Forex slippage test each spirit

The term active customer means any customer who was entitled to a monthly account statement under the provisions of CFTC Regulation 1. Members may satisfy this requirement by contacting the customer in writing by electronic or any other means reasonably designed to reach the customer and requesting that the customer notify the Member of any material changes to the information provided under Section c of Rule Whenever the customer notifies the FCM Member carrying the customer's account of any material changes to the information whether through the update process or through the customer's own initiative , a determination must be made as to whether additional risk disclosure is required to be provided to the customer based on the changed information.

Consistent with Section e of this Rule, the Member or Associate who currently solicits and communicates with the customer is responsible for determining if additional risk disclosure is required to be provided based on the changed information.

In some cases, this may be the Member introducing or controlling the account; in other cases, it may be the carrying FCM. Item 2 includes estimated annual income and net worth or net assets. For individuals, Members must obtain both estimated annual income and net worth. For all other customers, Members must obtain estimated annual income and net worth or net assets, however, if the customer is unable to provide a current estimated annual income figure, the Member may satisfy the Rule by obtaining the customer's previous year's annual income.

Item 3 , the customer's age or date of birth for individuals , helps the Member put the customer's financial condition, ability to understand and level of sophistication into perspective. Information about previous futures or swaps trading experience and securities or options trading experience may also be relevant and, therefore, have been included. The information set forth in items 6 through 10 must be obtained if a customer who is an individual trades security futures products.

Information on age, estimated annual income and net worth may be obtained through the use of brackets or "in excess of" descriptions so long as these are reasonably designed to elicit the required information in a meaningful manner. The information specified in Section c is a minimum requirement, intended to serve as a core of basic information that should always be obtained. Some Members routinely elicit additional items, such as liquid net worth, risk capital, or number of dependents, which may be quite useful, and NFA received comments on the Rule when it was drafted in suggesting that these items be required by the Rule.

NFA concluded, however, that the better approach was to adopt a Rule that would specify the minimum required information and allow Members to obtain other information as they deemed appropriate. NFA believes that the decision with respect to what additional disclosure, if any, should be given to the customer is best left to the Member or Associate, whose conduct is subject to review by the BCC.

There may be some customers for whom the additional disclosure will portray trading futures or cleared swaps as too risky for that customer. In these instances, the only adequate risk disclosure by the Member and Associate is that trading futures or cleared swaps is too risky for that customer. However, NFA believes that a determination of who those customers are cannot be made except on a case-by-case basis, because no objective criteria can be established that will apply to all customers.

The essential feature of the Rule is the link between "knowing the customer" and providing risk disclosure. Once that has been done and the customer has been given adequate disclosure, the customer is free to make the decision whether to trade futures or cleared swaps and the Member is permitted to accept the account.

Members and Associates, however, are prohibited from making individualized recommendations to any customer for which the Member or Associate has or should have advised that trading futures or cleared swaps is too risky for that customer. Section e : Introduced and Third-Party Controller Accounts The purpose of this Section is to place the obligation to obtain information and provide risk disclosure on the Member who deals directly with the customer when an account is introduced to a carrying FCM by an IB or another FCM doing business on a fully disclosed basis, or when a CTA controls the trading in a customer's account pursuant to written authorization.

NFA believes that the Member or Associate who solicits the customer and communicates with the customer in the process of the account opening is the appropriate party to comply with the Rule. For example, an FCM or, in the case of an introduced account, the IB must furnish a risk disclosure that satisfies Regulation 1.

Section i , which is discussed below, clarifies each Member's obligation to comply with other requirements. Section f : Reliance on the Customer as the Source of the Information Some Members confirm financial data because of concern about the creditworthiness of the customer.

NFA believes, however, that the decision whether to confirm customer data is best left to the Member's sound business judgment and is irrelevant to a customer protection rule aimed at providing information to a customer. Rule contemplates a good faith exchange of information between the customer and the Member or Associate.

A customer who gives incorrect information would still receive all the required risk disclosure statements but would have impaired the Member's ability to consider fully the customer's ability to understand the risk disclosures or whether additional disclosure was necessary. However, Section f will not operate as a "safe harbor" for a Member or Associate who falsifies information or who induces or suggests falsification by the customer.

Information invented by the Member or Associate does not constitute "information about the customer" as required by the general rule. Members and Associates engaging in such conduct will be subject to appropriate disciplinary action. Section g : Recordkeeping: Customers Who Decline to Provide Information In order to allow NFA to examine for compliance with the Rule, Section g requires that a timely record be made or obtained which contains the information obtained from the customer.

