Forex Trading Disputes

By the National Futures Association (NFA)

How can I learn more about the firms and individuals with whom I am trading?

As mentioned, only regulated entities, such as banks, insurance companies, broker-dealers or futures commission merchants, and affiliates of regulated entities may enter into off-exchange forex trades with retail customers. Therefore, you should ask the dealer how it is regulated and check with the dealer’s regulator about the dealer’s registration status and background. You should also ask the dealer if its regulator has adopted rules to regulate its retail forex activities.Unlike forex dealers, firms and individuals that solicit retail accounts for forex dealers and manage those accounts do not have to be regulated or affiliated with a regulated firm. Therefore, you should find out if the person’s forex activities are regulated and by whom. If the person is not regulated, you may be exposed to additional risks. You can verify CFTC registration and NFA membership statusof a particular firm or individual and check their disciplinary history by phoning NFA at 800-621-3570 or by checking thebroker/firm information section (BASIC) of NFA’s Web site at www.nfa.futures.org/basicnet/.

What are my rights and obligations?

Your relationship with your dealer is governed by your forex account agreement. Just as you wouldn’t consider buying a house or a car without carefully reading and understanding the terms of the contract, neither should you establish a forex account without first reading and understanding the Account Agreement and all other documents supplied by your dealer. You should know your rights, responsibilities and the firm’s obligations before you enter into any forex transaction. If you have questions about the Agreement, don’t hesitate to ask.

What should I do if I have a problem with my forex account?
Disagreements are bound to occur from time to time in any industry. Your first step should be to contact the firm you have a disagreement with and try to reach a settlement. Both the CFTC and NFA offer programs that may be available for resolving monetary disputes involving your forex account. Whether NFA or the CFTC can accept your case depends on several factors, however, including the party your claim is against. NFA offers an arbitration program to help customers and NFA Members resolve disputes. Information about NFA’s arbitration program is available by calling NFA at 800-621-3570 or visiting the Dispute Resolution section of its Web site at www.nfa.futures.org. The CFTC offers a reparation program for resolving disputes. If you want information about filing a CFTC reparations complaint, contact the CFTC’s Office of Proceedings at 202-418-5250 or visit the CFTC’s Web site at www.cftc.gov. In addition, if you suspect any wrongdoing or improper business conduct in your forex account, you may contact or file a complaint with NFA by telephone at 800-621-3570 or online at www.nfa.futures.org/basicnet/Complaint.aspx. You may also file a complaint with the CFTC. The CFTC has prepared a questionnaire form to assist the public in reporting suspicious activities or transactions. The questionnaire form is available on the CFTC’s Web site at http://www.cftc.gov/enf/enfform.htm. You can transmit theform to the CFTC electronically or by mail to CFTC, 1155 21st Street, N.W., Washington, D.C. 20581.

Conclusion

This article cannot tell you whether you should participate in the retail off-exchange foreign currency market. You should make that decision after consulting with your financial advisor and considering your own financial situation and objectives. However, we hope that this information is helpful in raising some of the issues that you need to consider in order to make a fully informed decision about investing in the off-exchange foreign currency market.