The NFA Tighten Their Grip on Spot Forex

0

The National Futures Association have made a couple of announcements recently that strongly suggest the number of US spot forex brokers and their associated introducing brokers are going to decline even further in the near future.  Last week the NFA implied that the proposed new CFTC regulations about forex IBs are going to be implemented much as originally drafted. They pointed out that:

One component of the proposed rules requires all forex introducing brokers, account managers and pool operators to register with the CFTC as forex IBs, CTAs and CPOs and to become Members of National Futures Association (NFA).

In anticipation of the publication of the CFTC's final rules, NFA will be offering registration/compliance workshops in conjunction with the upcoming Futures and Forex Expo. These workshops will outline the registration process and discuss regulatory requirements for each registration category.

Then this week the NFA sent a notice to its members reminding them that:

Amendments to NFA Financial Requirements Section 11(b) and (c) and its related Interpretive Notice will become effective October 1, 2010. Section 11(b) and (c) prohibit a Forex Dealer Member ("FDM") from including assets as current for purposes of determining adjusted net capital and from using those assets to cover currency positions if the assets are held at an affiliate or an unregulated person. An unregulated person is defined by the rule to include any entity except those specifically excluded.

The amendments remove regulated foreign equivalents from this list. Therefore, FDMs will no longer be able to treat assets held at regulated foreign equivalents of the above entities as current for purposes of determining their adjusted net capital or to cover currency positions.

It may of course be mere coincidence that Easy Forex seem to have decided this week to withdraw from the US market.

Filed under Regulation by  #

Leave a Comment

Fields marked by an asterisk (*) are required.