NFA further tightens reporting requirements on U.S. Forex brokers; new disclosures must be made public


One of the new disclosures is the total customer liability reported on the daily Forex Financial Report (FFR) for the last 12 months. To satisfy this requirement, FDMs are required to disclose the total liability owed to retail customers and the total liability owed to all ECP counterparties.

The U.S. National Futures Association (NFA) this week has in conjunction with the changes to Forex dealer member (FDM) capital requirements that take effect on January 4, 2016 is requiring FDMs to report additional information in the daily Forex Financial Report (FFR), which will assist NFA in its ongoing monitoring of FDMs.

In addition, NFA is adding new line items to the supplementary information section of the monthly 1-FR-FCM (or FOCUS II) filing, which will assist firms in properly calculating their net capital requirements under the new requirements.

Additional information required in the daily FFR:

Effective for the January 5, 2016 daily FFR filing, containing information as of January 4, 2016, 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 (new question 1).
  • Total liabilities the FDM owes to ECP counterparties that are an affiliate of the FDM not acting as a dealer (new question 2).
  • 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 (new question 3).
  • 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 (new question 4).

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 for question 3), not the net of all balances.

Additional information required in the supplementary information section of the monthly 1-FR-FCM (or FOCUS II) filing:

In order to assist FDMs in calculating their net capital requirements, FDMs will be required to include the following line items in the supplementary information section of the monthly 1-FR-FCM (or FOCUS II) filing, beginning with the January 31, 2016 monthly filing:

  • 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.

Public disclosures to be made available on the FDM’s website

NFA also reminds FDMs that the public disclosures required by NFA Compliance Rule 2-36 must be available on each firm’s website by January 4, 2016.

One of the new disclosures is the total customer liability reported on the daily FFR for the last 12 months. To satisfy this requirement, FDMs are required to disclose the total liability owed to retail customers and the total liability owed to all ECP counterparties.

Firms are not required to separately disclose each of the ECP reporting categories noted on the FFR. Additionally, 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).

Finally, FDMs are not required to include the daily information for the full 12 months beginning with the January disclosure. Firms should report the January 4, 2016 information on January 5 and continue to update the information with each subsequent day until daily information for 12 months is disclosed. Firms should then keep the information current for the most recent 12 months.

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. FDMs must include the most recent 12 months (ending with November 2015 information) on their website on January 4, 2016.

After the initial disclosure, each FDM must keep this information current by making new month-end information publicly available on its website by the end of business on the date in which the FDM submits the applicable information to NFA.

More information on the changes to FDM capital requirements is available from LeapRate by clicking here.

To see the official release on the new reporting requirements issued this week click here.

Related News

arrow

NFA further tightens reporting requirements on U.S. Forex brokers; new disclosures must be made public

1

Send this to a friend

Subscribe to LeapRate
PGlmcmFtZSBzcmM9Ii93cC1jb250ZW50L2E0bHIvaGFuMTZyZXNfNjI1eDQwMC5odG1sIiB3aWR0aD0iNjI1IiBoZWlnaHQ9IjQwMCIgZnJhbWVib3JkZXI9IjAiIHN0eWxlPSJib3JkZXI6bm9uZTsiIHNlYW1sZXNzPjwvaWZyYW1lPg==
PGlmcmFtZSB3aWR0aD0iNjQwIiBoZWlnaHQ9IjM5NSIgc3JjPSJodHRwczovL3d3dy55b3V0dWJlLmNvbS9lbWJlZC80Mzc5MThJbFc5ST9yZWw9MCZjb250cm9scz0wJnNob3dpbmZvPTAiIGZyYW1lYm9yZGVyPSIwIiBhbGxvdz0iYXV0b3BsYXk7IGVuY3J5cHRlZC1tZWRpYSIgYWxsb3dmdWxsc2NyZWVuPjwvaWZyYW1lPg==
Fill out the form below for more information
for lising in LeapRate's Forex Yellow Pages

Please enter the company name, email address to reach you and phone # (optional):

Please fill out the message field to the right for any questions or special inquiry:
PGlmcmFtZSBzcmM9Imh0dHBzOi8vd3d3LmxlYXByYXRlLmNvbS9hNGxyMTcvNjAweDQyNS82MDB4NDI1TFIuaHRtbCIgZnJhbWVib3JkZXI9IjAiIHdpZHRoPSI2MDAiIGhlaWdodD00MjUiPjwvaWZyYW1lPg==
PGlmcmFtZSBzcmM9Imh0dHBzOi8vd3d3LmxlYXByYXRlLmNvbS9hNGxyMTcvdWZ4MTgvNjAweDQyNV8xc3QtVGltZUxlYXBSYXRlLWVuLUdCX0hUTUw1Lmh0bWwiIGZyYW1lYm9yZGVyPSIwIiB3aWR0aD0iNjAwIiBoZWlnaHQ9NDI1Ij48L2lmcmFtZT4=
PGlmcmFtZSBzcmM9Ii8vY2RuLmJhbm5lcnNuYWNrLmNvbS9iYW5uZXJzL2JjaWVod29iOC9lbWJlZC9pbmRleC5odG1sP3VzZXJJZD0zMTU5MzQwNiZ0PTE1MTAxMzg3MTAiIHdpZHRoPSIxMDAlIiBoZWlnaHQ9IjEwMCUiIHNjcm9sbGluZz0ibm8iIGZyYW1lYm9yZGVyPSIwIiBhbGxvd3RyYW5zcGFyZW5jeT0idHJ1ZSIgYWxsb3dmdWxsc2NyZWVuPSJ0cnVlIj48L2lmcmFtZT4=