NFA raises margin requirements on Forex futures

NFA raises margin requirements starting 5 December 2016 on Forex futures with Mexican peso, Japanese yen, and New Zealand dollar.

29 November, AtoZForex – The agency responsible for policing the futures industry in the United States, the US National Futures Association (NFA), stated it would temporarily increase margin requirements. The regulator will implement the increases in requirements for the Forex futures.

NFA raises margin requirements

The regulator will increase the margins on the Mexican peso, Japanese yen, and New Zealand dollar. Also, NFA raises margin requirements would be effective on December 5, 2016. Moreover, the NFA requires traders to increase the minimum security deposits collected and maintained by the Futures Commission Merchant (FDMs). Additionally, the increase for Mexican peso will be to 8 percent and 4 percent for Japanese yen.

Multibank Review
Visit Site
eToro Review
Visit Site
4.8/5 Review
Visit Site

Furthermore, NFA stated that investors involved in New Zealand dollar Forex trades must post a minimum margin of 3 percent of the notional value of the transaction.

Additionally, the Executive Committee determined to reduce minimum margin requirements for Swiss franc currency trades to 3 from 5 percent.

Consequences of SNB unexpected decision

In January 2015, the Swiss National Bank took the unexpected decision to remove the 1.20 floor on the EHR/CHF currency pair. Thus, the NFA boosted the security deposits required for trading in the US dollar and Swiss franc currency pair. Moreover, NFA’s boost of security deposits was a step to limit leverage following steep losses suffered by traders and brokers after the Swiss National Bank’s aforementioned decision.

Also, Section 12 of The NFA’s Financial Requirements contains these changes. The changes allow the executive committee to temporarily restrict amounts of borrowed money or leverage. Yet, they are allowed to restrict the amount only under extraordinary market conditions.

The US self-regulatory entity NFA has recently announced that Thomas Sexton is selected as the next president and chief executive officer.

Think we missed something? Let us know in the comments section below.

Leave a Reply

Your email address will not be published. Required fields are marked *