(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. (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. (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. (3) For long options, the full premium charged and received by the banking institution.

(b)

1. (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:

   1. (i) Obligations of the United States and obligations fully guaranteed as to principal and interest by the United States;
   2. (ii) General obligations of any State or of any political subdivision thereof;
   3. (iii) General obligations issued or guaranteed by any enterprise, as defined in 12 U.S.C. 4502(10);
   4. (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));
   5. (v) Commercial paper;
   6. (vi) Corporate notes or bonds;
   7. (vii) General obligations of a sovereign nation;
   8. (viii) Interests in money market mutual funds; and
   9. (ix) Such other financial instruments as the Board deems appropriate.

2. (2) Haircuts. A banking institution shall establish written policies and procedures that include:

   1. (i) Haircuts for noncash margin collected under this section; and
   2. (ii) Annual evaluation, and, if appropriate, modification of the haircuts.

(c) Major currencies.

1. (1) for the purposes of paragraphs (a)(1) and (a)(2) of this section, major currency means:

   1. (i) United States Dollar (USD)
   2. (ii) Canadian Dollar (CAD)
   3. (iii) Euro (EUR)
   4. (iv) United Kingdom Pound (GBP)
   5. (v) Japanese Yen (JPY)
   6. (vi) Swiss Franc (CHF)
   7. (vii) New Zealand Dollar (NZD)
   8. (viii) Australian Dollar (AUD)
   9. (ix) Swedish Kronor (SEK)
   10. (x) Danish Kroner (DKK)
   11. (xi) Norwegian Krone (NOK), and
   12. (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. (1) Mark the value of the retail forex customer's open retail forex positions to market;
2. (2) Mark the value of the margin collected under this section from the retail forex customer to market;
3. (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. (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:

   1. (i) Collect margin from the retail forex customer sufficient to satisfy the requirements of this section; or
   2. (ii) Liquidate the retail forex customer's retail forex transactions.