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CFTC bans use of credit cards to fund retail forex accounts

  • #1
  • First Post: Dec 12, 2014 10:52pm Dec 12, 2014 10:52pm
http://www.marketwatch.com/story/cft...st=tbeforebell

WASHINGTON (MarketWatch) — The Commodity Futures Trading Commission has approved a ban on credit cards to fund retail foreign exchange and futures accounts.

The National Futures Association announced the CFTC had approved its ban in a press release Friday. The rule will take effect at the end of January.
“Given the highly volatile nature of the forex and futures markets, the substantial risk of loss, and the possibility that a total loss may occur in a very short period of time, the Board has concluded that Members should be prohibited from permitting customers to use credit cards,” said the self-regulatory agency’s original notice.

According to Bloomberg, two of the largest foreign exchange brokers widely encourage the use of credit cards.
  • #2
  • Dec 12, 2014 11:06pm Dec 12, 2014 11:06pm
i think you can still use your debit card from your bank, I THINK
  • #3
  • Dec 12, 2014 11:08pm Dec 12, 2014 11:08pm
i read NFA baned credit card about 7-8 months ago
  • #4
  • Dec 13, 2014 12:01am Dec 13, 2014 12:01am
Quoting Abcxyz77
i read NFA baned credit card about 7-8 months ago
they was talking about it back then
  • #5
  • Dec 13, 2014 12:23am Dec 13, 2014 12:23am
Just another move by the CFTC/NFA to put retail forex industry to the ground. LOL Let's see, they capped the maximum leverage rate TWICE, banned hedging (which took away a potentially useful strategy for a trader to control his/her losses thus making us traders more vulnerable to losses) and now this. Wow they are getting really creative!! Credit card is just a faster and cheaper for traders from many countries to fund and withdraw from their account otherwise they will have to pay a hetfy wire charge to get the accounts funded and have funds withdrawn from their accounts. For many brokers, withdraw funds to a credit card is free but the broker will only withdraw to the credit card that was used to fund the account. If a trader wants to have their account funded, he/she will get the account funded, one way or another. Banning the credit card usage achieves nothing besides making it more difficult for the traders and the retail forex brokers to do business with each other.

If they REALLY want to do something for us investors to "protect us from the highly risky foreign exchange blah blah blah" why don't they ban brokers from trading against us, front-running and price manipulations? Not just fining the brokers that have been found guilty but actually ban the practices outright instead of trying to clamp down on the retail forex industry altogether. Useless bureaucrats!
Make your losses in demo. Earn your profits live.
  • #6
  • Dec 13, 2014 4:20am Dec 13, 2014 4:20am
Quoting Forexia
Just another move by the CFTC/NFA to put retail forex industry to the ground. LOL Let's see, they capped the maximum leverage rate TWICE, banned hedging (which took away a potentially useful strategy for a trader to control his/her losses thus making us traders more vulnerable to losses) and now this. Wow they are getting really creative!! Credit card is just a faster and cheaper for traders from many countries to fund and withdraw from their account otherwise they will have to pay a hetfy wire charge to get the accounts funded and have funds withdrawn...
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  • #7
  • Edited 6:21am Dec 13, 2014 6:08am | Edited 6:21am
Credit cards I can understand. I hope it doesn't extend to debit cards though. I see PT "thinks" it doesn't. Has anyone been able to determine that for sure? As if I didn't have enough issues to deal with and things to "dig" for information about. Good Lord! ... lol

EDIT: I may have just found my answer in the article picture? That's a Wachovia Debit Card. Wachovia was what is now my bank Wells Fargo. Good Lord!
Guess I'll have to have a chat with my broker to see if they can shed any light on it.
Attached Image


EDIT: 2 .... From the Bloomberg article.
http://www.bloomberg.com/news/2014-1...066b53d695eefa

Alternate Payments
"Gain spokesman Chris Mittendorf declined to comment.
Three months after that filing, following the NFA’s June letter to the CFTC proposing a credit card ban, Gain told investors it didn’t expect the change would significantly harm shareholders. It said customers can use alternative payment methods, including debit cards, wire transfers and electronic checks. Gain said on June 26 that 5 percent of total global deposits were from U.S. customers using credit cards."

