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NFA - "No more Limit or Stop Loss orders"

  • #141
  • Jul 6, 2009 12:01pm Jul 6, 2009 12:01pm
Correct me if I'm wrong, but the NFA isn't a government agency has no real authority, right?
  • #142
  • Jul 6, 2009 12:06pm Jul 6, 2009 12:06pm
Quote
Correct me if I'm wrong, but the NFA isn't a government agency has no real authority, right?

They are a private oversight body. But in order to run a forex brokerage you must be a part of an approved futures organization. Currently there's only 1 approved futures organization, and that's the NFA. So while it's not a gov't agency, if a broker fails to comply with NFA rules it will lose it's NFA membership and be unable to do business within the US.
  • #143
  • Jul 6, 2009 3:12pm Jul 6, 2009 3:12pm
Quoting Rabid
They are a private oversight body. But in order to run a forex brokerage you must be a part of an approved futures organization. Currently there's only 1 approved futures organization, and that's the NFA. So while it's not a gov't agency, if a broker fails to comply with NFA rules it will lose it's NFA membership and be unable to do business within the US.
So FXDD is screwed? Hope not. I am not sure the above post is 100% accurate.
FF = Forex Faggots
  • #144
  • Edited 4:28pm Jul 6, 2009 3:22pm | Edited 4:28pm
Quoting 8fingers
So FXDD is screwed? Hope not. I am not sure the above post is 100% accurate.
Don't believe everything you read..There are many spot forex brokers operating in U.S. that are not regulated by NFA. Registration is VOLUNTARY if they only deal in spot forex. It is only mandatory for brokers conducting business with U.S. futures exchanges. This thread is Unbelieveable!!! Sort of like a true and false test.
  • #145
  • Jul 6, 2009 5:40pm Jul 6, 2009 5:40pm
Quote
Don't believe everything you read..There are many spot forex brokers operating in U.S. that are not regulated by NFA. Registration is VOLUNTARY if they only deal in spot forex. It is only mandatory for brokers conducting business with U.S. futures exchanges. This thread is Unbelieveable!!! Sort of like a true and false test.
Wrong. Keep up with the law.

Link:
http://www.forexfactory.com/showpost...&postcount=392

It was passed in 2008, it's called the "CFTC Reauthorization Act" and it mandates that spot forex brokers register with a futures organization. The text of the bill is included for you to read.
  • #146
  • Jul 6, 2009 6:06pm Jul 6, 2009 6:06pm
I am lucky to live in the UK. I have already opened my Alpari UK account and will leave my IBFX account to accrue slowly via my robots, until such time as NFA finally get around to closing down all retail accounts.

Or I might just close the IBFX account and transfer the funds elsewhere. It is up to the brokers what they do about the NFA 'rules'. You can bet your last dollar that NFA are only getting away with their criminal lunacy because they are basically the brokers in a different disguise.

No disprespect intended to my fellow traders from the US. These bucket-shop dipsticks are unbelievable. If they don't want retail traders' accounts, they should simply stop accepting them. Those of you in the US need to find your offshore brokers.

  • #147
  • Edited 7:06pm Jul 6, 2009 6:55pm | Edited 7:06pm
Nope, a contract for future delivery is a future, not spot forex. Both (I) and (II) need to apply, it does not say I or II.
From the NFA webiste
http://www.nfa.futures.org/NFA-registration/index.HTML
"With certain exceptions, all persons and organizations that intend to do business as futures professionals must register under the Commodity Exchange Act (Act)."



Quoting Rabid
Wrong. Keep up with the law.

Link:
http://www.forexfactory.com/showpost...&postcount=392

It was passed in 2008, it's called the "CFTC Reauthorization Act" and it mandates that spot forex brokers register with a futures organization. The text of the bill is included for you to read.
  • #148
  • Jul 6, 2009 7:03pm Jul 6, 2009 7:03pm
Quote
Nope, a contract for future delivery is a future, not spot forex.
You need to read the entire text, not just some random part of it. Earlier on, above the part you're talking about, it says...

"Agreements, contracts and transactions in retail foreign currency."

