Problem FastBrokers and FXDD case

[BigT1]

{Ed: Edited spelling and English grammar for the benefit of all}
Greetings to all, Could someone please explain the NFA rules with regard to customer notification . . .
Is the article I read here correct?
Thank's in advance

Hello hazarder,
You raise a good point, in that many traders and investors don't know where to begin to get accurate information; and often rely on hearsay and misinformation to guide their decisions.
Things are changing fast, and the burden is upon you to keep up with change.
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I have attached here the latest reference document published by the NFA that currently controls NFA Regulated Forex Firms in their dealings with clients.
It is written in plain English for both dealers and the public to understand. Please refer to it, and translate it into your native language to address any and all questions regarding the rules for NFA regulated firms. Anything else you read or see on the web that disagrees with it is pure rubbish.
View attachment forex-regulatory-guide.pdf
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This guide is regularly updated by the NFA, and is always located right here for all to download:
http://www.nfa.futures.org/NFA-compliance/publication-library/forex-regulatory-guide.pdf
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The latest NFA News Releases that may affect this guide in the near future are also made available right here:
National Futures Association | News Center
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You should also investigate the regulatory history of any NFA Registered Entity (like any broker or advisor) right here:
BASIC Search
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You can file a complaint against any regulated entity right here:
http://www.nfa.futures.org/basicnet/Complaint.aspx
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If you have a complaint, do the following:
1 - Search your heart and reconfirm you earnestly believe yourself to be on solid ground. If so, collect all emails, statements, and documents you believe support your claim.
2 - File your complaint accurately stating your case, and fully document it. Do so as quickly and simply as possible in plain language, without prejudice or exaggeration.
3 - Await your reply.
You will definitely find an open ear and an endeavor to provide justice and eventual relief, whenever your claim has merit and you have communicated it fairly and accurately.
Elsewise; you will receive a very good explanation, should it not.
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Commentary:
In today's markets the NFA may rightly appear inept, overwhelmed, overworked. It is certainly under-funded, and intentionally scape-goated by Congress and the CFTC. However, even as a regulated entity myself, I believe at its core the NFA is composed of well-meaning individuals; human regulators with hearts and minds who are honorable, well-intentioned, and dedicated to properly managing this often very dispicable clientele who behave irreverantly and in such a wildly self-interested manner within this taxing financial environment that they should be shot at dawn.
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In the near future, a few at the NFA will be surely and gleefully sacrificed; accorded no mercy at the hands of superiors themselves blatantly beholdant to the gaggle of wantonly depraved, pandering, corrupt, complicit, trough-eating, pig-snorting politicians.
In some cases this might be well deserved in retribution for the absolutely astounding failures of oversight at PFG, at Madoff, Enron, Worldcom, and a dozen other frauds I could mention.
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However, in general; a career in "Regulation" is truly a thankless job.
There are only 4 possible outcomes regardless of personal merit:
1 - Done well in good times, nobody at all notices; your firm's managment tolerates you as a cost of doing business. You are sent packing with a dribble of a salary and a pat on the back.
2 - Done poorly in good times you might survive without reprimand, but you are highly suspect. You are sent packing with a dribble of a salary, and no pat on the back.
3 - Done well in bad times, you reveal the weaknesses in your environment, and become hated by all. You are paid, barely tolerated, and despised by all.
4 - Done badly in bad times, you are soon hung by your feet from a lamp post after being blamed for the very predictable results explicitly requested by society as a whole, years in advance.

In my personal opinion we are currently lingering somewhere between condition 3 and 4 (August 2012).
No wonder these seats in government, and in the private sector as well, are hard to fill.
.
Anthony Ingrassia, CTA
NFA ID#: 0278164

 

[BigT1]

{Ed: Edited spelling and English grammar for the benefit of all}
Greetings to all,
Could someone please explain the NFA rules with regard to customer notification . . .
Is the article I read here correct?
Thank's in advance