Ghost Rider - WWTBMD?
  • #8
  • Edited 7:08am Dec 14, 2014 6:48am | Edited 7:08am
Quoting Forexia
Just another move by the CFTC/NFA to put retail forex industry to the ground. LOL Let's see, they capped the maximum leverage rate TWICE, banned hedging (which took away a potentially useful strategy for a trader to control his/her losses thus making us traders more vulnerable to losses) and now this. Wow they are getting really creative!! Credit card is just a faster and cheaper for traders from many countries to fund and withdraw from their account otherwise they will have to pay a hetfy wire charge to get the accounts funded and have funds withdrawn...
Retail traders are becoming too good. It's that simple.

If they really wanted to crush retail FX they would just initiate a tax on it or make leverage 10x.

Or brokers would require a flat % fee for withdrawals.

Then the world would be in chaos, because retail FX makes the world go round, as difficult as that may be to comprehend.

Sure, the banks and sovereign wealth funds could play just with each other, but the liquidity we provide, as little as it may be, is actually substantial, because many of these traders buy and sell at the worst possible points. Losing 100 pips x 0.1 lot is more important to the big money than having a trader lose 1 pip on 1 lot.

The bigger retail traders are more precise, and may provide better liquidity, but less profits for the big money in the long run, because we keep stops tight.


The accumulation distribution that goes on between the big money is so complex and long term its unlikely any of us can fathom it.
They battle it out for years on the monthly chart to make their profits. The patience they must have....
Predatory by Nature
  • #9
  • Dec 14, 2014 8:03am Dec 14, 2014 8:03am
Quoting Forexia
Just another move by the CFTC/NFA to put retail forex industry to the ground. LOL Let's see, they capped the maximum leverage rate TWICE, banned hedging (which took away a potentially useful strategy for a trader to control his/her losses thus making us traders more vulnerable to losses) and now this. Wow they are getting really creative!! Credit card is just a faster and cheaper for traders from many countries to fund and withdraw from their account otherwise they will have to pay a hetfy wire charge to get the accounts funded and have funds withdrawn...
Just for reference for myself, how does that no hedging law in USA here work? I believe for example let's say there are multiple orders on one pair such as buys on eurusd at 1.2300 1.2290 1.2250. they ALL would have to be in profit before any can be closed?
  • #10
  • Dec 14, 2014 8:37am Dec 14, 2014 8:37am
Quoting justin7
{quote} Just for reference for myself, how does that no hedging law in USA here work? I believe for example let's say there are multiple orders on one pair such as buys on eurusd at 1.2300 1.2290 1.2250. they ALL would have to be in profit before any can be closed?
Hi Justin,

No it just means you can't have a buy and sell (hedge) on the same pair at the same time. You can close any or all trades at a loss. However with FIFO (whether in loss or profit) you have to start with the first trade placed, then the second then the third. Both are pain in the butt rules.
Ghost Rider - WWTBMD?
  • #11
  • Dec 14, 2014 8:49am Dec 14, 2014 8:49am
Quoting albchr
{quote} Hi Justin, No it just means you can't have a buy and sell (hedge) on the same pair at the same time. You can close any or all trades at a loss. However with FIFO (whether in loss or profit) you have to start with the first trade placed, then the second then the third. Both are pain in the butt rules.
all regulated usa brokers are regulated by FIFO?
  • #12
  • Dec 14, 2014 9:17am Dec 14, 2014 9:17am
Quoting albchr
{quote} Hi Justin, No it just means you can't have a buy and sell (hedge) on the same pair at the same time. You can close any or all trades at a loss. However with FIFO (whether in loss or profit) you have to start with the first trade placed, then the second then the third. Both are pain in the butt rules.
Just makes using MULTIPLE limit orders (which profitable traders use) more difficult.
But with Oanda you could have a long 0.5 lot and then a sell limit for 1.00 lot and it would TP and get your short all at once.

And if you had multiple long entries, the TP would close them in order automatically. Great brokers like OANDA are finding ways to say F U to the rules.

