The Commodity Futures Trading Commission approved rules proposed by the National Futures Association to enhance protections for retail customers at Forex Dealer Members. Among other things, FDMs, going forward, will be required to implement and maintain a formal risk program and make certain disclosures on their website regarding their financial condition and the material risks of their business. FDMs will also be required to have an independent risk management unit that reports to the firm’s senior management. Elements of FDMs’ risk management program must include policies and procedures to monitor and manage market, credit, liquidity, foreign currency, legal, operational and counterparty risks; liabilities to retail foreign currency customers risk; and technology, capital and any other applicable risks. FDMs will be required to conduct stress tests on at least a semi-monthly basis of all positions in their proprietary accounts and in each counterparty account. In approving the NFA’s rules, CFTC Commissioner Sharon Bowen nonetheless indicated that “these proposals are not, by themselves, enough to provide retail commodity investors the basic protections they enjoy for every other commodity except foreign exchange.” She said that the CFTC itself “needs to adopt more rigorous regulations on retail foreign exchange dealers,” particularly in the area of reducing currently permitted leverage. The NFA has not yet announced the compliance date for its newly approved FDM rules. (Click here for background on the NFA’s proposal in the article “NFA Proposes Enhanced Capital and Risk Management Requirements for Retail Forex Dealer Members” in the May 31, 2015 edition of Bridging the Week. Click here for another perspective in the article “CFTC Approves NFA’s Enhanced Retail Forex Requirements” in the April 28, 2015 edition of Corporate & Financial Weekly Digest by Katten Muchin Rosenman LLP.)