The Commodity Futures Trading Commission has approved and set effective dates for a series of amendments to certain National Futures Association (NFA) requirements relating to Forex Dealer Members (FDMs) and forex customer statements.
The first set of amendments will take effect on April 1, 2009. These include changes made to NFA Compliance Rule 2-36 and require that hypothetical results used in forex promotional material comply with NFA Compliance Rule 2-29(c) and the related NFA Interpretive Notice to the same extent as performance results for futures contracts. FDMs and their associates also will be prohibited from exercising discretionary trading authority over customer accounts for which the FDM acts as counterparty.
Beginning on April 1, FDM weekly reports must be submitted by a supervisory employee who is, or is supervised by, a listed principal of the firm who is registered as an associated person, and FDMs will be required to have in place a written policy detailing their procedures for calculating rollover charges and payments.
Additional amendments will take effect as of June 1, including the implementation of new NFA Compliance Rule 2-44, which specifies the information that must be included in FDM confirmations and monthly statements and requires that customers be provided with access to daily statements. Amendments to NFA’s Interpretive Notice to Compliance Rule 2-36(e), relating to FDMs’ obligations to supervise the use of electronic trading systems, will take effect at the same time and will, among other things, require an FDM to notify NFA of the trading platform(s) that it uses, audit its trading system annually (which audit must be performed by an outside party initially and on a biennial basis thereafter), provide customers with certain disclosures about the system and its potential risks, and provide both customers and NFA with reports of realized and unrealized profits and losses (at year-end and upon request, respectively).