Oh yea we got trouble, right here in river city.FXCM has got a plan to repatriate their UK Accounts back to the US as of 10/18/2010, see below. No word yet from Forex.com UK.
Dear Client:
FXCM would like to inform you of important new legislation passed in the United States that will impact your forex trading account(s). The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act is a federal statute that states that overseas brokers not registered with the CFTC will not be able to be counterparties to US retail investors in OTC forex transactions after October 18, 2010.
What does this mean for your account? As you are a resident of the United States, FXCM LTD (FXCM UK), FXCM AU LTD (FXCM AU) or FXCM Asia Ltd. (FXCM Asia) can no longer be the counterparty for your forex transactions. However, so that you may continue trading, your account(s) are scheduled to be moved the weekend of October 15, 2010 to FXCM LLC (FXCM US). As a US resident having your account(s) with FXCM US will comply with this new rule.
How will my account(s) be affected?
Will my account move?
Yes, your account is scheduled to move the weekend of October 15,2010 to FXCM US.
Will I have the same username and password? Yes, you will keep the same username and password.
Will I have to download a new platform?
No you will not have to download a new platform.
Will my margin requirements change?
Yes, the maximum leverage available with FXCM US is 50:1 for major currency pairs and 20:1 for exotic currency pairs. (See the table below). For detailed examples on how margin will change and how to avoid a margin call, visit the online support center.
Will my open positions transfer? All open positions and orders will be transferred to FXCM US.
There is no need to close positions.
What will happen to my stops and limits? All stop and limit orders can remain open during this move.
There is no need to remove them.
Will I have hedging on FXCM US?
No, you will no longer be able to open new buy and sell positions on the same currency pair at the same time.
Will I have to do anything? FXCM will be providing continuous communication over the next few weeks and will outline if there is any further action needed on your part or any changes to this initial communication.
Will my deposit and withdrawal procedures change? You may continue to visit myfxcm.com to deposit and withdraw funds. Account holders in USD denominated accounts will now send their funds to Bank of America in the United States.
What protection will my account have under the new US regulations?
FXCM is registered with the Commodity Futures Trading Commission (CFTC) and is a member of the National Futures Association (NFA). If a dispute arises, investors can turn to the NFA or the CFTC. Please be aware that once your account has transferred to FXCM US, American (US) requirements and consumer protection rules will apply. The rules made by the UK’s Financial Services Authority to protect consumers will no longer apply; FSA consumer protection, bankruptcy protection, segregated accounts money rules. Any complaints you may have about activities up to the date of transfer will be dealt with under UK rules, thereafter under US.
For additional information, please read the Frequently Asked Questions on the DailyFX Forum. Visit Now
Hello Chris,
ReplyDeleteThanks for the update :o) Forex.com UK has also issued a warning telling their customers that accounts will be moved to the US branch. It seems that right now one of the only non-NFA broker accepting US customers is GoMarkets, we'll see if this changes before the 18th.
Keep up the great work :o)
Daniel
Daniel-
ReplyDeleteThanks for the comment and for the tip on GoMarkets.
I spoke with Dan from Trader's choice FX today and he indicated that Forex.com (Gain Capital) accounts would be moving to the US prior to the October 18th date. I haven't gotten any notice from them yet.
The terms would basically be the same as above, same account numbers, platform logins, etc. He also indicated I should go ahead and open up my new accounts now and they would transfer back to the US under the new account restictions.
Since my credit card company charges a 2% fee on non-USD transactions, I should probably wait until after the deadline to fund.
I was planning to trade Atinalla #1 in one of these accounts and I believe its possible for that system to be long and short the same pair, so that may be a problem.
Maybe I should wait for things to settle before opening and funding more accounts. As general George Washington said, "Its best not to swap horses while crossing the river".
Take care and keep the great work yourself,
Chris
Hi Chris,
ReplyDeleteThanks for the reply :o) Well as a matter of fact the trading of Atinalla No.1 cannot be done on NFA brokers under MT4 due to the hedging and FIFO restrictions. However once the systems are moved into MT5 they will be trading a net positioning approach which will allow their use on NFA brokers (such as approach is not possible under MT4).
However as always we are coming up with new portfolios and setups in Asirikuy and possibly - due to this new development regarding NFA brokers - we will be focusing on the development of Atinalla No.3 and No.4 which will seek to be NFA compliant. Anyway you can always experiment using our profit and draw down analysis tools to find some combination of systems on different instruments that fits your needs :o)
Also some brokers which are Bank-based (therefore out of CTFC regulation) will continue to allow US citizen trading under non-USD conditions (perhaps Dukascopy or a similar broker ?) or other brokers like GoMarkets may also choose this approach. Well, we'll see when the dust settles as you so wisely say :o)
Thanks again for the reply !
Best Regards,
Daniel
I just thought of a way US can get around the hedging issue unless there is some sort of clause in the rules that state I cannot approach it this way (obviously I have not read the rule beyond "no hedging"). FX brokers could allow for something like group accounts. So when I open an account, I actually open 2 accounts. The broker pipes everything to me in the visual of this group account. If I take a buy on the EUR/USD account 1 handles that, if I take a hedged position, doing a sell on the EUR/USD it does it on the 2nd account. In the end I really only have to manage the one account or the group account interface. The trades happen single action just as they are now, so I don't have to switch between accounts. The balance may be a bit of a tricky issue but I am sure things could be worked out.
ReplyDeleteNot sure if I am making any sense here, but I bet I am not the only one that has thought of this. It very well could be the NFA already thought of this and stated in some way that you could not do this.... ...Would the NFA restrict us to only have one account per broker? Or, say I could only hold a buy position in one account and a sell in another account for the same currency pair?
Anyway thanks for the post and comments.
JT
Looks like I messed up on my last question. "Or, say I could only hold a buy position in one account and a sell in another account for the same currency pair?" I meant "couldn't hold" rather than could only hold.
ReplyDeleteJT
Well JT, hedging doesn't make any sense since every hedging strategy is equivalent to a strategy based on net positioning provided that a platform that has this approach is available. This is the goal Metatrader 5 has. Only one position open on each instrument, a net positioning approach. When MT5 becomes available through NFA brokers the only issue will be leverage since hedging can be translated into net positioning and FIFO loses relevance as only one position per pair is ever held. I wrote an article a while ago about this http://mechanicalforex.com/2010/07/does-hedging-on-same-currency-pair.html.
ReplyDeleteDaniel