NFA Proposes Diminution Of Its Exemptive Authority Under Capital Rules

The National Futures Association ("NFA") proposed amendments to NFA Financial Requirements ( Section 11), Security Deposits for Forex Transactions with Forex Dealer Members ( Section 12), and Forex Transactions ( NFA Interpretive Notice 9053) that would diminish the NFA's own exemptive authority.

CFTC capital requirements for forex dealer members ("FDMs") generally prevent an FDM from including in its regulatory capital any assets held by an affiliate that is not subject to a U.S. financial regulator, albeit subject to the possibility of obtaining an NFA exemption pursuant to CFTC Rule 5.7. Absent an exemption, an FDM is generally prevented from obtaining an offset for positions booked with or through an affiliate. The NFA proposal addresses concerns regarding obtaining access to funds where they are held outside the United States. The proposal would have the effect of taking away certain NFA exemptive authority.