2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | 1997 | 1996|
Email This to a Friend
March 10, 2008
Alternative Language for Customer Disclosure
As of June 1, 2008, forex dealer members ("FDMs") must provide, and customers must acknowledge, prescribed disclosure language prior to the time a customer first engages in a forex transaction. In adopting this requirement, NFA's Board of Directors provided that NFA staff may approve alternative language where appropriate based upon an FDM's business model.
In response to individual requests, NFA has approved alternative language to be used in lieu of the prescribed disclosure where the FDM's business model, unlike the typical counterparty relationship, has the following characteristics: (1) when a retail customer enters an order on the FDM's platform, the FDM automatically (without human intervention and without exception) enters into the same transaction with another counterparty, creating an offsetting position in its own name; (2) the FDM confirms to the retail customer the price at which the order has been executed, which is the same price at which the FDM entered into the offsetting position; (3) the FDM does not profit from any resulting market movement as its offsetting transaction will result in the same profit or loss as the retail customer's transaction; and (4) the FDM's sole manner of compensation is a commission charge on each trade.
Any FDM whose business model is the same as that described above may use the alternative language set forth below. An FDM must provide NFA with written notice of its intention to use this alternative language and include in such notice a representation that it's business model is the same as that described above. Such written notice must be signed by a principal of the FDM that is also an NFA Associate.
The alternative language that may be substituted is as follows:
ALTHOUGH [MEMBER] IS THE COUNTERPARTY TO EACH OF YOUR TRADES, [MEMBER] LIMITS RISK TO ITSELF BY INSTANTANEOUSLY OFFSETTING THE TRADES AND POSITIONS IT ENTERS INTO WITH YOU WITH A BANK OR INSTITUTIONAL MARKET MAKER. AS A RESULT, [MEMBER] DOES NOT PROFIT WHEN YOU LOSE MONEY ON A TRADE. RATHER, [MEMBER] EARNS COMMISSIONS ON EACH TRADE IT ENTERS INTO WITH YOU. THE AMOUNT OF COMMISSIONS CHARGED IS DISCLOSED ON PAGE [x] OF THE CUSTOMER AGREEMENT.