OOPS!
In my previous reply to you hazarder, I neglected to place the direct quote from the Forex Regulatory Guide - Page 8 plus my guidance I had intended to include in answer to your queston.
Here it is:
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Customer Orders
Managing Customer Accounts
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FDMs, and their Associates, may not exercise trading authority over a
customer account for which the FDM is, or is offering to be the counterparty.
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Offsetting Transactions
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An FDM may not carry offsetting positions in a customer account and must
offset the positions on a first-in, first-out basis. A customer may, however,
direct the FDM to offset same-size transactions even if there are older
transactions of a different size, but the transaction must be offset against the
oldest transaction of that size.
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Price Adjustments
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An FDM is prohibited from directly or indirectly canceling or adjusting the
price of executed customer orders, with two exceptions.
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The first exception is where the adjustment is done to settle a customer
complaint in the favor of the customer. An FDM may also adjust orders even
in the absence of individual customer complaints if the customer were
adversely affected by a technical problem with the Member's trading
platform. However, an FDM may not adjust prices on customer orders that
benefitted from the error and may not cherry-pick which account to adjust.
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The second exception is where the FDM uses exclusively "straight-through
processing" such that it automatically (without human intervention and
without exception) enters into an offsetting position in its name with another
counterparty and that counterparty cancels or adjusts the price at which the
position was executed.
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An FDM that adjusts an executed customer order based on an adjustment by
a counterparty must provide notice to the affected customer within fifteen
minutes of the customer order having been executed. The notice must state
that the Member intends to cancel or adjust the price of the order to reflect
the adjusted price provided by the Member's counterparty and must include
documentation of the cancelation or price adjustment from the counterparty.
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The Member 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 in
writing by a listed principal of the Member who is also an associated person.
Such review must include the documentation from the counterparty and must
be provided to NFA. Finally, any Member 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 the
customer first engage in forex transactions with the Member.
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Price Slippage
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In the context of FDM trading systems, price slippage sometimes occurs
between the time a customer first submits an order until the time the order
reaches the FDM's system. When this occurs, some FDMs immediately
requote the customer the current price and require the customer to confirm
that it still wants to place the order at the requoted price. Other FDMs have
built in slippage parameters that permit execution of the order if the slippage
is within the established parameters. FDMs that use slippage parameters
must apply the slippage settings 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. In
addition, 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 NFA's Interpretive Notice, "NFA Compliance Rule 2-36: Requirements for
Forex Transactions".
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My Guidance:
So you see that price adjustments can only be done under limited, rare circumstances.
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1 - They must be applied to all customers (for both long and short positions being opened and closed)
2 - Be signed by a registered Principal of the firm
3 - Be applied and reported to all affected clients within 15 minutes
4 - Are legal only if you had been notified in advance that this was the policy of the firm to do so, before you began trading with the firm
5 - Only when the adjustment was due to an adjustment forced upon the broker from an outside counterparty (Liquidity Provider), not arbitrarily by the broker firm as the counterparty.
6 - And only with proof provided to you of by whom that change was made to the broker itself, and provided to all others affected at that time.

Therefore, you do have a very high probability of success if you were violated on any one of those provisions!
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Next, inform your broker that you intend to file a formal complaint with the NFA if you were violated. Give them the quote(s) from the Regulatory Guide you feel apply, and give them 48 hrs to respond in writing. If they are so foolish as to not correct your account immediately, forward your communications and their responses to the NFA along with your complaint.
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I do hope this helps.
Anthony Ingrassia, CTA

 

[Pharaoh]

1 - They must be applied to all customers (for both long and short positions being opened and closed)
2 - Be signed by a registered Principal of the firm
3 - Be applied and reported to all affected clients within 15 minutes
4 - Are legal only if you had been notified in advance that this was the policy of the firm to do so, before you began trading with the firm
5 - Only when the adjustment was due to an adjustment forced upon the broker from an outside counterparty (Liquidity Provider), not arbitrarily by the broker firm as the counterparty.
6 - And only with proof provided to you of by whom that change was made to the broker itself, and provided to all others affected at that time.

Therefore, you do have a very high probability of success if you were violated on any one of those provisions!

Unless your broker is FXDD and decides that suing you is better than following direct instructions from the NFA to pay you.

I wonder how long until the NFA makes a ruling in that complaint.

 

[BigT1]

Newly updated Regulatory Guide for August 2012:
http://www.nfa.futures.org/NFA-compliance/publication-library/forex-regulatory-guide.pdf

 

[PipStar]

Unless your broker is FXDD and decides that suing you is better than following direct instructions from the NFA to pay you.
I wonder how long until the NFA makes a ruling in that complaint.

FXDD are obviously not afraid and have no respect for regulator's decision. If NFA does not set an example here then they would lose all credibility.

 

[Pharaoh]

Speaking of regulator's decisions, didn't FXDD have 30 days to submit a response.

I'm not seeing an answer here yet - Case Summary

Does anyone know how long from when an answer is submitted until it is posted? Or, how long after a non-response until the NFA makes a decision?

 

[RP1]

anyone heard anything about this ?

 

[Pharaoh]

Still nothing new on the NFA page. My guess is that FXDD is busy doing procedural backflips in order to try to stall this as long as possible.

 

[RP1]

Possibly... They cant do that forever though .
I think NFA will really clobber them over this , could they kick them out ?

 

[Pharaoh]

Kicking them out is always a last resort. It would depend on whether FXDD decides to finally cooperate vs. continuing to directly defy NFA orders.