NFA Compliance Rule 2-43b
Definition of 'NFA Compliance Rule 2-43b'A 2009 rule implemented by the U.S. forex industry's self-regulatory organization, the National Futures Association (NFA), regarding forex trading by U.S. regulated forex companies. It prohibits hedging by requiring multiple positions held in the same currency pair to be offset on a first-in, first-out (FIFO) basis. It also prohibits price adjustments to executed customer orders except to resolve a complaint in the customer's favor or in the case of certain straight-through processing transactions, and these changes must be reviewed, approved and documented by the NFA. |
|
Investopedia explains 'NFA Compliance Rule 2-43b'Traders refer to Rule 2-43b as the FIFO rule. The rule's supporters say it increases transparency for customers and brings forex trading practices more in line with those of the equities and futures markets. The change forced many forex firms to change their trading platforms because the old software allowed users to choose which orders they want to close out, thus not complying with the FIFO rule. Under the new rules, it is still possible to place stop and limit orders, but they must now be entered differently. It was also possible to avoid the changes altogether by moving one's forex account to a firm in another country where forex trading rules are different. |
Related Definitions
Articles Of Interest
-
How To Profit From Interventions In The Forex Market
The forex market can be extremely profitable. Learn how to spot an intervention and trade when it's occurring. -
Getting Started In Forex Options
Stocks are not the only securities underlying options. Learn how to use FOREX options for profit and hedging. -
Top 7 Questions About Currency Trading Answered
Whether you're puzzled by pips or curious about carry trades, your queries are answered here. -
Getting Started In Forex
Before entering this market, you should define what you need from your broker and from your strategy. -
A Primer On The Forex Market
Moving from equities to currencies requires you to adjust how you interpret quotes, margin, spreads and rollovers. -
The Fundamentals Of Forex Fundamentals
Charting is not the only way to analyze the foreign-exchange market. Learn how to apply fundamental analysis to the economic indicators. -
What Forex Traders Need To Know About The Yen
The Japanese Yen possesses some unique qualities that traders should know before jumping in. -
Predict Inflation With The Producer Price Index
Find out how the PPI can be used to gauge the overall health of the economy. -
Trade Forex On Herd Instinct
Use caution and commonsense when making trades according to herd instinct – use stop losses, avoid complacency and plan your exit strategy. -
Uncovering Oil And Gas Futures
Find out how to stay on top of data reports that could cause volatility in oil and gas markets.
Free Annual Reports