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Forex Investor Alert

OCTOBER 18, 2010

New Forex Rules Become Effective on October 18

On August 30, the Commodity Futures Trading Commission (CFTC) issued its final rules regarding retail off-exchange foreign currency (forex) trading in the United States. The rules, which become effective on October 18, 2010, have far-reaching implications for all forex investors in the United States.

The rules require, with certain exceptions, any firm acting as a counterparty to certain retail forex transactions to register as a Retail Foreign Exchange Dealer (RFED) or Futures Commission Merchant (FCM). In addition, the rules require, with certain exceptions, any individual acting as a forex solicitor, account manager or pool operator to register with the CFTC as Introducing Brokers (IBs), Commodity Trading Advisors (CTAs) or Commodity Pool Operators (CPOs) or as an associated person of one of these entities and become Members of NFA.

Effective October 18, all CFTC-registered forex firms and individuals will be subject to CFTC regulations and NFA rules covering every aspect of their business, including recordkeeping, promotional material and sales practices.

Investors can check the registration status of any forex firm through NFA's Background Affiliation Status Information Center (BASIC) available on the Association's website ( BASIC contains current and historical registration information concerning all current and former CFTC registrants, including name, business address and registration history.

BASIC also provides information concerning disciplinary actions taken by NFA, the CFTC and all the U.S. futures exchanges. If you are researching a firm, you should also conduct a background check of all the individuals listed as principals of the firm. Sometimes the firm will have no disciplinary history, but one or more of the principals may have been disciplined while working at other firms.

Forex investors can register complaints with NFA against any CFTC-registered firm or individual either by telephone or through NFA's website.

In addition, investors who believe that they have been treated unfairly by their forex firm have the ability to file an arbitration claim with NFA. In most cases, arbitration is mandatory for all NFA Members and Associates required to be registered with the CFTC. NFA arbitration provides an effective and cost-efficient method for the settlement of futures and forex-related disputes.

For additional information, contact NFA’s Information Center at 1-800-621-3570 or (312) 781-1410.

NFA is a self-regulatory organization subject to oversight by the CFTC. NFA’s primary mission is to protect investors and safeguard market integrity.

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