NFA proposes to reduce certain fees for Forex Dealer Members

Maria Nikolova

Under the proposal, each Forex Dealer Member shall pay an assessment of $.003 on each order segment submitted to NFA’s Forex Transaction Reporting Execution Surveillance System rather than $.004.

The United States National Futures Association (NFA) filed a rule submission letter with the CFTC on November 29, 2019, outlining a proposal concerning Forex Dealer Members (FDMs).

NFA proposes amendments to NFA Bylaw 1301(e) and to the NFA Interpretive Notice entitled Forex Transactions regarding a reduction in the assessments for each order segment fee FDMs submit to NFA’s Forex Transaction Reporting Execution Surveillance System (FORTRESS).

NFA’s Forex regulatory program currently obtains the revenue needed to operate the program from three sources: (i) annual membership dues for FDMs for which NFA serves as the DSRO; (ii) annual membership dues for non-FDM Forex Members; and (iii) an assessment of $.004 on each order segment submitted to NFA’s FORTRESS by FDM Members. NFA utilizes FORTRESS to perform surveillance of FDMs’ trading activity.

NFA explains that it aims to ensure each of its Member regulatory programs is financially self-sufficient and maintains between 10 and 14 months of reserves to cover projected operating expenses. The Forex regulatory program, however, currently maintains reserves beyond the 14 month range. That is why, NFA’s Board of Directors approved staff’s recommendation to reduce the FORTRESS segment fee to bring NFA’s Forex regulatory program’s reserve balance to within the 10-14 month range.

On November 21, 2019, NFA’s Board unanimously approved the proposed amendments to NFA Bylaw 1301(e) and the Interpretive Notice entitled Forex Transactions to reduce the FORTRESS segment fee from $.004 to $.003.

The amended rule states:

Each Forex Dealer Member shall pay an assessment of $.003 on each order segment submitted by the Forex Dealer Member to NFA’s Forex Transaction Reporting Execution Surveillance System. For purposes of this requirement, an order segment is a record of any line of data associated with an order, and includes when an order is added, modified, cancelled or filled”.

NFA is invoking the “ten-day” provision of Section 17(j) of the CEA and plans to make the proposal effective ten days after receipt of this submission by the CFTC unless the regulator notifies NFA that it has determined to review the proposal for approval.

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