Our industry’s self regulatory organization in the United States, the National Futures Association (NFA), has informed all Forex Dealer Members (FDMs), which includes FXCM, that it has adopted new Compliance Rule 2-43 regarding forex trading. Read Compliance Rule 2-43
After May 15, 2009, forex customers of FDMs will no longer be allowed to open "hedged" positions in their accounts. Hedging is defined as taking a long and short position in the same currency pair in the same account. This will only affect new positions that are placed after May 15, 2009. You will be able to manage existing long and short positions.
Please be aware that if you have an existing buy (long) position on a currency pair, any new sell order placed after May 15 will offset (meaning “close”) that existing position and vice-versa for existing sell (short) positions. Watch our Video Presentation to Learn More
For additional information, please visit the “NFA No Hedging Rules” forum on DailyFX; it has been created to answer your questions. Visit Now
The NFA is prohibiting hedging because it believes that hedging eliminates any opportunity to profit on a transaction, and it increases the customer’s financial costs. The NFA's position is that “customers do not understand either the lack of financial benefit or the financial costs involved” in carrying long and short positions in the same currency in the same account.
While FXCM acknowledges the risks associated with hedging, and understands the NFA’s concern and obligation to protect clients, FXCM would like to extend an option to those traders wishing to continue using hedging as a strategy and who understand the underlying risks and financial costs involved.
If you wish to continue hedging, you can trade through Forex Capital Markets Limited (FXCM UK), which is regulated by the Financial Services Authority (FSA) in the UK. Learn More
If you wish to transfer your trading account to FXCM UK, please complete the one page form. Account Transfer Form
DEADLINE TO COMPLETE TRANSFER FORM: MAY 13, 2009
Important Notice: If you completed the Transfer Form, your account will be operational at FXCM UK starting May 17, with hedging enabled.
Your account number and password will remain the same and your open positions will remain intact. Moving an account to FXCM UK involves some changes in deposit and withdrawal instructions, and changes in charges for transferring funds.
Since we anticipate a large number of traders moving accounts to FXCM UK for hedging, we are now completing the MYFXCM.com infrastructure to support the additional account volume at our FXCM UK entity. We expect MYFXCM.com to be operational by early June.
Funding an FXCM UK account: Credit card funding will be available by the end of May 2009. In the interim, you can deposit and withdraw through the following links:
Deposits | Withdrawals
If you have any questions about the new regulations, or their effect on your risk management, please don’t hesitate to call us at 1-888-503-6739, or e-mail us at email@example.com.
We look forward to serving you.
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New York, NY 10005
NFA Hedging Rule Excerpt and Explanation
Notice to Members I-09-10 - Hedging
April 13, 2009
Effective Date of NFA Requirements Regarding Forex Orders
The NFA has received notice that the Commodity Futures Trading Commission has approved new NFA Compliance Rule 2-43 regarding forex orders. The prohibition on carrying offsetting transactions will be effective for any positions established after May 15, 2009.
The NFA is prohibiting hedging because it believes that “customers do not understand either the lack of financial benefit or the financial costs involved” in carrying long and short positions in the same currency in the same account. Therefore, Compliance Rule 2-43(b) bans the practice and requires FDMs to offset positions on a first-in, first-out basis (FIFO). http://www.nfa.futures.org/news/newsNotice.asp?ArticleID=2273