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Felix Shipkevich October 31, 2011

The NFA has finalized several proposed amendments to rules governing forex dealer members (“FDM”). These amendments were first proposed September in rule submission letters to the CFTC. One set of changes will come into effect next month, while the second will not be in place until January.

The first set of amendments concerns electronic trading systems and assignee/transferee rules. Notice for Compliance Rule 2-36(e): Supervision of the Use of Electronic Trading Systems has been amended to require forex firms to “accurately and completely” discuss their trading platforms in promotional materials, monitor their proprietary trading activities, and notify all customers affected by any electronic trading disruption, no matter how brief.

The amendments to NFA Compliance Rule 2-40 on assignee/transferee rules add reporting obligations for forex account assignees and transferees. FDMs and IBs that accept assigned or transferred accounts pursuant to bulk transfer rules must obtain personal and financial information from retail clients, provide retail clients with disclosures, and obtain signatures within 60 days of the transfer. Amendments to these rules and notices go into effect on November 15, 2011.

The second set of amendments affects NFA Financial Requirements Section 13 and its related interpretive notice. These amendments require forex dealer members to file daily, monthly, and quarterly reports.

The daily reports must include:

  • details of the FDM’s capital position;
  • an assessment of its ability to meet obligations to retail forex customers;
  • the net aggregate value for all open futures and options forex positions.

The monthly reports must now include:

  • operational information;
  • the number of retail and ECP forex customers;
  • number of active customers, both US and foreign domiciled.

The quarterly reports must include:

  • up-to-date performance disclosures;
  • total number of non-discretionary retail forex customer accounts, including the percentage of  profitable and not profitable accounts.

The amendments will become effective on January 2, 2012, and the first report is due on January 17.

Read more about these NFA forex amendments.

Creative Commons License photo credit: joeltelling

35 thoughts on “NFA finalizes forex amendments

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