Alpari comments on new CFTC rules, tackles FIFO rule
Alpari (US) Comments on CFTC Ruling The final Commodity Futures Trading Commission (“CFTC”) rules regarding off-exchange retail foreign currency trading

Alpari (US) Comments on CFTC Ruling
The final Commodity Futures Trading Commission (“CFTC”) rules regarding off-exchange retail foreign currency trading were released on August 30, 2010. Alpari (US) (“Alpari”) would like to take this opportunity to address the rules and what it will mean for you and the company’s business.
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Alpari supports the regulations recently enacted to protect traders and have been in touch with the NFA and CFTC to obtain a comprehensive understanding of the rule and its implications.
As a member of the NFA, Alpari has already been adhering to numerous significant regulations2 regarding off-exchange FX trading. As of October 18, 2010, these regulations, along with others, are now being mandated by the CFTC for the rest of the FX industry.
Highlights of the Upcoming CFTC Rule
When the new CFTC regulations go into effect on October 18, 2010, the U.S. FX industry will be subject to additional requirements:
- Alpari will be registered with the CFTC under the new registration category of Retail Foreign Exchange Dealer (“RFED”). Since Alpari also offers exchange traded futures, Alpari will be dually registered as an FCM and RFED.
- Any Introducer who is domiciled in the U.S. will need to be registered with the NFA in the appropriate capacity for which their business is conducted, such as IB, CTA or CPO. The NFA Registration Department has stated that they will be expediting all applications prior to this date. Alpari will not be able to do business with these Introducers if they have a “pending” registration status with the NFA.
- U.S. RFED’s will be required to collect and maintain a security deposit of 2% of the notional value (50:1 leverage) of retail transactions for major currency pairs and 5% (20:1 leverage) for all others.3 Alpari received clarification from the NFA on what constitutes “major currency pairs.” A comprehensive list can be found within Section 12 of the NFA’s Financial Requirements.4
Effective October 18, 2010, all client account settings will be automatically adjusted to the new requirements. Alpari clients will be contacted in the coming days with more information about how their current trading activity will be affected.
Alpari is Available to Help
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Alpari will continue to be in touch with the NFA and CFTC regarding these rules and is making it a top priority to keep customers continually informed about any pertinent information and changes to Alpari business practices.
As of September 2, 2010, the NFA began accepting applications for registration. Alpari is available to answer your questions about the registration process and offer assistance to IBs, CTA’s, CPO’s and others who need help registering with the NFA. Additionally, the NFA will be hosting Registration/Compliance Workshops for currently unregistered IBs, CTA’s and CPO’s at the Las Vegas Futures & Forex Expo, where Alpari (US) will be the Platinum sponsor. We encourage you to attend, and feel free to reach out to us during the expo with any questions you may have.
If you have further questions, our Client Services team is available by phone at 646-825-5760 or by email at cs@alpari-us.com. You can also visit us online at www.alpari-us.com.
About Alpari (US)
Alpari (US), LLC is one of a group of Alpari companies with operations in New York, London, Shanghai, Dubai, Frankfurt and Moscow. Founded in 1998, the Alpari Group is one of the world’s fastest growing providers of online foreign exchange (“FOREX”, “FX”) trading services, with offices in ten countries, including London, New York, Shanghai, Dubai, Moscow, Mumbai and Frankfurt, serving more than 150 countries. With over 400 employees worldwide, more than 330,000 customer accounts and monthly Forex trading volumes in excess of $147 billion,* the Alpari Group is one of the market leaders in Forex.
Alpari (US) was established in 2006. The company is based on Wall Street, in the financial district of New York City, where it is has been registered by the Commodity Futures Trading Commission (CFTC) as a Futures Commission Merchant (FCM) and has been a member of the National Futures Association (NFA), Member ID: 0379678, since November 2007.
New FIFO technology:
Alpari (US), a leading provider of online foreign exchange (FOREX, FX) trading services, announced the creation of a proprietary netting plug-in, which addresses trading with the previously imposed NFA rule, “First in First Out (FIFO).” This proprietary technology allows traders to buy, sell and place opposite-side pending orders and net positions as one aggregated position. Alpari (US) developed this technology in-house and is the first company to offer this as a brand-new, unique trading functionality in the U.S. The NFA has reviewed use of this plug-in, which remains compliant with the FIFO trading rule.
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Hi Michael,
I note that Alpari make no mention of which introducers (if any!) they will be guaranteeing after October 18th. It seems as though it’s not a very good time to be an “Introducer who is domiciled in the U.S.”.
What do you suppose will happen to all the money that currently goes to “Introducers [who] have a “pending” registration status with the NFA”, or even no registration status at all?
Jim
Some of the brokers have started trying to work with the unregulated IBs and get them sold to a regulated IB in order to maintain the relationship with the customers.
— Asaf
Gain and FXCM to start with.
I have to tell you though that there are a lot of loopholes in this regulatory restrictions because the brokers still pay their unregulated US IBs for customers that reside outside the US which is not very clear by the regulations if this is allowed or not.
— Asaf.
Hi Asaf,
I must admit I’m having difficulty getting definitive statements on this stuff from any number of brokers. Do you suppose their legal eagles will have straightened everything out properly by this time next month?
Jim
The rule for IBs is simple – you are not allowed to receive compensation for referring US customers unless you are registered with the CFTC as an IB.
You are allowed to receive compensation for referring international customers to international brokers even if you are operating out of the US. Some brokers require you to have specific European registration to refer EU customers but the majority of them will pay you without any regulations.
— Asaf.
this rule is ever present in france also, what brokers cna do is get the fcm to write an invoice as if they are providing service to the firm.