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- 25 October, 2008 -
- Forex -
- Tags : cftc, Forex, Forex Dealer Member, NFA
- 14 Comments
Yesterday the NFA announced that Forex Dealer Members, those brokers who engage in Forex transactions with retail customers, will need to have a minimum net capital of $10 million by October 31, 2008. This doubles the current minimum net capital of $5 million.
The NFA has been very aggressively moving to regulate the retail forex market. Congress has helped through passing the Farm Bill, but separately from the Farm Bill, the NFA, in conjunction with the CFTC, has been moving towards regulating not only the managers of Forex hedge funds, but also the Forex dealers.
Earlier this year the NFA changed the minimum net capital for Forex Dealers from $1 million to the current $5 million; there are two more hikes scheduled to be implemented in the first half of next year. While this will undoubtedly serve to protect investors, it also cast a huge burden on current and future Forex Dealer Members. The NFA notice is posted below and can be found here.
Notice I-08-27
October 24, 2008
Net Capital Requirements for Forex Dealer Members
On October 22, 2008, the Commodity Futures Trading Commission approved increases to NFA’s capital requirements for Forex Dealer Members (FDMs). As stated in a July 23, 2008 Notice to Members, the minimum requirement will be $10 million as of October 31, 2008, $15 million as of January 17, 2009, and $20 million as of May 16, 2009.
Questions concerning these requirements should be directed to Sharon Pendleton, Director, Compliance (spendleton@nfa.futures.org or 312-781-1401) or Valerie Kretschmer, Manager, Compliance (vkretschmer@nfa.futures.org or 312-781-1290).
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