September 13, 2010, New York, NY -The final Commodity Futures Trading Commission (“CFTC”) rules regarding off-exchange retail foreign currency trading1 were released on August 30, 2010. Alpari (US) (“Alpari”) would like to take this opportunity to address the rules and what it will mean for you and the company’s business.
Alpari supports the regulations recently enacted to protect traders and have been in touch with the NFA and CFTC to obtain a comprehensive understanding of the rule and its implications.
As a member of the NFA, Alpari has already been adhering to numerous significant regulations2 regarding off-exchange FX trading. As of October 18, 2010, these regulations, along with others, are now being mandated by the CFTC for the rest of the FX industry.
Highlights of the Upcoming CFTC Rule
When the new CFTC regulations go into effect on October 18, 2010, the U.S. FX industry will be subject to additional requirements:
• Alpari will be registered with the CFTC under the new registration category of Retail Foreign Exchange Dealer (“RFED”). Since Alpari also offers exchange traded futures, Alpari will be dually registered as an FCM and RFED.
• Any Introducer who is domiciled in the U.S. will need to be registered with the NFA in the appropriate capacity for which their business is conducted, such as IB, CTA or CPO. The NFA Registration Department has stated that they will be expediting all applications prior to this date. Alpari will not be able to do business with these Introducers if they have a “pending” registration status with the NFA.
• U.S. RFED’s will be required to collect and maintain a security deposit of 2% of the notional value (50:1 leverage) of retail transactions for major currency pairs and 5% (20:1 leverage) for all others.3 Alpari received clarification from the NFA on what constitutes “major currency pairs.” A comprehensive list can be found within Section 12 of the NFA’s Financial Requirements.4
Effective October 18, 2010, all client account settings will be automatically adjusted to the new requirements. Alpari clients will be contacted in the coming days with more information about how their current trading activity will be affected.
Alpari is Available to Help
Alpari will continue to be in touch with the NFA and CFTC regarding these rules and is making it a top priority to keep customers continually informed about any pertinent information and changes to Alpari business practices.
As of September 2, 2010, the NFA began accepting applications for registration. Alpari is available to answer your questions about the registration process and offer assistance to IBs, CTA’s, CPO’s and others who need help registering with the NFA. Additionally, the NFA will be hosting Registration/Compliance Workshops for currently unregistered IBs, CTA’s and CPO’s at the Las Vegas Futures & Forex Expo, where Alpari (US) will be the Platinum sponsor. We encourage you to attend, and feel free to reach out to us during the expo with any questions you may have.
If you have further questions, our Client Services team is available by phone at 646-825-5760 or by email at cs@alpari-us.com. You can also visit us online at www.alpari-us.com.
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1.Regulation of Off-exchange Retail Forex Transactions and Intermediaries 2.Current NFA regulations include requirements for registration of the company and its principals, capital, disclosure, supervision, record keeping and trading and operational standards 3.The current security deposit requirements are 1% (100:1 leverage) for major currency pairs and 4% (40:1 leverage) for all others. 4.The NFA defines the major currency pairs as 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.