Because Section a imposes an affirmative duty on Members to obtain information, a Member who engages in or allows Associates to engage in a course of conduct which is designed to or has the effect of eliciting or prompting refusals by customers to provide that information would not have discharged that duty and could not use Section g as a shield from disciplinary action. The approval requirement applies to all new accounts. This is consistent with the Member's responsibility to supervise the futures and swaps activities of its employees diligently pursuant to NFA Compliance Rule In the case of non-U.

Section h : Review Procedures The requirement that a Member establish adequate review and compliance procedures provides Members with the flexibility to design procedures that are tailored to the way the Member does business. NFA staff will, in the routine course of an examination, check these procedures for adequacy, taking into account the facts and circumstances of the particular Member. This is because Rule is intended initially to apply to "account opening" or its equivalent.

Other examples of CFTC Regulations which affect the process covered by the Rule have been cited in the discussion of Sections b , d , e and g above. See Compliance Rule If fees and charges associated with futures and cleared swap transactions are not determined on a per trade or round-turn trade basis, the FCM or IB Member must provide the customer with a complete written explanation of such fees and charges. NFA recognizes that FCM and IB Members may employ various arrangements in assessing customers fees and charges associated with futures or cleared swap transactions.

Any such arrangement which is intended to or is likely to deceive customers is a violation of NFA Requirements and will subject the Member to disciplinary action. CFTC Regulation 4. Because "up front" fees and charges can have a significant impact on the net opening equity of pools and managed accounts, the above NFA rule requires not only disclosure of the existence and the amount of the up front charges but also disclosure of how the up front charges affect the return which must be achieved to break even at the end of an investor's first year or the initial amount of capital available for trading.

Furthermore, the impact of the up front charges on net performance must be included in the rate of return figures reflected on a CPO's or CTA's required past performance presentation. Disclosure of Prospective Up Front Fees and Charges The disclosure document must disclose up front fees and expenses, if any, to participants in a pool or clients in a managed account.

NFA's Board of Directors believes that investors should be fully aware of not only the amount of such fees and expenses but also their impact on the return which must be achieved to break even at the end of the investor's first year or the net proceeds that will be available at the outset for futures trading. CTAs may provide similar information either through the use of break-even analysis which complies with the requirements of Compliance Rule b and the accompanying interpretive notice or through the use of a dilution table.

If a CTA chooses to use a dilution table, the dilution table should be highlighted in a tabular format on the cover page of the disclosure document. The suggested format for the table would detail a standardized amount of initial investment, all up front fees and charges, including all sales and administrative fees, and the net proceeds that would be available for trading after deducting the up front expenses.

Moreover, if the results in the dilution table, without further explanation, could be materially misleading as to the impact of the up front fees and charges on the amount of initial capital available for trading for example, because the fees as a percentage of the initial investment vary depending on the amount of the investment , then explanatory footnotes should be used. The extent to which a CTA breaks down the up front expenses into categories, including, but not limited to, fees, sales and administrative fees, is solely within the discretion of the CTA as long as the net proceeds for trading and the portion that is deducted from the initial investment are clearly delineated as such.

All fees that are charged up front must be disclosed except that a CTA that charges periodic management fees on the first day of each period, including the initial period, need not describe such fees for the first period in the dilution table. Treatment of Up Front Fees in the Required Past Performance Presentation In preparing rate of return information, the beginning net asset value of a pool or managed account must be calculated before any up front fees and expenses, including organizational and offering expenses, are deducted.

However, a CTA acting as an independent advisor to a commodity pool is not required to include the up front fees or expenses charged by the CPO in beginning net asset value for the purposes of calculating rate of return information for the CTA's own disclosure document. In general, a CTA is acting as an independent advisor if it is not an affiliate of the CPO and does not receive any portion of the up front fee. For these purposes, "affiliate" means any advisor which owns or controls, is owned or controlled by, or is under common ownership or control with the CPO.

All up front fees and organizational expenses must be reflected as a reduction of net performance in the period in which the contribution was made to the pool or client's managed account, unless such fees and expenses can be amortized pursuant to Generally Accepted Accounting Principles. The monthly amortizable amount shall be calculated by dividing the total amount of amortizable expenses by the total number of months over which such expenses shall be amortized.

From the earliest stages of its formation, NFA's founders recognized that the creation of a meaningful and effective industrywide self-regulatory organization would be completely impossible unless all persons required to be registered as FCMs, IBs, CPOs or CTAs were required to be Members. Given the importance of the mandatory membership concept, NFA Bylaw , which tracks the language of Article III, Section 1 f , states the prohibition in the strongest possible terms.

