Traders: NFA makes fun of you. And of itself
NFA's efforts to ridicule the mandate it has been given by the CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term have finally reached the point where it simply becomes absurd. It appears that the agency has no idea what it should be doing or what the results of its actions are.
If I wasn't sure that the NFA could care less about whether its requirements are what the market really needs or whether it harms the traders more than it benefits them, now I've become confident that the NFA has completely lost it. They have absolutely no idea what Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term is or what its role as a regulator should be.
In another chapter that will surely be written in a book about one absurd US regulatory agency, it will say that not only the NFA imposed a completely nonsensical requirement (FIFO) but that it also had no idea how to make sure it was implemented correctly, moreover it had no idea that basic knowledge of forex is required in order to regulate forex.
NFA has sent out a raging email to US brokers complaining that they have disseminated 'false' and 'misleading' information about its recent requirements. DOH! What did you expect would happen? The only thing the NFA did to make sure brokers knew what the hell they wanted was to send a laconic document explaining the reasons for the decision. This ridiculous document had absolutely no explanation of how this should be implemented and had absolutely no understanding that demanding FIFO compliance would result in Stop and Limit Orders being severely affected as well?
Wouldn't it have been much easier to gather all the brokers and explain to them that you would like to stop the hedging practices and ask them what would be the smartest way to do that? Or maybe you should have sent an email telling the brokers to stop accepting hedging orders instead of inventing the first in first out requirement which seems nice on paper but in fact caused a software fiasco?
This is the email the NFA sent to US brokers. Read it yourself and cry or laugh or whatever you think is appropriate:
Communication with the Public Relating to NFA Compliance Rule 2-43
NFA has become aware of false or misleading blog entries and e-mails to customers stating or implying that NFA has banned stop orders and limit orders. As you know, Compliance Rule 2-43(b) does not prohibit either type of order but simply requires that executed stops and offsetting limit orders be applied to the oldest open position or, at the customer’s direction, to the oldest open same-size position.
Please ensure that neither your employees nor any firms or individuals that introduce forex business to or manage forex accounts carried by your firm are spreading misleading information about the effect of Compliance Rule 2-43. As you are aware, under NFA Compliance Rule 2-36(d), an FDM is subject to discipline for the activities of persons who solicit, introduce, or manage customer accounts. Therefore, NFA will not hesitate to file an enforcement action against any FDM with an introducer or account manager that initiates, spreads, or condones statements that convey false information.
NFA's efforts to ridicule the mandate it has been given by the CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term have finally reached the point where it simply becomes absurd. It appears that the agency has no idea what it should be doing or what the results of its actions are.
If I wasn't sure that the NFA could care less about whether its requirements are what the market really needs or whether it harms the traders more than it benefits them, now I've become confident that the NFA has completely lost it. They have absolutely no idea what Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term is or what its role as a regulator should be.
In another chapter that will surely be written in a book about one absurd US regulatory agency, it will say that not only the NFA imposed a completely nonsensical requirement (FIFO) but that it also had no idea how to make sure it was implemented correctly, moreover it had no idea that basic knowledge of forex is required in order to regulate forex.
NFA has sent out a raging email to US brokers complaining that they have disseminated 'false' and 'misleading' information about its recent requirements. DOH! What did you expect would happen? The only thing the NFA did to make sure brokers knew what the hell they wanted was to send a laconic document explaining the reasons for the decision. This ridiculous document had absolutely no explanation of how this should be implemented and had absolutely no understanding that demanding FIFO compliance would result in Stop and Limit Orders being severely affected as well?
Wouldn't it have been much easier to gather all the brokers and explain to them that you would like to stop the hedging practices and ask them what would be the smartest way to do that? Or maybe you should have sent an email telling the brokers to stop accepting hedging orders instead of inventing the first in first out requirement which seems nice on paper but in fact caused a software fiasco?
This is the email the NFA sent to US brokers. Read it yourself and cry or laugh or whatever you think is appropriate:
Communication with the Public Relating to NFA Compliance Rule 2-43
NFA has become aware of false or misleading blog entries and e-mails to customers stating or implying that NFA has banned stop orders and limit orders. As you know, Compliance Rule 2-43(b) does not prohibit either type of order but simply requires that executed stops and offsetting limit orders be applied to the oldest open position or, at the customer’s direction, to the oldest open same-size position.
Please ensure that neither your employees nor any firms or individuals that introduce forex business to or manage forex accounts carried by your firm are spreading misleading information about the effect of Compliance Rule 2-43. As you are aware, under NFA Compliance Rule 2-36(d), an FDM is subject to discipline for the activities of persons who solicit, introduce, or manage customer accounts. Therefore, NFA will not hesitate to file an enforcement action against any FDM with an introducer or account manager that initiates, spreads, or condones statements that convey false information.