Quick Answer
Futures Commission Merchants and Introducing Brokers must disclose the costs a customer pays to trade, the commissions, fees, and other charges. Fee arrangements must be presented honestly, and any charge structure intended or likely to deceive a customer about the true cost of trading violates the rules. It is a disclosure-and-fair-dealing duty.
This last topic is short and follows the honest-dealing theme: a customer must be able to see what a futures transaction actually costs.
Tell the Customer What Trading Costs
The duty is about transparency, not about capping fees.
- Futures Commission Merchants (FCMs) and Introducing Brokers (IBs) must disclose to customers the costs associated with futures transactions: the commissions, fees, and other charges a customer will pay to place and carry trades.
- Fee arrangements must be presented honestly. Any charge arrangement that is intended to or likely to deceive customers about the true cost of trading violates the rules and exposes the firm to discipline.
- This is a disclosure-and-fair-dealing duty. A firm may set its own fee schedule, but it must be transparent about it, in keeping with the just-and-equitable-principles and honest-solicitation standards from the general registration and account rules unit.
Think of it this way: a firm is free to price its services, the way a shop sets its own prices. What it cannot do is hide the price tag or bury charges so the customer never sees the real total. The rule is about showing the true cost, not about how high or low that cost is.
Exam Tip: Gotchas
- The rule requires honest disclosure of costs, not a specific fee cap. A firm may charge what it chooses as long as it discloses the costs plainly. The violation is deceiving the customer about the true cost, not setting a high fee.