Breaking: NFA Mandates Forex Brokers to Disclose Costs per Trade to Clients

The National Futures Association in the US is imposing a new disclosure requirement on brokers

The US National Futures Association (NFA) has issued a new disclosure requirement on brokers. Forex dealers in the US must provide a detailed breakdown of transaction costs to their clients whenever a customer demands the information.

The NFA outlines that brokers will need to be able to provide a detailed breakdown of per-trade costs. Forex brokers need to disclose any commissions and any other fees related to every trade.

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For brokers that are executing their order flow via Straight Through Processing (STP), firms have to provide a breakdown on any mark-ups or mark-downs they imposed on the price that they received for offsetting the position.

Brokers that are not processing orders on an STP basis, have to disclose the mid-point spread cost. This is defined by the NFA as the difference between the price at which the forex broker is executing the order of the client and the mid-point of the bid/ask spread at the time when the order was executed.

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Forex dealers in the US will have to inform their clients diligently about the new rule and make sure their clients know and can request the information from their brokerage.

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