National Futures Association (NFA), the self-regulatory organization for the U.S. derivatives industry, has announced that its new proposed rules regarding trade data disclosure around Forex transactions will become effective as of March 31, 2017.
We had reported back in November that the NFA decided that more transparency was needed in retail forex transactions – in particular, giving clients more insight into exactly how their order was filled, in comparison to other transactions occurring at around the same time. The NFA’s proposals were sent for review to the CFTC. The NFA today gave notice that the CFTC has approved its proposals.
The new rules provide retail forex customers with a framework for obtaining execution information to review the quality of the execution a customer received compared to that of other customers of the broker.
Under the NFA’s new rules, a broker will be required, upon a customer request regarding an executed forex transaction of that customer, to provide the customer with the following transaction data for the 15 transactions in the same currency pair that occurred immediately before and after the customer’s transaction, limited to those transactions that occur 15 minutes before and after the transaction.
Brokers must provide a customer with this data within 30 minutes of a customer’s request.
Transaction data to be provided includes:
- Execution date and time (to the nearest millisecond in Eastern time);
- Customer side (i.e., buy or sell);
- Quantity;
- Currency Pair;
- Execution price (including any mark-up);
- Commission and other charges assessed by the broker(if applicable); and
- Currency denomination of commission or other charges.
After March 31, each regulated broker in the US must inform customers of their ability to request this transaction information by prominently displaying a notice of this option in three separate places – the broker’s website, the customer’s trading portal, and each customer transaction statement.
In addition, each broker must provide the NFA with a copy of any customer requests and the broker’s response in the form and manner required by the NFA. NFA staff will contact each broker to provide further information about the required content and method of submission.
More on the NFA’s new trade data reporting rules can be seen on the NFA website here.