On December 4, the National Futures Association (NFA) submitted proposed amendments to NFA Compliance Rule 2-36 and Rule 2-43 to the Commodity Futures Trading Commission.
The amendment to NFA Compliance Rule 2-36 will require forex dealer members (FDM) to disclose to customers on a per-trade basis: (1) any commissions or other fees charged; (2) for FDMs using a straight-through processing (STP) model, any mark-up or mark-down imposed on the price received from the liquidity provider for the offsetting position; and (3) for FDMs using a non-STP model, the mid-point spread cost. Further, the amendment will require FDMs not using the STP model to provide customers with a description of the mid-point spread cost in a form and manner acceptable to the NFA.
The amendment to NFA Compliance Rule 2-43 clarifies that the prohibition on price adjustments does not include when an FDM favorably adjusts all customer orders that were adversely affected by circumstances beyond the customer’s control (e.g., issues with third-party vendors, including liquidity providers, trading platforms and related connectivity providers). The rule currently provides relief from the prohibition only when a customer’s order is adversely affected by technical problems with the platform or similar factors beyond the customer’s control.
NFA’s Board of Directors unanimously approved the proposed amendments on November 16.
NFA’s rule submission is available here.