The ruling looks skewed against platforms who act as counterparties, which will no doubt fuel the anxieties of those who suspect the NFA has a bias towards the exchanges.
Platforms that act as counterparties to trades must inform clients of the following: “The foreign currency trading you are entering into is not conducted on an exchange. [Member] is acting as a counterparty in these transactions and, therefore, acts as the buyer when you sell and the seller when you buy. The prices [member] offers might not be the best prices available.” Exchanges currently have no obligation to state that their prices might not be the best available.
The NFA also requires that platforms that act as principals to state the following: “Although [member] is the counterparty to each of your trades, [member] limits risk to itself by instantaneously offsetting the trades and positions it enters into with you with a bank or institutional market maker. As a result, [member] does not profit when you lose money on a trade. Rather, [member] earns commissions on each trade it enters into with you. The amount of commissions charged is disclosed on page [x] of the customer agreement.”