Another blow to the spot FX business in the U.S.

Is CME Group lobbying responsible for the NFA’s new anti-spot FX rule?

As reported by leading MT4 bridge provider CMAP LLC, a recently implemented NFA rule change forces U.S.-regulated FCMs (Futures Commission Merchants) to maintain equity capital of at least $20 million if they offer spot FX. The NFA’s previous rules stated that only FCMs / RFEDs which directly faced retail clients needed to have $20 million in capital. The rule change effectively means that even Prime Brokers, which do not face retail clients, need to post $20 million of capital to register and operate in the US.

CMAP drew an interesting connection between the new rules and the CME Group, which in effect competes with the spot FX industry. CMAP points out that:

  • The NFA specifically noted that they received input from the CME as they developed these new rules on capital.
  • The CME Group spent the most of all US exchange operators on government lobbying last year ($1.59 million on lobbying in the year to October 31, 2012).

So, as CMAP infers, does CME Group lobbying = Spot FX in the U.S. gets crushed? Interesting…. 

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.


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