The Commodity Futures Trading Commission has approved new National Futures Association (NFA) Compliance Rule 2-43, relating to adjustments to customer forex orders and the offset of customer forex positions by forex dealer members (FDMs). NFA Compliance Rule 2-43(a) prohibits FDMs from adjusting the price of executed customer orders except where (i) the adjustment is favorable to the customer and is made to settle a customer complaint, or (ii) the FDM exclusively operates a “straight-through processing” platform and the counterparty cancels or adjusts the price. In the latter case, the FDM is required to provide written notice to the customer within 15 minutes of execution and either cancel the order(s) or adjust the accounts of all similarly situated customers, as provided in the Rule.
NFA Compliance Rule 2-43(b) separately prohibits FDMs from allowing customers to carry offsetting positions and generally requires an FDM to offset positions in a customer account on a first-in, first-out basis. The Rule permits the FDM to offset same-size transactions at the customer’s request, however, even if there are older transactions of a different size in the account (provided that the offset must be against the oldest same-size transaction). Rule 2-43(a) will become effective as to all customer orders executed after June 12; Rule 2-43(b) will become effective for positions established after May 15.
Click here to read the NFA Notice to Members announcing the new Rules.