New NFA rules about Price Slippage and Requoting

Starting from March 26, 2012 the new NFA rules about Price Slippage and Requotes come into effect.

The rules are aimed to set a level playing field for brokers and traders, so that when slippages or requotes occur, they will no longer be “one-sided, mainly favoring brokers” (e.g. executed at the best price when the slippage (requote) favors brokers, and at the worst price when it favors traders). Instead brokers will be required to set up their trading systems in such way that they offer equal opportunities for both sides in the market.

Straightening up this order handling process will provide additional clarity & honesty into the Broker-Client relationship.

The Official Document

More information on the new Interpretive Notice can be found in NFA’s September 2, 2011 Submission Letter to the CFTC. Questions concerning the Interpretive Notice should be directed to Lauren Brinati, Director, Compliance at [email protected] or Carol Wooding, Associate General Counsel, at [email protected].

Source: Effective Date of NFA Interpretive Notice to NFA Compliance Rule 2-36 regarding Price Slippage and Price Requoting

Details: How Slippage & Re-quotes Work


• The FDM (Forex Dealer Member – a broker) set the maximum losing slippage
(i.e., slippage that was unfavorable to the customer and favorable to the FDM)
at a much wider range of pips than the maximum profit slippage (i.e., slippage
that was favorable to the customer and unfavorable to the FDM). As a result,
a customer was much more likely to have an order filled when the market move
was unfavorable to it than when the movement was favorable to the customer.

• The FDM set the limit on the number of contracts in an order that could be
executed that experienced losing slippage for the customer at a much higher
number than the limit on the number of contracts in an order that could be
executed that experienced profitable slippage for the customer. As a result, a
larger sized order that moved against the customer was much more likely to be
executed than a smaller sized order that moved in the customer’s favor.

• The FDM only passed negative slippage on to the customer. If the FDM was
able to offset the customer’s order at a better price than the price at the time the
customer submitted its order, the FDM did not give the customer the better price.
However, if the FDM offset the customer’s order at a price that had negative
slippage and was unfavorable to the customer, the FDM would thereby benefit
from the slippage and fill the customer’s order at the offset price.

In each of the above instances, the FDM’s asymmetrical slippage settings allowed it to
manipulate the prices that the forex customer received and allowed the FDM to benefit
from the order slippage to the detriment of the customers.

For NFA regulated brokers in the United States and their clients this will no longer be an issue.

Broker discussion area

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This slippage or requoting shouldn’t be allowed at all

well.. when u playing with DMA and ECN type broker u gonna more often facing this slippage, but so far as i know and i facing at DMA type, slippage is 50:50. sometime it give benefit to traders, sometime it give benefit to broker. about slippage at ECN i dont know, personally i more love DMA type, because still use spread and no commisions like at ECN type. i think not to much different from DMA and ECN in slippage.
for notice, i try at FSA regulated broker, not NFA.

So i think about regulatory and this new rules from NFA i think it no give big effect to traders. Some FSA regulated broker also have it, and also fair play about slippage as long your account type is real DMA or ECN type.

Come on NFA… we still not interested with your little leverage, how this gonna make us happy?? 🙂

NFA heaven for big player, we all know, very tight audit, very secure money, more low risk because low maximum leverage.

But.. if u not “big dog” are this new rules about slippage give benefit to you?
if yes just give me example one 🙂

do you think your 1 lot gonna sliped far away? in some case, if u used MM type broker with virtual dealer it could be, but if we talk about good broker versus good broker, example ECN at FSA versus ECN at NFA its doesn’t make sense.

Tips from me about slippage:
1. Choose broker with DMA or ECN type connection.They more fair play at slippage.
2. Don’t choose broker with type MM, DD, or MMDD. Its not fairy tale, they get profit from SL hunting, widening spread, bad slippage, re-quote, and others nightmare.
3. STP now day can be manipulated, so this type not standart anymore for me. So theory is, if STP broker can easy widening spread did it hard to slipping your order?? even for me, STP only diplomatic version of MM syndicate.
4. Choose broker with more than 10 liquiditor, my experience in some broker with 17 liquiditor is very good in slippage, more often are give benefit to me.
5. Also choose broker with good regulator, because broker almost same with cat, if not patrolled it gonna become big cat and eat you. so it need regulator as police to keep watching this cat. if u don’t like low leverage at NFA than u can considering FSA as alternative. Dont trusth to local regulator, for me, FSA or NFA only that!
5. and classic advice is, don’t trade when big news come 🙂

Thank You,

good news for traders

Wish we had a no slippage and requote ASIC rule here in Australia. I think that to level the playin field even further is that all forex brokers trading platforms should be software audited every 3 months to meet a fair trading environment. I say that because each broker can get a team of software developers to tailor make there forex trading platform to work in there favour (Capitalism).