The rule does not require proof that the Member firm was at fault or failed to exercise due diligence, simply that it transacted customer business with a non-Member that is required to be registered. NFA Bylaw requires Members to make two determinations: whether it is doing business with an entity which is required to be registered, and if so, whether that person is a Member of NFA.

The second of these determinations is relatively simple. The determination of whether a particular person is required to be registered can obviously be much more difficult. In such a case, the Member is in technical violation of the strict liability terms of NFA Bylaw A review of NFA policy, procedures and past disciplinary actions, however, clearly indicates that NFA Bylaw has not been enforced unreasonably. In making its recommendations in cases involving apparent Bylaw violations, staff has consistently not relied on the strict liability standard set by the rule itself.

Staff has recommended the issuance of complaints in Bylaw cases in which the evidence indicates that the Member knew or should have known of the violation. BCC Members exercise their informed business judgment in making these decisions, and are certainly aware that some violations of Bylaw may occur in spite of reasonably diligent efforts to comply with the rule. The question of whether a Member should have known of a violation of NFA Bylaw depends in large part on the adequacy of its procedures to prevent such violations.

Though it would be impossible to describe all of the situations which should put a Member on notice that a particular person is required to be a Member or NFA, there are certain minimal steps which should be taken to reduce the possibility of a violation of NFA Bylaw 1. Each Member should review its list of customers. If a customer's name indicates that it may be engaged in the futures business, the Member should inquire as to its registration and membership status; 4.

Members should ensure that their branch offices are not separately incorporated entities. The CFTC Division of Trading and Markets has issued an interpretive letter stating that branch offices which are separately incorporated entities are required to be registered as introducing brokers; and 7. As mentioned above, these suggested steps do not purport to be a dispositive list of internal procedures required to prevent violation of NFA Bylaw Though under some circumstances a Member following these suggestions could still be found liable for a violation of NFA Bylaw , the suggested procedures should help foster compliance with NFA Bylaw and greater protection to the investing public.

This program is voluntary and no Member is required to file promotional material with NFA prior to using the material unless otherwise required to do so by an NFA rule or directive. In addition, the use of this program in no way lessens the requirement that Members review, approve and supervise the use of all of their promotional material. The filing must also include the following information: The name of the supervisor s who reviewed and approved the promotional material; A description of how the promotional material will be used and disseminated to prospective client s ; The type s of investment products being offered in the promotional material; and The date the Member intends to begin using the promotional material.

NFA staff will review submissions as expeditiously as possible. The Member will be notified if additional information is needed or the review cannot be completed within the day period. The firm representative may communicate with the reviewer regarding a particular submission at any time during the review process by sending an electronic message through the system.

NFA will notify the Member by email when the review is complete and instruct the firm to access the Promotional Material Filing System to view any review comments or obtain notification that staff has no further comments and the material may be used. The Member is responsible for ensuring the accuracy of all information in the promotional material. NFA staff will not be able to independently verify the accuracy of every statement or numerical claim made in a piece of promotional material within the day review period, and submitting promotional material to NFA will not preclude NFA from raising compliance issues with the content of the promotional material or taking a disciplinary action for misstatements, omissions of material facts or other violations of NFA rules that are subsequently identified.

NFA staff's review is designed to provide guidance to Members, particularly with regard to whether the material presents the appropriate balance regarding the possibility of profit and the risk of loss and the proper use of disclaimers. Members may also ask general questions about promotional material or Compliance Rule by contacting NFA's Information Center at or or through the "contact" feature of NFA's web site at www.

Inquiries will be forwarded to the appropriate personnel for response. All applicants for AP registration are required to fill out the Form 8-R, supplying, among other things, information concerning their recent employment history and any disciplinary proceedings against them. What may not be immediately apparent from the face of the application is whether any of the applicant's previous employers have been the subject to disciplinary proceedings by the Commission or by NFA.

This information could be helpful to a prospective employer in determining the extent of supervision a particular applicant would require after he is hired. Certainly, if a recently hired AP has received the bulk of his professional training and experience from, for example, a number of firms which have been closed down as a result of disciplinary proceedings brought by the Commission or by NFA, that individual may well require closer supervision for a period of time than other APs.

All SD and MSP Members should carefully screen individuals who will effect or be involved in effecting swaps for statutory disqualifications, including by reviewing any applicable information available from NFA. Summary information concerning the proceeding is available through BASIC or can be provided over the phone, and copies of any available documents relating to the proceeding can be provided upon request.

