NFA Makes Two Separate Announcements on New Forex Rules

( Today the NFA made two separate announcements regarding proposed new forex rules.  The announcements follow a series of similar announcements last week regarding new forex rules (see NFA Continues to Pursue Forex Regulation for Current Forex Dealer Members).  The first announcement dealt with additions to Compliance Rule 2-36 and related Interpretive Notice Changes.  The second announcement dealt with a completely new forex Compliance Rule 2-43.

NFA Proposes Addition to Compliance Rules 2-36 and Related Interpretive Notices – this announcement contained a hodge-podge of different rules the NFA staff felt needed to be addressed.  The announcement centrally focuses on (i) requirement that forex hypothetical results be subject to the anti-fraud provisions of NFA Compliance Rule 2-29(c),* (ii) require FDMs to have an Associated Person file the required weekly reports, (iii) require FDMs to adopt written policies regarding the calculation of rollover interest charges and payments, and (iv) prohibits FDMs from trading a customer’s account when they are a counterparty to the trade. 

*[please note that this rule, if and when approved, will only apply to those persons who are NFA members and engage in off-exchange forex trading.  These rules, presumably, will also apply to those persons who will need to register

New Compliance Rule 2-43 – this rule has two parts.  Part a provides that forex dealer members cannot automatically close positions in a customer account if there has been a trading error and thus a transaction executed at an incorrect price.  Part a will now require that such positions be closed under certain enumerated situations if the customer is notified of the need to close the position within 15 minutes of entering the order.  Part b of the new rule would require Forex Dealer Members to offset long and short positions in a single currency pair in any single account.  Part b would require the offsetting to follow a first in-first out method.

These new rules and rule changes will go into effect once the CFTC has approved the rules.  It is expected that the CFTC would approve the rules because these rules were subject to comments from the forex community.

Other forex articles which are related to these new forex rules:

3 thoughts on “NFA Makes Two Separate Announcements on New Forex Rules

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