New CFTC and NFA Rules and Regulations

Chris Lee

New CFTC regulations. Copied from NFA Notice to Members I-07-14

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 National Futures Association 

Notice to Members I-07-14
March 6, 2007

Effective Date of Amendments to Forex Requirements

NFA has received notice that the Commodity Futures Trading Commission has approved changes to NFA Bylaws 306 and 1507; Compliance Rules 1-1, 2-36, and 2-39; Code of Arbitration Section 1; Financial Requirements Sections 1, 11, and 12; and the Interpretive Notice Regarding Forex Transactions. Most of these changes ensure that NFA has jurisdiction over leveraged off-exchange foreign currency contracts when NFA Members act as counterparty to, solicit or introduce, or manage accounts on behalf of retail customers. The remaining changes are technical amendments that clarify the existing forex requirements. All of these amendments became effective on February 13, 2007.

The amendments adopt a new section (b) to Bylaw 1507 to define “forex” as any leveraged off-exchange foreign currency transaction offered to customers who are not eligible contract participants. The definition does, however, contain a limited exclusion for transactions that either 1) result in actual delivery within two days or 2) create an enforceable obligation to deliver between a buyer and seller who have the ability to fulfill that obligation in connection with their line of business (e.g., bona fide hedging activities). The amendments also incorporate this definition into NFA’s other forex requirements by reference, eliminate language made superfluous by the new definition, and revise the introductory language to the Interpretive Notice to make it consistent with this definition.

Finally, the Board adopted several technical changes to the existing forex requirements. Those changes:

  • Clarify that Compliance Rule 2-39 applies to Associates soliciting or managing forex accounts even when those activities are not conducted on behalf of an NFA Member;
  • Clarify that the concentration charge includes customer positions;
  • Modify current footnotes 5 and 13 of the Interpretive Notice to conform to Compliance Rule 2-39;
  • Clarify that Forex Dealer Members are responsible for all their forex affiliates, including assuring that those affiliates do not engage in forex transactions unless they are authorized to do so under the Commodity Exchange Act; and
  • Make a technical amendment to Financial Requirements Section 12 to update a rule reference.

NFA’s November 13, 2006 submission letter to the CFTC contains a more detailed explanation of the changes and includes a copy of the forex requirements with the amendments marked. You can access an electronic copy of the submission letter through this link:1 National Futures Association | News Center

Questions concerning these changes should be directed to Michael Piracci, Senior Attorney ([email protected] or 312-781-1419) or Kathryn Camp, Associate General Counsel ([email protected] or 312-781-1393).

1 The submission letter does not reflect subsequent amendments to the requirements in effect at that time. The current requirements, as amended, have been incorporated into NFA’s electronic rulebook, which is located at this link: National Futures Association | NFA Manual / Rules

You are receiving this message because you are either a Member of National Futures Association (NFA) or you subscribed to the email subscription list on NFA’s Web site. To cancel or change your subscription at any time, visit the Email Subscriptions page on our Web site at https://www.nfa.futures.org/subscribe/subscribe.asp.

Don’t become a victim of forex fraud, commodity fraud or other types of investment fraud or scams.


Chris Lee

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