In separate requests, National Futures Association (NFA) has proposed amendments to its rulebook to implement recent amendments to the Commodity Exchange Act (CEA) relating to retail foreign exchange (forex) transactions. In its first request, NFA has proposed to increase the adjusted net capital requirement for Forex Dealer Members (FDMs) from $5 million to $10 million and then gradually increase the requirement to $20 million by May 2009. These increases, which are anticipated to take effect starting October 31, 2008, are intended to mirror the requirements set out in recent amendments to the CEA.
NFA’s second proposal integrates the CEA’s new retail foreign exchange dealer (RFED) registration category into the NFA’s forex regulatory framework and provides that all RFEDs will be regulated by NFA as FDMs. The proposed amendments also extend FDM regulation to NFA members that are broker-dealer affiliates primarily or substantially engaged in retail forex transactions; such members may satisfy their FDM net capital requirements in part by way of a guarantee from an affiliated Futures Commission Merchant or broker-dealer.