CFTC Approves NFA Amended Rules to Better Protect Retail Forex Traders
FinanceMagnates
Published Aug 27, 2015 05:30PM ET
CFTC Approves NFA Amended Rules to Better Protect Retail Forex Traders
By Andy Traveller
Following the Global Financial Crisis, OTC (over the counter) markets have been subject to greater oversight and tighter rules from regulators. Protection of individual, retail investors is one of the underlying motives.
Accordingly, an announcement today from the U.S. Commodity Futures Trading Commission (CFTC) seeks to further protect retail foreign exchange (forex) traders. The U.S. watchdog that oversees futures and option markets has approved rule amendments and a new interpretive notice filed by the National Futures Association (NFA).
The rule amendments and interpretive notice stipulate enhanced requirements for those forex dealers (referred to as FDMs) that are members of the NFA, an organization for the U.S. derivatives industry, including on-exchange traded futures, retail off-exchange foreign currency transactions, and swap transactions.
The rules include: imposing additional capital requirements on FDMs; requiring FDMs to collect security deposits for off-exchange foreign currency transactions from eligible contract participant counterparties in addition to retail counterparties; requiring FDMs to adopt and implement rigorous risk management programs; and requiring FDMs to provide additional market disclosures and firm-specific information on their websites to permit current and potential counterparties to better assess the risks of engaging in off-exchange foreign currency transactions and with conducting business with a particular FDM. Under the new rules, forex dealers will be required to maintain adjusted net capital equal to or in excess of $20 million plus certain percentages of the member’s various liabilities.
As mentioned, the new rules follow a raft of new regulation surrounding OTC derivative trades across multiple jurisdictions. Indeed, Finance Magnates reported today that Australia is set to roll out new rules for margin forex and CFD trading, which will be supervised by the Australian Securities and Investments Commission.
Original Source
Get The News You Want
Written By: FinanceMagnates
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.