The CFTC has approved an NFA interpretive notice to NFA Compliance Rule 2-36: Requirements for Forex Transaction. The notice was originally written in response to an uptick in the number of disciplinary actions taken against Forex Dealer Members for failure to observe high standards of commercial honor and just and equitable principals of trade in the conduct of their forex business.


The notice states that slippage occurs when a trade price changes between the time a customer places the order and the time the order arrives at the FDM's system. Some firms simply ask customers to reconfirm the trade at the new price. However, others use slippage parameters to determine whether the trade will clear. Though slippage parameters are not inherently unjust, the NFA states that some may be written to favor slippage in favor of the FDM against the customer. This Interpretive Notice makes clear that this and other practices that favor the FDM to the detriment of the Forex customer violate Rule 2-36 and will be dealt with accordingly.

Summary of FDM Requirements:

- Slippage settings must not be affected by the direction of the market; - Slippage settings must be uniform and symmetrical; - Requoting must be bidirectional - for and against the client; - Clients must be provided with written disclosure of the FDM's slippage / requoting policy.

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