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NFA ( National Futures Association ) Compliance Rule 2-43(a)                                     ( The NFA rules about Price Slippage and Requotes ) 

Notices to Members, Notice I-09-10 April 13, 2009                                                             ( FDM = Forex Dealer Member )

Price Adjustments

For orders executed after June 12, 2009, Compliance Rule 2-43(a) will prohibit an FDM from adjusting executed customer orders, with two exceptions. The first exception is where the adjustment is done to settle a customer complaint in favor of the customer. The second exception is where an FDM exclusively operates a "straight-through processing" model and the liquidity provider with which it entered into the automatic offsetting position changes the price of an executed order with the FDM.

Pursuant to the new rule, an FDM that adjusts an executed customer order based on an adjustment by a liquidity provider must provide notice to the affected customer within fifteen minutes of the customer order being executed. The notice must state that the FDM intends to cancel or adjust the order and must include documentation of the price adjustment from the liquidity provider. The FDM must either cancel or adjust all customer orders executed during the same time period and in the same currency pair or option regardless of whether they were buy or sell orders. All cancellations or adjustments of executed customer orders must be reviewed and approved by a listed principal of the FDM who is also an associated person. Such review must be in writing and include the documentation from the liquidity provider, and the written review and documentation must be provided to NFA at Finally, any FDM that may elect to cancel or adjust executed customer orders based upon liquidity provider price changes must provide customers with written notice of that fact prior to the time they first engage in forex transactions.


Notices to Members, Notice I-12-03 January 26, 2012

Effective Date of NFA Interpretive Notice to NFA Compliance Rule 2-36 regarding Price Slippage and Price Requoting

The Commodity Futures Trading Commission (CFTC) recently approved NFA's Interpretive Notice entitled NFA Compliance Rule 2-36: Requirements for Forex Transactions. NFA Compliance Rule 2-36 imposes a number of requirements on Forex Dealer Members (FDMs) regarding the manner in which they handle customer forex transactions, which are designed to ensure that an FDM acts honestly, fairly and in the best interests of its customers. NFA's Business Conduct Committee has recently taken a number of disciplinary actions against FDMs for violations of this Rule based on practices they employ in handling price changes that occur from the time a customer enters an order until the time it reaches the FDM's trading system. This Interpretive Notice provides guidance to FDMs on how to deal with these circumstances in a manner that does not violate NFA Compliance Rule 2-36. The Interpretive Notice becomes effective March 26, 2012.

The Interpretive Notice provides examples of asymmetrical price slippage settings that have been used by FDMs that clearly violate NFA Compliance Rule 2-36 because the settings allow the FDM to manipulate the prices that the forex customer receives and allows the FDM to benefit from the price slippage to the detriment of the customer. The Interpretive Notice also makes it clear that any asymmetrical slippage settings or requoting practices that provide an advantage to the FDM to the detriment of the forex customer violate NFA Compliance Rule 2-36. In order to avoid violating NFA Compliance Rule 2-36 when addressing these price changes, FDMs must adhere to the following:

  • FDMs must apply the slippage setting uniformly regardless of the direction the market has moved;
  • If the FDM requotes prices when the market moves against it, it must requote prices when the market moves in its favor; and
  • FDMs must ensure that the customer is aware of how the FDM handles these price change circumstances prior to trading with the FDM by providing full written disclosure of its policy, including the information outlined in the Interpretive Notice. For existing customers, FDMs must provide written disclosure prior to the effective date of this Interpretive Notice.

FDMs must also have written procedures that outline the manner it handles price changes, including information on the application of any slippage parameters and requoting practices. Finally, FDMs must ensure that any of its promotional material that discusses the mechanics of its trading system does not include information that misrepresents or is misleading with respect to its price slippage and requoting practices.

FDMs should be aware that although the Interpretive Notice becomes effective on March 26, 2012, the practices described in the Notice are already violations of Compliance Rule 2-36.


NFA Compliance Rule 2-43 Q & A 

Opinions And Comments

web resources This compliance rule affects United States based accounts.

"... and also restricted the ability of brokers to wreck profits by claiming price feed errors (extremely good)."

"... Many traders have experienced the ripoff where a brokerage waits days (or weeks or even months) to say “We're sorry, but there was a price feed error, so 40 pips of your 50 pips profit are gone.” As of June 12th, 2009, that semi-legal form of theft ends for good with NFA registered brokers.
For positions established after June 12th, brokers are greatly restricted from making price adjustments to client orders. There are only 2 exceptions.
First, if a customer disputes a price, adjustments may be made, but ONLY in the customer's favor.
Second, if the broker has an exclusively straight-through processing model and the liquidity provide makes a price adjustment. In these cases, the customer must be notified within 15 minutes. Yes, that is 15 minutes from the order being executed to send a notification to the customer. Save those emails with full headers – you may need them to prove that they waited 20 minutes to notify you. If the broker isn't exclusively STP, then they don't even get 15 minutes.
As for spike trading and broker rules – I really am not sure how this will work with a non-STP broker. They won't be able to adjust the price. I have a feeling we may see some interesting legal cases starting in late June.
For those of you contacting the NFA to complain about the hedging rule, make sure to take a moment to thank them for the new protection they've given to traders to keep brokers from being able to make up prices later. wow, that means no NFA broker will fill you on the news anymore...."

"... This is the next step of regulating the wild west of forex...the same thing happened to futures, personally I think the odds are against the retail trader in forex, unless your strategy is about taking advantage of price discrepancies. If so you better take advantage as much as you can now."

Definition of 'NFA Compliance Rule 2-43b' NFA Compliance Rule 2-43b

"... It also prohibits price adjustments to executed customer orders except to resolve a complaint in the customer's favor or in the case of certain straight-through processing transactions, and these changes must be reviewed, approved and documented by the NFA."

"... The rule also disallows the adjustment of customer orders by an FDM except in cases requiring the settlement of a customer dispute or when an FDM executes trades using a "straight-through processing" model."

"... The NFA set forth new regulations for US forex brokers. The new rule is in two parts, with one being the most talked about.

The first part of rule 2–43 is specifics and limits on how forex brokers can adjust customer orders. The rule basically eliminates arbitrary adjustments made by forex brokers." Forex Trading - New Forex Hedging Rules


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