Ie:

"This Act applies to, and the Commission shall have jurisdiction over, an agreement, contract, or transaction in foreign currency that--"

And then goes on to label different elements. Element 1 is, as you said, a futures contract. But element 2 proceeds to define use the text "eligible contract participants" via:

"(II) is offered to, or entered into with, a person that is not an eligible contract participant, unless the counterparty, or the person offering to be the counterparty, of the person is--"

Where it proceeds to define the term. In other words it has jurisdiction over futures contracts that aren't on an exchange, or any other transaction in retail foreign currency that isn't with an "eligible contract participant."

This means that in order to deal with the general public on a spot forex transaction (in the US, at least) you must be registered under a futures organization. This is widely understood, as the same bill later raises the minimum capital requirements, which has several smaller brokers shutting down.

Quote
Both (I) and (II) need to apply, it does not say I or II
No. That isn't the way this law works. Either must apply, not both. The wording is confusing a bit, but it clarifies this later on:

"(gg) a retail foreign exchange dealer that maintains adjusted net capital equal to or in excess of the dollar amount that applies for purposes of clause (ii) of this subparagraph and is registered in such capacity with the Commission, subject to such terms and conditions as the Commission shall prescribe, and is a member of a futures association " registered under section 17."

If both had to apply, then section gg would not apply to retail brokers. Yea I know, it's poorly worded. But until a court determines that this does not apply to retail brokers, we can only use the context to determine what was meant.
  • #149
  • Edited 7:35pm Jul 6, 2009 7:13pm | Edited 7:35pm
Nope, you need to read the section where it says when they have jurisdiction. As stated earlier, it does not say (I) or (II), it says (I) and (II) BOTH (I) and (II) need to be true, not just one or the other. (gg) is part of (II). (I) is false, therefore, (II) being true is irrelevant. The wording is clear, if they had intended one or the other they would have used "or" not "and". But, as earlier, I am not going to waste any more time with somebody so stubborn. This is my last post on the subject and good luck.

Quoting Rabid
You need to read the entire text, not just some random part of it. Earlier on, above the part you're talking about, it says...

"Agreements, contracts and transactions in retail foreign currency."

Ie:

"This Act applies to, and the Commission shall have jurisdiction over, an agreement, contract, or transaction in foreign currency that--"

And then goes on to label different elements. Element 1 is, as you said, a futures contract. But element 2 proceeds to define use the text "eligible contract participants" via:

"(II) is offered to,...
  • #150
  • Jul 6, 2009 7:55pm Jul 6, 2009 7:55pm
Quote
Nope, you need to read the section where it says when they have jurisdiction. As stated earlier, it does not say (1) or (2), it says (I) and (II) BOTH (I) and (II) need to be true,not just one or the other. But, as earlier, I am not going to waste any more time with somebody so stubborn. This is my last post on the subject and good luck.

You need to read further on...

Inserted Code
                    ``(C)(i)(I) <<NOTE: Applicability.>>  This 
                subparagraph shall apply to any agreement, contract, or 
                transaction in foreign currency that is--
                                    ``(aa) offered to, or entered into 
                                with, a person that is not an eligible 
                                contract participant (except that this 
                                subparagraph shall not apply if the 
                                counterparty, or the person offering to 
                                be the counterparty, of the person that 
                                is not an eligible contract participant 
                                is a person described in any of item 
                                (aa), (bb), (dd), (ee), or (ff) of 
                                subparagraph (B)(i)(II)); and
                                    ``(bb) offered, or entered into, on 
                                a leveraged or margined basis, or 
                                financed by the offeror, the 
                                counterparty, or a person acting in 
                                concert with the offeror or counterparty 
                                on a similar basis.

That is subsection C, outside of B, therefore element (B)(i) and (B)(ii) does not apply. That section clarifies that a transaction (not just a futures contract) in foreign currency that is offered to someone that's not a eligible contract participant, and is offered on a leveraged basis falls within the general jurisdiction of section 13101, subsection C.

Inserted Code
                    ``(II) Subclause (I) of this clause shall not apply 
                to--
                          ``(aa) a security that is not a security 
                      futures product; or
                          ``(bb) a contract of sale that--
                                    ``(AA) results in actual delivery 
                                within 2 days; or
                                    ``(BB) creates an enforceable 
                                obligation to deliver between a seller 
                                and buyer that have the ability to 
                                deliver and accept delivery, 
                                respectively, in connection with their 
                                line of business.

Further defining this. This section does not apply to a security (ex: shares of a currency fund) that is not a futures product (spot forex is not a security at all, so it is not exempt here), OR, a contract that results in delivery (forex does not result in delivery). Therefore it is not exempted by (II).

