eliminate the existing exemption from the security deposit requirement. These changes will become effective on November 30, 2009.
The amendments to Section 11 revise the existing alternative net capital requirement that is based on an FDM's liabilities to customers.1 As of November 30, 2009, the alternative requirement is $20 million plus 5% of the amount of customer liabilities over $10 million. FDMs that exclusively use straight-through-processing for their customer transactions are exempt from this alternative requirement and need only maintain the $20 million minimum (unless the firm is subject to a higher requirement under FR Section 1).
The amendments to Section 12 eliminate the existing security deposit exemption for FDMs that maintain 150% of their required net capital. This means that, beginning on November 30, 2009, all FDMs must collect a customer security deposit of at least 1% for the currencies listed in Section 12 and at least 4% for all other currencies.2
NFA's submission letters to the Commodity Futures Trading Commission include of the revised language and more detailed descriptions of the changes. You can access electronic copies of the February 23, 2009 submission letters at http://www.nfa.futures.org/news/PDF/CFTC/FRSec11_IntNotc021909.pdf (for the changes to Section 11) and http://www.nfa.futures.org/news/PDF/CFTC/FRSec12_IntNotc021909.pdf (for the changes to Section 12).
Questions concerning these requirements should be directed to Valerie Kretschmer, Manager, Compliance (email@example.com or 312-781-1290) or to Sharon Pendleton, Director, Compliance, (firstname.lastname@example.org or 312-781-1401).
1 The term "customer" does not include eligible contract participants.
2 The currencies that qualify for the 1% security deposit are the British pound, the Swiss franc, the Canadian dollar, the Japanese yen, the Euro, the Australian dollar, the New Zealand dollar, the Swedish krona, the Norwegian krone, and the Danish krone.