I think this is exactly what your searching for
However, I think what will happen is really on retial platform no matter how small the news is they will only have a lock out time of 5 to 10min along with the ECN will remain the same.
National Futures Association
Notice to Members I-07-19
April 16, 2007
Effective Date of New Interpretive Notice Governing Electronic Trading Systems Used for Forex Transactions
NFA has received notice that the Commodity Futures Trading Commission has approved a new Interpretive Notice to NFA Compliance Rule 2-36(e) qualified Supervision of the Usage of Electronic Trading Systems. The Interpretive Notice, which applies only to systems employed for forex trading, has been approved by the Commission on March 28 and will become effective July 1, 2007.
All NFA's busy Forex Dealer Members (FDMs) use electronic trading platforms, but the reliability of these platforms as well as the documents they generate vary broadly. NFA's existing Interpretive Notice to Compliance Rule 2-9 qualified Supervision of the Use of Automated Order-Routing Systems (the AORS Interpretation) provides advice to NFA Members on how they could fulfill their supervisory responsibilities within the security, capacity, and credit and risk-management controls supplied by electronic systems that route orders to an exchange, but it does not address retail forex egies.
The Board determined that similar advice will help FDMs comply with their own supervisory responsibilities under NFA Compliance Rule 2-36(e). Parts of the Notice also apply to Members that are subject to Compliance Rule 2-39.
The new Interpretive Notice is modeled after the AORS Interpretation, modified as necessary depending on the differences between exchange-traded service markets and off-exchange seller markets. It also contains two extra segments relevant to forex trading systems.
The section on security monitors the AORS Interpretation. The overall normal conditions that Members who manage forex orders should adopt and enforce written procedures to protect the reliability and confidentiality of customer orders and account information, and the procedures have to assign responsibility for overseeing the procedure to one or more people who know how it works and that are capable of assessing if the procedure complies with the company's procedures. This section goes on to discuss user authentiion, encryption, firewalls, user consent, periodic testing, and management.
As in the AORS Interpretation, the department on capacity sets an overall benchmark that requires Members who manage forex orders to adopt and enforce written procedures to keep adequate personnel and facilities for its timely and effective delivery of customer orders and reporting of executions. The overall standard also requires employees who operate trading platforms to adopt and enforce written procedures to keep adequate facilities and personnel for its timely and effective execution of customer orders. In addition, the procedures have to be made to take care of customer complaints about order delivery, implementation, and reporting and to deal with those complaints in a timely manner.
The third section also comes in the AORS Interpretation and requires Members who manage forex orders to adopt and enforce written procedures reasonably designed to prevent customers from entering into trades that produce undue financial risks for the Member or the Member's other customers. Though this overall standard is the same like in the AORS Interpretation, the discussion of account controls isn't. Many FDM trading platforms automatically liquidate positions prior to an account goes to a shortage, and some FDMs utilize this as a selling point for their platforms. Therefore, the Interpretive Notice requires companies that use this function to place up the automatic liquidation levels large enough so that ranks will be shut out at prices that will keep the account from going to a deficit position under all but the most extraordinary market conditions.
The extra section on recordkeeping spells out the information the system has to record and maintain. As a general benchmark, it states that Members who manage forex orders should adopt and enforce written procedures reasonably designed to record and maintain essential information regarding customer orders and account activity. It then addresses the specific information that the electronic system should record and keep in three egories: Transaction documents for orders (which should contain the types of information included on orders for exchange-traded commodities) and rollovers; Account documents showing the financial standing of each account; and Time and price records like those preserved by the futures exchanges. The section on trade integrity sets an overall standard requiring FDMs to adopt and enforce written procedures reasonably designed to guarantee the integrity of trades set on their trading platforms. It then discusses three specific areas of concern: pricing, slippage, and rollovers. Pricing. Trading platforms have to be made to provide bids and offers that are reasonably linked to current market prices and requirements. Slippage. Electronic trading platforms should be made to make sure that any slippage is based on real market requirements. What's more, whenever an FDM advertises no slippage, the platform ought to be made to perform a market order in the price displayed when the order is entered and to execute a stop order at the stop price.1 Rollovers. The platform ought to be made to make sure that automatic rollovers comply with the terms disclosed in the client agreement. At length, the Interpretive Notice requires a principal of the Member to certify that the firm has met the applicable standards in the Notice. This principal has to be a documented AP.
NFA's November 21, 2006 entry letter to the CFTC carries a copy of the Notice. ALL FOREX DEALER MEMBERS AND ALL MEMBERS SUBJECT TO COMPLIANCE RULE 2-39 SHOULD READ THE ENTIRE NOTICE. You may get an electronic copy of the entry letter in http://www.nfa.futures.org/news/news...ArticleID=1688.
Questions regarding these requirements should be directed to Sharon Pendleton, Director, Compliance, at or -LRB-312-RRB-Â 658-6540, or to John Brodersen, Associate Director, Compliance, in or -LRB-312-RRB-Â 781-2226.
1 FDMs may not market no slippage unless they also fulfill the prerequisites explained in the Interpretive Notice on Forex Transactions (NFA Manual, Para. 9053).
Reply With Quote
