Do not invest more money than you can afford to lose.
The US National Futures Association (NFA) has announced it is raising to 5% the minimum security deposits of GBP required to be collected and maintained by its Forex Dealer Members (FDMs). The new requirement is prompted by the UK Brexit vote and comes into effect at 5 PM (CST) on November 7. It is valid until further notice.
Under Section 12 of the financial requirements of the NFA, FDMs are obliged to collect and maintain minimum security deposits for each forex transaction between them and their customers. For transactions in Swiss franc, Canadian dollar, Japanese yen, Euro, Australian dollar, New Zealand dollar, Swedish krona, Norwegian krone, and Danish krone are required to 2% of the notional value. In the same group was also the British pound.
For transactions in other currencies, the requirement is for 5% of the notional value.
The NFA is a self-regulatory organization overlooking at the US derivatives markets, including on-exchange traded futures, retail off-exchange forex and over-the-counter (OTC) derivatives (swaps). It has tens of thousands of firms and associates as members. It acts as an external dispute resolution (EDR) organization in case of disputes between its members and their clients in smaller cases with arbitration claims of up to $150,000.
Its members are required to comply with certain rules and regulations and to provide reports on a daily, monthly, and quarterly basis. It recently introduced additional reporting requirements for FDMs.
Since the Brexit vote in June and the ensuing market volatility, the British pound’s value has been steadily declining, reaching several historical lows. Last week’s court ruling that the Brexit cannot be triggered without Britain’s parliament ruling on it, helped the pound gain a significant portion of the lost ground.
