FX Solutions finds a way to circumvent NFA’s Anti-Hedging requirement
Looks like it’s not a coincidence that the company is named Solutions… In a move that was all but unexpected
Looks like it’s not a coincidence that the company is named Solutions…
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In a move that was all but unexpected FX Solutions now offers multi-account offset solution in order to keep clients from moving their accounts overseas. What this cumbersome solution allows is to place a long trade in one account and a short trade in a separately margined account using a single login.
So far we have seen 4 different brokers offer three different solutions to the NFA’s Anti-Hedging blow: FXCM and Gain ask clients to shift their funds to oversea subsidiaries, FXDD chose to fight NFA directly and FX Solutions offers a solution that I find difficult for traders to embrace and might prove too cumbersome for EA programmers as well.
All this only strengthens what the NFA already knew: Forex brokers will never join hands in order to fight it, making it easier to pass any unreasonable requirement and watch the brokers twist and turn in order to comply with it.
Full statement as published on FX Solution’s website:
The National Futures Association (NFA) has notified its Forex Dealer Members, such as FX Solutions LLC, that effective May 15, 2009 the hedging portion of Compliance Rule 2-43(b) will become effective.
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Per the NFA, after May 15, 2009 Forex clients will not be allowed to be both long and short, in the same currency pair (or instrument), in the same account (Hedging) at the same time. However, this rule will only affect those positions placed after May 15, 2009. POSITIONS THAT WERE HEDGED PRIOR TO MAY 15 MAY REMAIN HEDGED.
The NFA’s decision can be viewed at http://www.nfa.futures.org/news/newsNotice.asp?ArticleID=2273
FX Solutions realizes that for many of our clients the ability to have both long and short positions is an important part of their trading strategy. Therefore, we are offering two regulatory-compliant alternatives:
Solution #1: Multi-Hedge Capability available on GTS after May 15, 2009�
If you wish to use hedging as part of your trading strategy and remain with FX Solutions LLC, an NFA-regulated entity, you can simply open an additional account. There is no cost and there is no requirement to deposit more funds. Simply transfer equity from your existing account to the new one and access both accounts from your existing GTS trading platform using your existing username and password. In addition, starting May 17, you will be able to trade spot gold and silver:
To “hedge” in one currency pair, simply place “buys” in one account and “sells” in the other. Click on the account that you wish to use, and trade as normal. You will be able to view your entire portfolio of trades on one screen. Although both accounts are separately margined, we will provide you with the ability to easily transfer equity from one account to the other straight from your trading platform at no cost.
Solution #2: Non-US Customers�
Non-US clients will have the additional option of opening an account with our affiliate, FX Solutions Australia, which allows offsetting positions (hedging) and the ability to trade additional financial instruments. IF YOU WISH TO CONTINUE TO HEDGE AND TAKE ADVANTAGE OF THIS OPTION you may open a new account. FX Solutions Australia is fully regulated by the Australian Securities and Investments Commission (ASIC) and deposited funds are held at JP Morgan Chase bank in New York.
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“FX Solutions realizes that for many of our clients the ability to have both long and short positions is an important part of their trading strategy. Therefore, we are offering two regulatory-compliant alternatives:”
Trading strategy should read “trading stupidity.” This so-called “hedging” is not a hedge. It takes you out of the market; no different than closing the position, except the “opportunity cost” may hit you very hard when the market moves 400 points while sitting on your hands – fat, DUMB, and happy.
“FX Solutions realizes that for many of our clients the ability to have both long and short positions is an important part of their trading strategy. Therefore, we are offering two regulatory-compliant alternatives:”
Trading strategy should read “trading stupidity.” This so-called “hedging” is not a hedge. It takes you out of the market; no different than closing the position, except the “opportunity cost” may hit you very hard when the market moves 400 points while sitting on your hands – fat, DUMB, and happy.
It may not be a hedge, but it’s not always “trading stupidity” either.
If you’re a systems trader, trading more than one system at a time is not in the least bit stupid. If your systems happen to consist of MetaTrader EAs, probably from different vendors, then you almost certainly need one account for each EA, or a single account that supports “hedging”. At least one of those EAs ought to make a tidy profit if the market moves 400 points in a hurry.
You might make the point that using MetaTrader EAs is stupid, but everyone’s got to start somewhere.
It may not be a hedge, but it’s not always “trading stupidity” either.
If you’re a systems trader, trading more than one system at a time is not in the least bit stupid. If your systems happen to consist of MetaTrader EAs, probably from different vendors, then you almost certainly need one account for each EA, or a single account that supports “hedging”. At least one of those EAs ought to make a tidy profit if the market moves 400 points in a hurry.
You might make the point that using MetaTrader EAs is stupid, but everyone’s got to start somewhere.
Hi, gr8 post thanks for posting. Information is useful!
Hi, gr8 post thanks for posting. Information is useful!