Thanks to Felix Shipkevich and the team at Shipkevich Law Firm for summarizing the new rules the NFA has formally put in place (and approved by the CFTC) regarding slippage. You can see the summary on Shipkevich Law Firm’s website here, or the original release on the NFA’s website here.
So what will change? Not much, really, in that this rule was already unofficially enforced by the NFA. Until this rule was put in place (actually, it will officially take effect on March 26) it was technically legal for U.S. Forex brokers to requote clients if the market moved in the client’s favor (in between the time a trade was requested and received on the broker’s system), but not requote them if the market moved against the client, in the market maker’s favor. Although this rule is new, the NFA already in the past has investigated several brokerage firms for this practice of “asymmetrical price slippage”, eventually coming to fine settlements with them (including with industry leaders FXCM and Gain Capital). Perhaps the reason those cases were settled with no admission of wrongdoing was that indeed there was no formal rule broken.
For more on Forex regulation in the U.S., Japan, China, Europe and around the world see the LeapRate-Dow Jones Forex Industry Report.