Inserted Code
                    ``(ii)(I) Agreements, contracts, or transactions 
                described in clause (i) of this subparagraph shall be 
                subject to subsection (a)(1)(B) of this section and 
                sections 4(b), 4b, 4c(b), 4o, 6(c) and 6(d) (except to 
                the extent that sections 6(c) and 6(d) prohibit 
                manipulation of the market price of any commodity in 
                interstate commerce, or for future delivery on or 
                subject to the rules of any market), 6c, 6d, 8(a), 
                13(a), and 13(b).

Agreements, contracts or transactions described in clause (i), as spot forex would be, shall be subject to (a)(1)(B) (along with a few others). That's the part we were talking about earlier.

Inserted Code
                    ``(II) Subclause (I) of this clause shall not apply 
                to--
                          ``(aa) any person described in any of item 
                      (aa), (bb), (dd), (ee), or (ff) of subparagraph 
                      (B)(i)(II); or
                          ``(bb) any such person's associated persons.

Later we have more exceptions. (I) shall not apply to (aa), (bb), (dd), (ee), or (ff) or any of their associated persons. Interestingly they don't exempt (gg), clarifying their intention to regulate retail forex brokers under this clause.

Later on... (C)(i)(III)(iii)(I) [ugh]

Inserted Code
``(iii)(I) A person, unless registered in such 
                capacity as the Commission by rule, regulation, or order 
                shall determine and a member of a futures association 
                registered under section 17, shall not--
                          ``(aa) solicit or accept orders from any 
                      person that is not an eligible contract 
                      participant in connection with agreements, 
                      contracts, or transactions described in clause (i) 
                      of this subparagraph entered into with or to be 
                      entered into with a person who is not described in 
                      item (aa), (bb), (dd), (ee), or (ff) of 
                      subparagraph (B)(i)(II);

Etc, etc, etc. You can read the text from there.

The way I read this, 13101(a)(B)(i) applies directly because 13101(a)(C)(i) says that it does. Regardless of the "AND" phrasing, it is later clarified in the text.

Unless a court comes in and says that (a)(C)(ii) exempts retail brokers and therefore exempts them from (a)(B)(i), a US broker would be wise to register.
  • #151
  • Jul 6, 2009 8:00pm Jul 6, 2009 8:00pm
When is management going to rule on a senior member ban on Jason Rogers??? Man, I hope he can post soon so he can put an end to this farce.
  • #152
  • Jul 6, 2009 8:16pm Jul 6, 2009 8:16pm
People. I have been trading with MB for a while and can tell you this issue is really a NON-ISSUE. Relax, OCO orders are simple (with MB at least) and if your broker is giving you a hard time, maybe it;s time to consider the alternatives.
  • #153
  • Jul 6, 2009 8:20pm Jul 6, 2009 8:20pm
I agree, I have been using OCO orders for a long time with IB. The issue is what is MetaQuotes Software going to do,,,I like to use MT4 with EAs also..

Quoting enochben
People. I have been trading with MB for a while and can tell you this issue is really a NON-ISSUE. Relax, OCO orders are simple (with MB at least) and if your broker is giving you a hard time, maybe it;s time to consider the alternatives.
  • #154
  • Jul 6, 2009 8:28pm Jul 6, 2009 8:28pm
This is only strike two traders... if leverage gets mandated below 50:1 then it will be strike three and time to move offshore!
  • #155
  • Jul 6, 2009 8:34pm Jul 6, 2009 8:34pm
Exactly, but will like to keep it US if at all possible,,but if strike 3 comes, then there would be no choice...

Quoting mdcarlson144
This is only strike two traders... if leverage gets mandated below 50:1 then it will be strike three and time to move offshore!
  • #156
  • Jul 6, 2009 10:30pm Jul 6, 2009 10:30pm
Well it looks as if Jason Rogers has been reinstated, so I have these questions for him.

1. A while back when no hedging became a rule FXCM appeared to want to move FXCM US clients to FXCM UK. This also appeared to be the case when FXCM quit offering MT4 for US and made it only available to UK clients. At that time, it did not make much sense, but now with this FIFO silly rule, it appears possible that the MT4 decision had considered this.

2. One question that I have is, assuming that MetaQuotes Software makes MT4 compatible with FIFO, is there a possibility of opening MT4 US?