Prospective employers are also entitled to any non-public registration records regarding a prospective employee. For example, each applicant for registration as an AP must complete the disciplinary history portion of the Form 8-R, and must supply a detailed explanation of any "yes" answers to those questions.

That detailed explanation is treated as non-public but is available to prospective employers under NFA Registration Rule c. Thus, a prospective employer may obtain the non-public supplementary information which the applicant may have submitted in connection with any past registrations. The supervision of employees must be an issue of paramount concern to all NFA Members.

NFA recognizes that certain employees, by virtue of their past training or experience, may need more supervision than others and will gladly supply our Members with whatever information may be available to help identify those employees. As of January 1, NFA Bylaws , and set qualification standards for individuals serving on the Board, disciplinary committees, and arbitration panels and incorporate the disqualification standards in CFTC Regulation 1. Bylaws: Bylaws a d , through , , , through , and Compliance Rules: Rules through , a - c , , b and d 4 - 5 , , , through , a - e , h , and j , , , , , , , a - c and g , a , , , , and Financial Requirements: Sections 4, 14, 15, 16 and Registration Rules: Rules , a - b , , c and d 2 , and c and d 2.

These requirements are former Compliance Rules through , through , and and former Registration Rule The Rule is designed to accomplish two primary objectives: 1. Given these broad purposes, some of the Rule's provisions are very specific, while others, of necessity, are more general. Since some of the Rule's provisions are stated in general terms, Members may understandably seek more specific guidance on some points.

The purpose of this Notice is to provide Members with additional guidance in complying with Rule by summarizing how the BCCs have applied Rule since the Rule became effective in Since Rule became effective, a number of complaints have been filed by NFA alleging violations of the Rule.

Typical violations of the Rule generally fall into one of three categories. A description of typical violations in each category is set forth below. Inadequate Risk Disclosure The heart of Rule is the requirement that Members obtain certain basic information from the customer concerning his financial background, analyze that information and ensure that the customer has received adequate risk disclosure information.

For example, there may be instances where, for some customers, the only adequate risk disclosure is that trading futures or cleared swaps is too risky for that customer. Once adequate disclosure is given, however, the customers are free to decide whether to trade in futures or cleared swaps and the Member is free to accept the account.

The Rule recognizes that the identification of customers who require additional risk disclosure can only be done on a case-by-case basis and that the determination of whether additional risk disclosure is required for a given customer is best left to the Member firm, subject to review by the BCC.

The most serious violations of the Rule have involved either failing to provide additional risk disclosures when necessary or inducing customers to provide false information on their account opening forms. A number of the more egregious cases, which have generally resulted in expulsions from NFA membership, are summarized below.

The exact factual circumstances vary from case to case, but one common thread in these cases is that the customer had no previous futures trading experience and little, if any, other investment experience. Obviously, these extreme examples do not in any way limit the circumstances which may trigger a need for additional risk disclosures: An AP instructed a customer, who noted on his account opening forms that he had owned his own home for 18 years, to falsify his account application by indicating that he had been involved in real estate development for 18 years.

An AP solicited a year-old retired Air Force Colonel who had no prior commodity trading experience. The AP did not advise the customer of any specific numbers to put down on his account opening form regarding his net worth, but told him to make the numbers high enough to get the account approved.

An AP solicited a year-old nurse and her husband, a year-old computer operator, neither of whom had any prior investment experience in commodities or securities. The husband then went to the firm's office and signed the account forms during his minute lunch break; however, he did not read the forms, nor were they explained to him by the firm or its AP.

In addition, the AP neither explained the account documents to the customer, nor gave her sufficient time to review them. The customer informed the AP that both he and his wife were in ill health and that one of the reasons for his interest in investing in commodity futures contracts was his limited health insurance coverage and a desire to earn enough money to pay for his medical expenses.

Rather than providing the customer with risk disclosure in addition to that contained in the risk disclosure statements, the AP informed the customer that the risk of loss involved in futures trading was slight. Another of the firm's APs instructed a customer not to put down "unemployed actor" for his occupation but rather "self-employed. Again, the cases summarized above illustrate some of the more egregious violations of the Rule involving either inadequate risk disclosure or inducing customers to provide false information on their account opening forms.

However, because the determination of whether additional risk disclosure is required for a given customer can be made only on a case-by-case basis, the above scenarios should not be interpreted to limit the circumstances under which additional risk disclosure may be required. Recordkeeping and Supervisory Requirements Though risk disclosure is the heart of the Rule, Compliance Rule also imposes certain recordkeeping and supervisory requirements.

