The Commodity Futures Trading Commission has approved amendments to Section 11 of National Futures Association’s Financial Requirements, which replace the current alternative capital requirement for Forex Dealer Members (FDMs), based on 1% of net notional value, with a new requirement based on 5% of liabilities to retail forex customers. The CFTC also approved changes to NFA’s Interpretive Notice entitled “Forex Transactions with Forex Dealer Members,” which make clear that FDMs must maintain records of these liabilities. The new capital requirement and the corresponding amendment to the Interpretive Notice will become effective as of March 31.
CFTC Issues New Governance Guidelines for Futures Exchanges
The Commodity Futures Trading Commission has issued new “acceptable practices” as a voluntary safe harbor for compliance with “Core Principle 15,” a provision of the Commodity Exchange Act that requires exchanges to minimize conflicts of interest in their decision-making processes. The acceptable practices call for (i) exchange boards to consist of at least 35% public directors; (ii) each exchange to establish a board-level Regulatory Oversight Committee, composed entirely of public directors, to oversee the exchange’s performance of its day-to-day self-regulatory functions; and (iii) each exchange disciplinary panel to have at least one public member.
The acceptable practices will be effective 30 days after publication in the Federal Register. However, existing exchanges will have two years or two board election cycles, whichever comes first, to implement the acceptable practices or otherwise demonstrate full compliance with Core Principle 15.