Alpari US Fined $50,000 by NFA for Insufficient Compliance with Fortress

Failure to submit complete trade reports to the NFA's Forex Transaction Reporting Execution Surveillance System and failure to maintain required

nfa_logoThe National Futures Association (NFA) has released today an announcement to the public regarding a case bearing a penalty of $50,000 levied on the former retail FX broker, Alpari US.

Alpari US was originally established by the Russian FX broker, Alpari, in order to offer retail trading services to American customers. Based in New York, Alpari US is registered with the NFA as an approved Forex Dealer Member, futures commission merchant and Retail Foreign Exchange Dealer. In September of last year, Alpari announced it is withdrawing from the US retail market and transferred its client accounts to FXCM.

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According to the case made public today, in June 2013, the Business Conduct Committee (BCC) of the NFA issued a Complaint against Alpari US, alleging that the broker violated its compliance obligations by failing to submit complete trade reports to the NFA’s Forex Transaction Reporting Execution Surveillance System (Fortress) and by failing to maintain required trade records (Compliance Rules 2-48 and  2-’10.)

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In addition, the Complaint alleged that Alpari violated Compliance Rule 2-36(e) by failing to diligently supervise its employees and agents in the conduct of their forex activities. Initially, Alpari filed an answer to the complaint in which the company denied the allegations.

Later, Alpari admitted that it had difficulty submitting the missing trade data in the required Fortress format but claimed that the missing data was the consequence of a mistake in computer programming, rather than a subversive pattern or a failure to supervise on the firm’s part.

On January 8th, the NFA’s panel determined that Alpari committed the violations alleged in the Complaint and ordered the broker to pay a fine of $50,000, payable within 30 days, exactly as Alpari suggested in a settlement offer.

This case and its resolution exemplify one of the reasons that FX brokers, like Alpari, choose to disengage from the US retail market. Besides the high capital requirements, operating in the US demands an additional level of reporting and carries the risk of high penalties (relative to other jurisdictions) that only a few major brokers are now left willing to tolerate.

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