NATIONAL FUTURES ASSOCIATION
FOREX INVESTOR ALERT: FOREX CUSTOMER ACCOUNT STATEMENTS
In these challenging times, the need for investors to monitor and understand the activity occurring in their trading accounts has never been greater. National Futures Association (NFA) believes that customer account statements should contain clear, concise and complete information. The more difficult a customer account statement is to understand, the easier it is for a broker or account manager to mislead a customer about the value of a customer's account and the success of the customer's trades.
In an effort to provide retail forex customers with clearer, more uniform confirmations, daily statements and monthly statements, NFA has developed specific customer reporting requirements for its Forex Dealer Members (FDMs).
FDMs must currently provide written confirmations to customers within one business day after any activity in the customer's account, including offsetting transactions, rollovers, and deliveries, and these confirmations must include details of the transaction and any related costs. Effective June 1, 2009, a new rule clarifies that activity requiring a confirmation includes option exercises, option expirations, trades that have been reversed or adjusted, and monetary adjustments. The new rule specifies that the confirmations must contain the following information regarding the transaction and the funds in the account:
In addition, FDMs are currently required to send monthly statements to all customers who have accounts that have open positions at the end of the month or changes in the account balance or equity since the prior statement. Quarterly statements are required for all other open accounts. The new rule states that monthly or quarterly statements must contain the following information regarding the transactions during the reporting period and the funds in the account:
As of June 1, 2009, FDMs must also provide daily statements showing the account equity as of the end of the day. FDMs may provide the daily statements online or by other electronic means as long as they are readily accessible to customers. FDMs may provide confirmations and monthly/quarterly statements online or transmitted by other electronic means if the customer consents to the specific method used.
Conducting Due Diligence
NFA reminds all individuals who trade forex to conduct business with a regulated forex firm - i.e., a bank, an insurance company, a broker-dealer or a futures commission merchant. If the firm is a futures commission merchant, it is required to be registered with the Commodity Futures Trading Commission and to be a Forex Dealer Member of NFA. You can easily check an FDM's registration status through NFA's Background Affiliation Status Information Center (BASIC), available through NFA's website (www.nfa.futures.org).
Anyone who has any questions or concerns regarding their forex dealer should contact NFA either through our website (www.nfa.futures.org) or by calling our Information Center toll-free at (800) 621-3570 during normal business hours.
NFA is a self-regulatory organization subject to oversight by the CFTC. NFA's primary mission is to protect investors and maintain market integrity.
March 31, 2009
NFA Members can file many of their required documents electronically.