NFA Imposes New Reporting Requirements On U.S Forex Dealers

FDMs are also now required to disclose the total liability owed to retail customers and to all ECP counterparties on

The American National Futures Association (NFA) has announced today upcoming changes to forex dealer member (FDM) reporting requirements to assist in its monitoring. Starting January 2016 the NFA mandates FDMs to report additional information in the daily Forex Financial Report (FFR) and to add new line items to the supplementary information section of the monthly filing.

New Daily Requirements

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Effective for the January 5, 2016 daily FFR filing, each FDM will be required to provide the following information:

  • Total liabilities the FDM owes to eligible contract participant (ECP) counterparties that are not an affiliate of the FDM and are not acting as a dealer.
  • Total liabilities the FDM owes to ECP counterparties that are an affiliate of the FDM not acting as a dealer.
  • Total liabilities ECP counterparties that are an affiliate of the FDM and acting as a dealer owe to their customers (including ECPs), including liabilities related to retail commodity transactions.
  • Total liabilities the FDM owes ECP counterparties acting as a dealer that are not an affiliate of the FDM, including liabilities related to retail commodity transactions.

For each of the above line items, the balance should be the sum of the amount owed to each ECP (or each customer of the ECP), not the net of all balances.

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New Monthly Requirements

  • 5 percent of all liabilities the FDM owes to ECP counterparties that are not an affiliate of the FDM and that are not acting as a dealer exceeding $10 million.
  • 10 percent of all liabilities the FDM owes to ECP counterparties that are an affiliate of the FDM and are not acting as a dealer.
  • 10 percent of all liabilities ECP counterparties that are an affiliate of the FDM and are acting as a dealer owe to their customers (including ECPs), including liabilities related to retail commodity transactions.
  • 10 percent of all liabilities the FDM owes to ECP counterparties acting as a dealer that are not an affiliate of the FDM, including liabilities related to retail commodity transactions.

The NFA says these will assist firms in properly calculating their net capital requirements under the new requirements.

Online Disclosures

The NFA also reminds FDMs today that new public disclosures must be available on each firm’s website by January 4, 2016. One of these is that FDMs are required to disclose the total liability owed to retail customers and the total liability owed to all ECP counterparties.

With respect to affiliates acting as a dealer, the FDM should include the amount the FDM owes the affiliates (rather than the amount the affiliated dealers owe its customers).

Each FDM is also required to disclose on its website a summary schedule of the firm’s adjusted net capital, net capital and excess net capital reflecting balances as of the month end for the most recent 12 months.

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