Compliance Requirements for Retail Foreign Exchange Dealer (RFED) Applicants

Firms applying as a retail foreign exchange dealer (RFED) have a financial filing requirement (either a Form 1-FR-FCM or a FOCUS report), which can be met in one of the following ways:  

  • A financial statement certified by an independent public accountant as of a date not more than 45 days prior to the date on which such report is filed; or
  • A financial statement as of a date not more than 17 business days prior to the date on which such report is filed and a financial statement certified by an independent public accountant as of a date not more than one year prior to the date on which such report is filed.

NFA expects an applicant RFED's adjusted net capital to be above the early warning requirement. Applicants who cannot meet the early warning requirement are subject to additional reporting obligations until they have sufficient capital.

A firm's registration as an NFA Member RFED will not be complete until the RFED designates an individual as a Chief Compliance Officer (CCO) and lists the CCO as a principal of the RFED.

An RFED may also need to provide compliance procedures, additional documentation and written representation to NFA for review as part of the application. Such procedures, documents and representation would generally include, but are not limited to:  

An RFED's application will not be complete until it can satisfy its requirements under NFA Financial Section 14. This includes having qualifying institutions holding assets used to cover the RFED's liabilities to its retail forex customers and reporting the balances in the RFED's account(s) to NFA in the form and manner prescribed by NFA.

As NFA is conducting a review of the firm's financial operations, NFA will often request additional items not listed above, such as bank statements, general ledger, wire advices and cancelled checks. An RFED will not be approved until NFA reviews and approves all requested items. These financial or procedural items can be submitted to NFA through NFA's Regulatory Filing System.