The National Futures Association (NFA) this week has submitted to the Commodity Futures Trading Commission (CFTC) new Forex data transaction disclosure rules which were unanimously approved by NFA board members and of which reps from the five USA based retail Forex Dealer Members (FDMs) indicated that they had no objection to providing.
The proposed compliance rule changes are as follows:
1) Upon the request of a customer with respect to a particular executed forex transaction of that customer, an FDM must provide the customer, within 30 minutes of the customer’s request, with the following transaction data for the 15 forex transactions that occur immediately before and after in the same currency pair of the customer’s transaction:
(i) Execution date and time (to the nearest millisecond in Eastern time);
(ii) Customer side (i.e., buy or sell);
(iii) Quantity; (iv) Currency pair;
(v) Execution price (including any markup);
(vi) Commission and other charges assessed by the FDM (if applicable); and
(vii) Currency denomination of commission or other charges.
Provided, however, that an FDM only has to provide transaction data pursuant to this subsection for any transactions that occur within 15 minutes before and after the execution of the customer’s transaction.
(2) Each FDM must provide NFA with a copy of any customer request made under subsection (1) above and the FDM’s response in the form and manner prescribed by NFA.
(3) Each FDM must inform customers of their ability to request this information by a notice prominently displayed on the FDM’s website, each customer’s trading portal and each customer transaction confirmation statement.
Transactions entered into through an FDM to hedge currency exposure from positions on regulated exchanges are exempt from all forex requirements except sections (b) and (c) of this rule if the on-exchange transactions are handled by the same FDM.
Rationale behind NFA’s proposals
NFA’s Board of Directors has determined that retail forex customers should have greater transparency with respect to FDM transaction execution data.
The proposed rule change will provide retail forex customers with a framework for obtaining execution information to review the quality of the execution the customer received compared to that of other customers.
NFA’s Board approved the proposed amendment on November 17, 2016, and NFA respectfully has requested CFTC review and approval of the proposed amendment.
To read the letter in full click here (PDF).