3. Do you have any views on the likelyhood of the NFA continuing it's warpath and mandating lower leverage?

Thanks.
  • #157
  • Jul 7, 2009 8:55am Jul 7, 2009 8:55am
Quoting wwwin
Well it looks as if Jason Rogers has been reinstated, so I have these questions for him.

1. A while back when no hedging became a rule FXCM appeared to want to move FXCM US clients to FXCM UK. This also appeared to be the case when FXCM quit offering MT4 for US and made it only available to UK clients. At that time, it did not make much sense, but now with this FIFO silly rule, it appears possible that the MT4 decision had considered this.

2. One question that I have is, assuming that MetaQuotes Software makes MT4 compatible with FIFO, is there...
hi wwwin,

Thanks for the questions.

I believe that Metaquotes will have a solution to make MT4 FIFO compatible, but at what cost? We feel the two potential FIFO solutions we have seen put forth by Metaquotes would mean a significant loss of functionality in trading especially for expert advisors. There are estimates that up to 80% of EA's would need to be re-programmed to make it compatible with any new FIFO fixes.

We're less than 4 weeks away from the FIFO deadline, and we don't have exact details on how the FIFO fix for MT4 will work. That's not enough time to prepare our traders, especially expert advisor users that may need to make modifications. Therefore it's not worth taking the risk of relying on a third party for a solution when we already have a solution through FXCM UK. The MT4 platform stays the same through FXCM UK. No modifications needed for expert advisors.

The FX Trade Station II is different because it was designed by FXCM and we have direct control over the interface and back end execution to make it compatible and trader friendly for FIFO execution.

My view is that the NFA wouldn't be making proposals (leverage reduction) if they weren't intent on having them enacted. I do believe they have forex trader's best interests at heart despite the inconvenience it may have to some traders' strategies. Change is not always convenient. Even then, we still want to give traders the alternative through FXCM UK if they want to continue trading as they always have been.

Jason
  • #158
  • Jul 7, 2009 11:05am Jul 7, 2009 11:05am
thanks
  • #159
  • Jul 7, 2009 11:32am Jul 7, 2009 11:32am
Quoting Madmax1952
I doubt they will listen we are a thorn in their side....
well yeah. of course they are. they think that because speculators can control other markets, they can control the FX market. they see the USD falling and they automatically blame it on speculators; it's just like with the housing market, stock market, and oil market. and whats retarded is that the only one of these markets that has been even remotely afftected by speculators is the housing market, considering that evryone who buys a house (for investment or otherwise) is speculating. all the other markets havent been affected negatively by the speculators.

but thats where the government chooses to lay blame. not on people making stupid decisions, not the abundance of rules that strangle the markets, not the greedy lobbyists and their politcal whores; they blame the speculators. the people who are in the market to make a profit so they can support their families.

it's rediculous. i'm seriously considering moving out of the US because of all this BS. i might move out to Germany like Tjpld was suggesting somewhere else.

screw you america!

this is what you get for trying to regulate a capatilist market.
  • #160
  • Jul 7, 2009 2:01pm Jul 7, 2009 2:01pm
Quoting wwwin
yeap, MT4 in it's current state is not compatible with FIFO. But moving UK will solve both the problems the EAs have with no hedging and will have with FIFO, as neither of these two silly rules exist under the FSA. Besides, the NFA is not done with their silly regulations, there is more to come.
True, as of now. If the NFA's proposal is a success, then the FSA will take note of it and may implement it in the near future. The UK will always follow the ways of the US ... and vise-versa.

I truly don't believe that running to the UK will solve the problem, if you want to call it that. It's not a problem for me, as I don't hedge nor trade with a broker that is Position based. With my broker in complete compliance, I can and will continue to use Stops/Limit orders. But I do think moving an account to UK is a bit drastic, especially without thinking of the problems that may arrise later ... such as taxes. I wouldn't trust any broker that is willing to move your account to the UK branch. If your broker is looking to "ignore" the find "loopholes" in the law, says A LOT about your broker. Says even more about how they treat their clients. You have to wonder what a broker that is willing to "get over" on the government ... does to it's clients.

Bottom line, the regulartory body is looking to make the Interbank market a little more safer and regulated. Personally, Im looking forward to a little regulation. Bring FX to the mainstream without the scam broker and dealers.
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