Notices to Members

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Notice I-18-02

January 11, 2018

Effective date of amendments to NFA Compliance Rule 2-36: Requirements for forex transactions and NFA Compliance Rule 2-43: Forex orders

The Commodity Futures Trading Commission (CFTC) recently approved NFA's amendments to NFA Compliance Rules 2-36 and 2-43. The amendments apply to forex dealer members (FDM) and will be effective on April 5, 2018.

Required disclosures to be made on a per-trade basis

The amendments to NFA Compliance Rule 2-36 provide retail forex customers with greater transparency about the costs associated with forex transactions. The amendments require an FDM to disclose the following, if applicable, to each customer on a per-trade basis in the same currency as the base currency of the account on the customer transaction confirmation statement:

  • Commission and any other fees
  • For transactions where an FDM is using straight-through processing*, any mark-up or mark-down the FDM imposes on the price the FDM received for the offsetting position to the customer's order
  • For transactions where an FDM is not using straight-through processing, the mid-point spread* cost and a description of the mid-point spread cost in a form and manner required by NFA

Clarification regarding the prohibition on price adjustments

The amendment to NFA Compliance Rule 2-43 clarifies that the prohibition on price adjustments does not include situations in which an FDM favorably adjusts all customer orders that were adversely affected by circumstances beyond the customer's control. Circumstances beyond the customer's control include, but are not limited to, issues with third-party vendors such as liquidity providers, trading platforms and related connectivity providers.

More information on these amendments is available in the December 4, 2017 submission letter to the CFTC. If you have questions concerning these amendments, please contact Sarah Iverson, Director, Compliance (siverson@nfa.futures.org or 312-781-1202) or Matt Childers, Director, Market Regulation (mchilders@nfa.futures.org or 312-781-1552).

*Term definitions can be found in NFA Compliance Rule 2-36.

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