It traded at an all-time low of 2. He said wide fiscal slippage recorded by Ghana in the past two years had led to market uncertainty and dwindling confidence in the local currency. Ghana, which produces cocoa, gold and oil, has missed its spending targets since The west African country recorded a budget deficit of KENYA The Kenyan shilling is seen in a tug of war in the coming week as central bank liquidity mop-ups offset dollar demand from commercial banks.

The Central Bank of Kenya CBK has been regularly intervening in the money markets to drain excess shilling liquidity in recent weeks, a trend which traders say should boost the local currency. But traders also said there was solid demand for the dollar from commercial banks.

Banks quoted the shilling at

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Slippage trading has some impacts on forex trading, outlined next. Impacts Of Slippage In Forex Trading Slippage in forex may appear negative; however, this common forex occurrence could be a blessing in disguise. Forex market trading orders are executed at best, whether more favourable, equal or less favourable.

However, due to the slippage factor, the order might get executed at 1. In a less desirable rate, it could be executed higher at 1. No slippage is another outcome, and your order gets settled at 1. When you trade at a favourable rate, you make gains, but when your order is executed at a less desirable price, you lose.

Anytime your order is executed at a different rate , know it is due to the slippage factor. While the slippage definition is quite simple and easy to understand the likelihood of it happening is unpredictable. The changes in pips could be minimal, and thus the effect of the slippage could appear to be insignificant in smaller trades.

However, the real impact is felt when dealing with large volumes. How To Stop Slippage In Forex Quick changes in forex market prices can cause market slippage to happen to result in a lapse between when a trade order was placed and its execution.

The following are the best ways to help you in forex slippage control: Use Limit Orders Slippage trading occurs mostly when forex traders use market order for entry or exit positions. Thus it is logical to use limit orders among other ways to stop slippage in forex trading.

A limit order is effective because it executes your trade orders at your intended price or more favourable market value. In sharp contrast, market order executes trade orders even at a worse price resulting in market slippage. The negative slippage is best prevented by using a limit order. While it is the most effective way to prevent negative slippage, it has a limitation. This limitation often occurs in a volatile market where prices fluctuate rapidly to prevent order execution at the quoted price.

And if you are day trading, it is best to avoid trading during major financial announcements and news. Depending on the market reaction to the announcements, you could be vulnerable to the forex market slippage at that period. Even though the economic news events may be tempting, the market volatility often hampers the execution of trade orders at quoted prices.

Major economic news events also impact trades orders placed prior to the announcement. This situation leads to slippage forex specifically on the stop loss. Good Forex Broker In addition to the above ways, choose a low slippage forex broker that also operates on faster execution speed platforms. The rapid speed would reduce order and execution time differences that lead to slippage. The market maker brokers are known to manipulate market prices, exposing you to market slippage.

The slippage amounts to 5 points against the trader. Slippage is frequent in trading at market quotations, not only in Forex but also in other financial markets stock, commodity. As a rule, slippage in the main currency pairs is small about 1 point in a calm market. Slippage is most critical for scalping strategies that are characterized by a very large number of trades with the goal of several points.

Slippage Is the broker to blame for slippage? Well, this is possible if your broker is unprofessional. That is why you should be extremely cautious when choosing your broker. This must be a trustworthy company that has been in the market for years, has a license, and a good reputation.

Then your orders will be executed almost immediately with minimal slippage. Moreover, slippages must appear in both ways — positive and negatives. Factors influencing slippage Slippage might occur due to several factors that must be accounted for in trading: Publication of important news is the main factor that may cause slippages.

At the publication of important news economic indices , political events, speeches of eminent persons, force majeure the quotations move so swiftly that during the time spent on processing the order, the price might change significantly.

Slippages might be rather large 5 points and more in currency pairs. Volatility of the asset demonstrates the dynamics of the price change. The higher the volatility, the higher the probability of slippage. The type of the trading account: trading conditions on your chosen account type may also influence slippage. The most popular currently are ECN and Prime accounts , they are characterized by minimal spreads and extremely quick execution.

Internet connection: it must be of high quality for the timely execution of orders. This condition must comply with both at the side of the broker and the trader. How to minimize or avoid slippages? Upon studying the influencing factors carefully, we might try to minimize their influence on trading. This will be especially vital for those who trade intraday: for medium-term and long-term trading strategies, moderate slippage must not be that important.

Start from choosing a trustworthy broker that provides you with good trading conditions and high speed of order execution. Make sure that the Internet connection is good, with no lagging.