The Commodity Futures Trading Commission has approved amendments to National Futures Association’s (NFA’s) rules and an accompanying interpretive notice governing Forex Dealer Members (FDMs). Specifically, the rule amendments require FDMs to include liabilities owed to eligible contract participant (ECP) counterparties in computing their adjusted net capital. (Previously, FDMs were required to include only liabilities owed to retail customers in computing adjusted net capital.) The amendments additionally require FDMs, for the first time, to collect security deposits for forex transactions from ECP counterparties.
In addition, the amendments and interpretive notice extend to FDMs certain obligations currently imposed on futures commission merchants (FCMs) by CFTC Regulations. Drawing on CFTC Regulation 1.11, FDMs are required to adopt and implement a written risk management program. Similarly, FDMs are required to make available on their websites a firm-specific disclosure statement similar to that required of FCMs under CFTC Regulation 1.55. The disclosure statement must be updated at least annually.
More information is available here.
NFA’s rule amendments and related interpretive notice are available here.