§ 5.9. Security deposits for retail forex transactions.
314 words·~1 min read·
/us/cfr/t17/s§ 5.9·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(a)Each futures commission merchant engaging, or offering to engage, in retail forex transactions and each retail foreign exchange dealer must collect from each retail forex customer a minimum security deposit for each retail forex transaction equal to the applicable percentage as set by the registered futures association of which they are a member; Provided, that the registered futures association's security deposit requirement cannot be less than:
(1)2% of the notional value of the retail forex transaction for major currency pairs and 5% of the notional value of the retail forex transaction for all other currency pairs;
(2)For short options, 2% for major currency pairs and 5% for all other currency pairs of the notional value of the retail forex transaction, plus the premium received by the retail forex customer; or
(3)For long options, the full premium charged and received by the futures commission merchant or retail foreign exchange dealer from the retail forex customer.
(b)Security deposits must be made in the form of cash or other financial instruments that comply with the requirements specified in § 1.25 of this chapter.
(c)A futures commission merchant or retail foreign exchange dealer is required to collect additional security deposits from a retail forex customer, or liquidate the retail forex customer's positions, if the amount of the retail forex customer's security deposits maintained with the futures commission merchant or retail foreign exchange dealer are not sufficient to meet the requirements of this section.
(d)A major currency pair security deposit percentage is only applicable when both sides of a retail over-the-counter foreign exchange transaction involve major currencies.
(e)Any registered futures association whose members serve as counterparties to retail forex transaction shall designate which currencies are "major currencies", and shall review, no less frequently than annually, major currency designations and security deposit requirements, and shall adjust the designations and requirements as necessary.