(a) Margin required. A banking institution engaging, or offering
to engage, in retail forex transactions must collect from each retail
forex customer an amount of margin not less than:
(1) Two percent of the notional value of
the retail forex transaction for major currency pairs and 5 percent
of the notional value of the retail forex transaction for all other
currency pairs;
(2)
For short options, 2 percent for major currency pairs and 5 percent
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 banking institution.
(b) (1) Form of margin. Margin collected under
paragraph (a) of this section or pledged by a retail forex customer
for retail forex transactions in excess of the requirements of paragraph
(a) of this section must be in the form of cash or the following financial
instruments:
(i) Obligations of the United States
and obligations fully guaranteed as to principal and interest by the
United States;
(ii)
General obligations of any State or of any political subdivision thereof;
(iii) General obligations
issued or guaranteed by any enterprise, as defined in 12 U.S.C. 4502(10);
(iv) Certificates
of deposit issued by an insured depository institution, as defined
in section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C.
1813(c)(2));
(v)
Commercial paper;
(vi) Corporate notes or bonds;
(vii) General obligations of a sovereign
nation;
(viii) Interests
in money market mutual funds; and
(ix) Such other financial instruments
as the Board deems appropriate.
(2) Haircuts. A banking institution shall establish written policies and procedures
that include:
(i) Haircuts for noncash margin collected
under this section; and
(ii) Annual evaluation, and, if appropriate,
modification of the haircuts.
(c) Major currencies.
(1) For the purposes of paragraphs (a)(1)
and (a)(2) of this section, major currency means:
(i) United
States Dollar (USD)
(ii) Canadian Dollar (CAD)
(iii) Euro (EUR)
(iv) United Kingdom Pound (GBP)
(v) Japanese Yen (JPY)
(vi) Swiss Franc (CHF)
(vii) New Zealand
Dollar (NZD)
(viii)
Australian Dollar (AUD)
(ix) Swedish Kronor (SEK)
(x) Danish Kroner (DKK)
(xi) Norwegian Krone (NOK),
and
(xii) Any other
currency as determined by the Board.
(d) Margin calls; liquidation
of position. For each retail forex customer, at least once per
day, a banking institution shall:
(1) Mark the value of the retail forex
customer’s open retail forex positions to market;
(2) Mark the value of the margin collected
under this section from the retail forex customer to market;
(3) Determine whether, based
on the marks in paragraphs (d)(1) and (d)(2) of this section, the
banking institution has collected margin from the retail forex customer
sufficient to satisfy the requirements of this section; and
(4) If, pursuant to paragraph
(d)(3) of this section, the banking institution determines that it
has not collected margin from the retail forex customer sufficient
to satisfy the requirements of this section then, within a reasonable
period of time, the banking institution shall either:
(i) Collect
margin from the retail forex customer sufficient to satisfy the requirements
of this section; or
(ii) Liquidate the retail forex customer’s retail forex transactions.