Works with stop orders as well, not just TP. Allows you to have multiple stop losses too.
More brokers need to offer this. Oanda's MT4 is great
Predatory by Nature
  • #13
  • Dec 14, 2014 1:59pm Dec 14, 2014 1:59pm
Quoting justin7
{quote} all regulated usa brokers are regulated by FIFO?
Yes
Ghost Rider - WWTBMD?
  • #14
  • Dec 14, 2014 2:58pm Dec 14, 2014 2:58pm
Quoting albchr
{quote} Hi Justin, No it just means you can't have a buy and sell (hedge) on the same pair at the same time. You can close any or all trades at a loss. However with FIFO (whether in loss or profit) you have to start with the first trade placed, then the second then the third. Both are pain in the butt rules.
lol okay so that's an odd rule then that you must start with the first trade placed..
  • #15
  • Edited 4:02pm Dec 14, 2014 3:00pm | Edited 4:02pm
they need to stop worrying about how i spend my money and worry about the saftey of my funds with forex brokers
  • #16
  • Dec 14, 2014 3:58pm Dec 14, 2014 3:58pm
Quoting justin7
{quote} lol okay so that's an odd rule then that you must start with the first trade placed..
if you use limit order instead of take profits, Oanda does FIFO automatically for you.

You can't hedge but you can use reverse orders to TP and reverse the trade all in one instant and at the same price.

Not sure if its just Oanda or if its a new MT4 feature. If long 1 lot from .8224 aussie, and long 0.5 lot from .8260 aussie, with sell limit for 1.2 lots at 8300, it will close using FIFO and leave me long 0.3 lots. then if I have sell limit for 0.5 at 8350, it will TP the other 0.3 lots and get me short 0.2


Just wish other traders knew about this. Using market orders though, yeah its a pain. I just sort by "time opened", and then click X, X, X, X, and I can close 10 positions at market order in about 5 seconds (as long as they are sorted by time, FIFO isn't much of an issue for market orders).
Predatory by Nature
  • #17
  • Dec 15, 2014 2:05am Dec 15, 2014 2:05am
Well, I think it is a personal business of the way how somebody want to spend his money, even taken as a bank credit. Know some professional hotforex fellow traders who sometimes resort to bank help to add up margin to their account to not miss some important trades. High-risk environment, where money will be spent is not a solid reason to impose a limitation on it.
  • #18
  • Dec 15, 2014 1:17pm Dec 15, 2014 1:17pm
Quoting albchr
{quote} Hi Justin, No it just means you can't have a buy and sell (hedge) on the same pair at the same time. You can close any or all trades at a loss. However with FIFO (whether in loss or profit) you have to start with the first trade placed, then the second then the third. Both are pain in the butt rules.
Yup pain in the butt and ABSOLUTELY unnecessary and actually makes traders less able to manage and control losses. Honestly I do not understand how does no-hedging protect traders when traders are not allowed to take position on the opposite direction when it's clearly profitable for them to do so? And if they are concerned about creating unnecessary volatility due to hedging, that's a chicken-and-egg stupidity. The volatility was already there when the trader decided to hedge and it's because of the volatility that's there that made the traders decided to hedge to offset some of losses that the trader may have incurred, not the other way around. And FIFO is even more ridiculous!! All the trades were made by me, so WHY does anyone have any business in telling me which one I should close first and which one I should close last? Nobody has the right to tell me how I should trade only the market.

Stupid rules made up by a bunch of stupid bureaucrats who have never traded one minute in their lives!
Make your losses in demo. Earn your profits live.
  • #19
  • Dec 15, 2014 2:52pm Dec 15, 2014 2:52pm
Quoting leebsurag
Well, I think it is a personal business of the way how somebody want to spend his money, even taken as a bank credit. Know some professional hotforex fellow traders who sometimes resort to bank help to add up margin to their account to not miss some important trades. High-risk environment, where money will be spent is not a solid reason to impose a limitation on it.
  • #20
  • Dec 15, 2014 6:45pm Dec 15, 2014 6:45pm
I watched this happen in online poker back in 2008. It's clear that the American government hates the idea of American citizens throwing money away online to people in foreign countries. They tack on the 'regulations' and 'restrictions' one by one until a flat out ban feels painless and there's no-one left to complain about it.
First FIFO, then credit card ban, next will come 'foreign brokerage ban', then complete online ban. Give it a year.
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