Proposed NFA Capital Requirement - page 57
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NFA Hedging Policy
Dear Customers:
Interbank FX, along with all FCM's, has received information from the NFA that we want to pass along to our customers.
All registered FCM's have received a new Compliance Rule 2-43 regarding forex trading. On May 15, 2009, forex customers will no longer be allowed open "hedged" positions in their accounts. If you are currently using hedging as a trading strategy, we would encourage you to use the Interbank FX Demo accounts over the next month to help modify your trading strategy. Also, for those of you who utilize hedging strategy with your "Expert Advisors", we would encourage you to modify your code and test your advisor on the Interbank FX Demo servers as well. In order to assure a smooth transition for our customers to the new NFA Compliance Rule, Interbank FX has set May 8, 2009 as the last date that customers will be able to hedge open positions.
For customers trading on the MetaTrader 3 platform:
Due to the fact the MetaTrader 3 platform is no longer supported by MetaQuotes and they do not have the available resources to make the MetaTrader 3 platform compliant with this new rule, Interbank FX has decided to move all MetaTrader 3 customers to the MetaTrader 4 trading platform. This action will take place after the market closes on May 8, 2009. This action will require that MetaTrader 3 platform users download the MetaTrader 4 trading platform from our website. Instructions will be provided in future notifications explaining how to log into your MetaTrader 4 trading account
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Interested to hear what some of you who trade hedge methods will do?
Fxdd
To our valued clients.
FXDD encourages you to continue to trade as you always have. We have always had solutions to the new NFA hedging rule that will not cause you to change your trading strategies. We will keep you advised.
The FXDD team.
75 Park Place, 4th Floor
New York, NY 10007
Tel: 1.212.791.3933
Fax: 212.937.3845
sales@fxdd.com
Forex Trading | Currency Trading | Metatrader 4 | Forex Trading Software | Forex Broker | FXDD
hi
I didn't see the reason why ?
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Forex Indicators Collection
CMS Forex wants to inform clients of two important changes to our trading terms, due to forthcoming regulations proposed by the National Futures Association (NFA).
Hedging
The first new NFA regulation, effective May 15th, will prohibit the trading feature of "hedging." Hedging was offered as an added flexible trading tool due to high demand from our clients. However, the NFA believes that traders who are unaware of how to effectively use hedging can incur additional costs without added benefit. The NFA has also uncovered certain practices by money managers and others that indicated abuse of the "hedging" feature. Therefore, starting May 15th, CMS Forex will no longer be offering the hedging feature, in order to comply with NFA regulations.
Although hedging will no longer be allowed within one account, those who feel that hedging is an integral trading tool, can simulate hedging by using two separate CMS Forex trading accounts. You can place an order in one direction in your first account and place a trade in the opposite direction with your second account. This method presents a greater risk of being margin called, as the positions do not offset each other in the same account. However, having two accounts with CMS Forex may work as a solution for your hedging needs.
Leverage*
In addition, the NFA will likely implement a regulation to reduce the maximum leverage that Forex firms can offer. In order to support the NFA's efforts, our US regulated FCM entity, will be preemptively lowering our maximum leverage on major pairs from 400:1 down to 100:1 on May 15, 2009. Having reviewed our clients' trading activity, we've noticed that the vast majority of clients' accounts used leverage does not exceed greater than 100:1. Currently, Forex brokers may offer up to 400:1 leverage, but what they are offering is actually the maximum leverage that you can trade with, or the minimum amount of margin required to maintain a position. A better representation of how leveraged your account actually is would be your used margin, or the size of your position(s) divided by the total amount of equity in your trading account. On average our clients' used leverage is only about 12:1, much less than the maximum leverage offered.
As of May 15th, clients will have to maintain a minimum of 1% of the notional value of their positions............
March Net Capital Report
The CFTC has just released their latest net capital figures. With I Trade FX and GFS Forex departing the U.S. market that leaves only a little more than a dozen firms left standing.
Financial Data for FCMs
The following firms have net capital below $20 million
Easy Forex $15,552,000
Ikkon Royal $16,423,000
Alpari $16,557,000
MB Trading $17,031,000
Advanced Markets $19,686,000
The following firms have net capital above $20 million
Forex Club $21,354,000
CMS Forex $29,360,000
PFG $30,444,000
Interbank FX $38,393,000
FX Solutions $45,032,000
GFT Forex $87,169,000
Gain Capital $95,879,000
FXCM $113,463,000
Oanda $161,723,000
As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new $20 million capital requirement that is about to go into effect.
NFA regulated a new rule -NO MORE HEDGING POSITION + new order
As a result NFA Compliance Rule 2-43(b) Accounts in a hedged position currently do not have the ability to open any new positions involving the same pair has the hedge.
When one part of the hedge is closed the ability to open positions in the same direction as the remaining position shall be restored.