NFA raises required minimum security deposits for certain FX transactions

Maria Nikolova

The Association has determined to increase the minimum security deposits required to be collected and maintained by FDMs for the Norwegian Krone and the Mexican Peso.

The United States National Futures Association (NFA) is changing the requirements for the security deposits for FX transactions with Forex Dealer Members (FDMs).

Let’s note that each Forex Dealer Member has to collect and maintain certain minimum security deposit for each forex transaction between the Forex Dealer Member and its customers and/or eligible contract participant counterparties. At present (before the changes), the required deposits are:

  • (i) 2% of the notional value of transactions in the British pound, the Swiss franc, the Canadian dollar, the Japanese yen, the Euro, the Australian dollar, the New Zealand dollar, the Swedish krona, the Norwegian krone, and the Danish krone;
  • (ii) 5% of the notional value of other transactions;
  • (iii) for short options, the above amount plus the premium received; and
  • (iv) for long options, the entire premium.

The Executive Committee may temporarily increase these requirements under extraordinary market conditions.

Today, the Association said that, in light of the recent volatility in the currency markets, and the margin increases that CME and ICE have implemented with respect to foreign currency futures involving the Norwegian Krone and Mexican Peso, the Executive Committee has determined to increase the minimum security deposits required to be collected and maintained by FDMs under NFA Financial Requirements Section 12 to the following:

  • Norwegian Krone – 7%;
  • Mexican Peso – 10%.

These increases become effective, for both new and existing positions, at 5:00 p.m. CT on March 22, 2020. The changed requirements remain in effect until further notice.

Read this next

Digital Assets

Binance upgrades Bahrain license to offer full-suite of crypto services

The Central Bank of Bahrain (CBB) has granted Binance its Category 4 license as a fully-fledged crypto-asset service provider (CASP).

Digital Assets

BitMEX spot exchange hits $24 million in daily volume

The newly-launched spot market of crypto exchange BitMEX reported a record of $24 million in 24-hour trade activity on May 25.

Retail FX

Financial Commission certifies offering of trade copier 4X Solutions

The Financial Commission, an independent self-regulatory compliance specialist for the financial services industry, has certified the trading technology offered by trade copier 4X Solutions.

Industry News, Inside View

LIVE from Devexperts webinar for brokers on Fractional Trading

Finance Feeds is providing live coverage of the event that aims to help brokers discover fractional shares as a key tool for a successful brokerage business in today’s trading industry.

Industry News, Retail FX

ASIC celebrates retail ban on binary options as 68% of wholesale clients lose money

In the 13 months before the ban, between 74% and 77% of active retail clients lost money trading binary options. The product intervention order does not apply to wholesale clients.

Crypto Insider

Investing in crypto: how to stay away from weak players

The main reason behind the hacks of crypto exchanges is weak key management. For example, all 4 hacks that took place in 2021 were caused by the ability of hackers to obtain access to hot wallets. 

Retail FX

Vantage launches swap-free gold XAUUSD trades for all clients until end of July

“As the greenback continues to strengthen, we want to support traders who remain bullish on gold or seek short term trading opportunities amid the volatility”

Industry News

Broadridge launches ESG reporting solution ahead of European regulation SFDR

The Broadridge managed solution for EET adds to existing Broadridge services, including European PRIIPs Template, European MiFID Template, Solvency II Tripartite Template and many more across the European jurisdictions.

Industry News

iCapital to acquire embedded structured investment platform SIMON

SIMON’s platform, SPECTRUM, is a multi-dimensional allocation analysis and portfolio construction tool designed to evaluate how structured investments and/or annuities may fit into a portfolio. 

<