From the August 01, 2009 issue of Futures Magazine • Subscribe!

New forex rules ahead

NFA compliance rule 2-43 goes into effect Aug. 1 and can affect how traders can execute orders on certain forex platforms. Rule 2-43(a) tightens instances where brokers can adjust customers’ filled orders based on “bad ticks.” Rule 2-43(b) requires customer orders be executed in a first in, first out (FIFO) basis. The rule also eliminates the practice of allowing a customer to hold long and short positions in the same currency pair at the same time.

Glenn Stevens, CEO of GAIN Capital, says that certain forex platform architectures do not have the capability to execute trades based of FIFO. He adds that this does not affect GAIN’s platform, though traders who require “hedging” capability can trade through its London based platform.

FXCM has also offered customers the ability to transfer accounts to its London affiliate. Brendan Callan, head of sales at FXCM, says, “We changed the way of placing stop loss orders to comply with the new rule,” additionally, traders should check with their broker to see if new rules will affect their trading platform.

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