US NFA alters min margin requirements for MXN, JPY, NZD, CHF

US NFA alters min margin requirements for MXN, JPY, NZD, CHF

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US’ National Futures Association (NFA) said on Monday it is setting a higher minimum security deposit for forex transactions to the Mexican peso (MXN), the Japanese yen (JPY), and the New Zealand dollar (NZD), while decreasing that for pairs with the Swiss franc (CHF). The reason for this is the recent market volatility.

The new margins will come into effect at 5 pm (CST) on 5 December, 2016, until further notice and will apply for both new and existing positions.

Following are the new margin requirements set by the NFA:

  • Mexican peso – 8% margin
  • Japanese yen – 4% margin
  • New Zealand dollar – 3% margin
  • Swiss franc – 3% margin

Under the local regulaltions, each registered Forex Dealer Member (FDM) have to collect and maintain the a pre-set minimum security deposit for each forex transaction between the FDM and its customers and/or eligible contract participant counterparties.

The NFA’s decision to alter margin requirements comes shortly after the CME and ICE exchanges altered them for forex futures.

Earlier this month, the NFA also raised to 5% the minimum security deposits of British pound (GBP) pairs required to be collected and maintained by FDMs prompted by the UK Brexit vote and its effects on the financial markets.

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.

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