NFA prefers market makers over ECN/STP brokers?

In what seems to be an endless effort of the NFA to kick the Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term industry out of the US, it imposes more and more stringent, and some would say, requirements on the local brokers. Another latest requirement to be announced ties the NFA membership fees to broker's revenues from forex transaction.

NFA Bylaw 1301(e) requires Forex Dealer Members to pay annual dues that are graduated according to the firm's gross annual revenue from customers (e.g., commissions, mark-ups, mark-downs) for its forex activities. Profits and losses from proprietary trades are not to be included.

If I understand what I read this means that FDMs will pay high annual fees if they charge commissions or mark ups, but not when their clients lose money. Commission and mark ups is charged only by ECN/STP brokers, so this means that NFA actually encourages market making. Otherwise it would charge Market Makers Market Makers Market makers or called dealing desk brokers represent a type of broker that internalize flows and are taking the opposite side of a transaction submitted by their clients. The market making broker is only quoting a feed of prices to its clients. These feeds may or may not be the exact same as the prices quoted on the interbank market.Any order a client enters is processed internally and never goes out to the market, except in rare cases where a market making brokerage identifies a client as a v Market makers or called dealing desk brokers represent a type of broker that internalize flows and are taking the opposite side of a transaction submitted by their clients. The market making broker is only quoting a feed of prices to its clients. These feeds may or may not be the exact same as the prices quoted on the interbank market.Any order a client enters is processed internally and never goes out to the market, except in rare cases where a market making brokerage identifies a client as a v Read this Term a higher commission than what it charges the ECN/STP brokers. This means that ECN/STP brokers earning over $5 million a year will have to pay $120,000 more than their market making colleagues. This is also terrible from another perspective - making money from commission is much more difficult than from clients losses simply because commission can never be as high as the deposits and subsequent potential losses of a client. So instead of encouraging more objective brokers with not hidden interests and agendas the NFA goes and does exactly the opposite.

All this just to be able to solicit US clients? No thanks.

National Futures Association: Forex Dealer Members Dues - Proposed Amendments to Interpretive Notice regarding Forex Transactions -