NFA's Credit Card Ban Proposal – Another Malicious Nail in the Retail Forex Coffin
NFA has gone a long way trying to completely kick retail forex out of the US eventually reducing the number
NFA has gone a long way trying to completely kick retail forex out of the US eventually reducing the number of retail forex brokers from several dozens to just 11. With FX Solutions heading out as well the number of US forex brokers may fall below 10 within few months.
The latest proposal to ban the use of credit cards and ewallets as a funding method is just another nail in the retail forex coffin. However what makes it special is that NFA is bluntly ignoring its own members, namely the Forex Committee and makes a proposal exclusively concerning forex brokers however without even consulting with them. The only FDMs in the US systematically accepting credit card funding are the RFEDs, that is retail forex brokers. Some brokers have over 60% of total funds deposited by credit cards and other electronic wallets.
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NFA’s announcement stated that ALL Committees reviewed and supported this proposal: “The CRC directed staff to obtain comments on a prohibition on Members permitting customers to use credit cards to fund accounts from NFA’s FDMs, as well as NFA’s FCM, IB and CPO/CTA Advisory Committees. Each of NFA’s Advisory Committees has reviewed the CRC’s proposal to ban the use of credit cards and fully supports the proposal.“
This is false.
Several members of the Forex Committee confirmed to Forex Magnates that they were never even contacted about this proposal and in fact learned about it only when this proposal was sent to them as a done deal. NFA did not consult with its own forex members – the only ones to suffer from this proposal nor obviously with clients themselves. This move is unprecedented elsewhere in the world.
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NFA is once again here harms the very clients it’s supposed to protect. There are many reasons for brokers and traders alike to object this proposal:
- Such action is not borne out of any customer complaints or abuse
- Credit card funding measure is better than equity broker dealers providing margin credit for customers who put home equity line of credit funds into a brokerage account and then letting those same customers borrow against an equity portfolio on margin
- The FDM’s are not extending credit to the clients; these individuals have already been vetted and approved for credit by the financial institution that issues the credit card, and are monitored for payment by those institutions
- Credit card use provides the customer with the ability to dispute any abuses associated with their credit card, while bank wires cannot be disputed
- Banning the use of credit cards is not supported by the current scope of regulations
- NFA has no legal or compliance basis upon which it can exercise judgment and restrict legal payments
- Clients will no longer have the ability to rapidly fund their account to preserve their positions and avoid liquidation
- Smaller clients who wish to try out the foreign exchange market are discriminated against. They are not normally in a position to take time away form their daily schedule to physically go to the bank and wire money into their account, which in itself is an extra charge
In a series of many actions against the retail forex industry this proposal seems to be extremely one-sided and specifically aimed at retail forex brokers who couldn’t even voice their opinions before the proposal was drafted. It seems the NFA has lost any sense of shame and stopped hiding its anti-forex intentions. Members of the Compliance and Risk Committee are all representatives of exchanges and clearing firms who don’t even deal with retail clients and hence couldn’t care less.
We strongly suggest that the 100,000 or so of the remaining forex trading US clients voice their opinion and get in touch with the NFA and the CFTC protesting this latest nonsensical proposal if they agree with our opinion here. Relevant contacts are below:
NFA: Elizabeth C. Sheridan, Senior Attorney at esheridan@nfa.futures.org
CFTC: http://www.cftc.gov/Contact/index.htm
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Busted. ForexMagnates has done it again. All major forex and commodities forums should be commenting on this outrageous abuse of power by the NFA/CFTC fedulators. Where is the comment form on the proposed rules? Oh wait….the decision has ALREADY been made, so comments are unnecessary and would actually bring unnecessary scrutiny onto such a sensitive issue. This is an unprecedented war of control over how US Residents can spend their money. What would be interesting is if a broker or other organization sued CFTC in court on constitutional grounds, let alone pure negligence in providing proof that their cowboy approach… Read more »
Busted. ForexMagnates has done it again. All major forex and commodities forums should be commenting on this outrageous abuse of power by the NFA/CFTC fedulators. Where is the comment form on the proposed rules? Oh wait….the decision has ALREADY been made, so comments are unnecessary and would actually bring unnecessary scrutiny onto such a sensitive issue. This is an unprecedented war of control over how US Residents can spend their money. What would be interesting is if a broker or other organization sued CFTC in court on constitutional grounds, let alone pure negligence in providing proof that their cowboy approach… Read more »
the NFA should just say we don’t want any retail forex done in the US and call it a day, unbelievable!!!
they had a chance to bring in millions of dollars into the country, help hire more American workers and Yes protect the forex traders from scam forex companies that are spread all over the world. instead they have effectively shut down the door in front of oversees clients and forced jobs oversees and destroyed a thriving industry. they really should be ashamed of themselves for doing that.
the NFA should just say we don’t want any retail forex done in the US and call it a day, unbelievable!!!
they had a chance to bring in millions of dollars into the country, help hire more American workers and Yes protect the forex traders from scam forex companies that are spread all over the world. instead they have effectively shut down the door in front of oversees clients and forced jobs oversees and destroyed a thriving industry. they really should be ashamed of themselves for doing that.
i’d go farther and say they made the american public lose billions, not millions, of dollars and few thousands of jobs
i’d go farther and say they made the american public lose billions, not millions, of dollars and few thousands of jobs
This step should have come long time ago and I strong advise other regulators wordwide to enforce it. Many families had their lives destoryed because of trading forex especially on credit cards> I have seen people losing 0.5 -1 million usd on forex over the course of 1-2 years.
It is very sad that the greedeness of forex brokers owners that they do not give a heck of people lives.
I know you might say that it is their choice, but no, if regulatory bodies do not regulate many things in life, we would be living in a wildlife forest now.
This step should have come long time ago and I strong advise other regulators wordwide to enforce it. Many families had their lives destoryed because of trading forex especially on credit cards> I have seen people losing 0.5 -1 million usd on forex over the course of 1-2 years.
It is very sad that the greedeness of forex brokers owners that they do not give a heck of people lives.
I know you might say that it is their choice, but no, if regulatory bodies do not regulate many things in life, we would be living in a wildlife forest now.
@James
Casino gambling has taken far greater amounts of people’s money. And the house has a significant advantage in most cases. Forex is far more fair, assuming you are with a reputable broker.
Are you suggesting the USA and other countries around the world do away with retail forex or forex in its totality?
BTW, people can and do survive the world over with minimum regulation. They have running water, paved roads, internet, etc and they breathe in and out just fine. I guess some of us do need nanny states more than others.
@James
Casino gambling has taken far greater amounts of people’s money. And the house has a significant advantage in most cases. Forex is far more fair, assuming you are with a reputable broker.
Are you suggesting the USA and other countries around the world do away with retail forex or forex in its totality?
BTW, people can and do survive the world over with minimum regulation. They have running water, paved roads, internet, etc and they breathe in and out just fine. I guess some of us do need nanny states more than others.
Sometimes extra regulation and restrictions hurts and annoys but to tell the truth i like what the NFA is doing in the US , more regulation is better , these fx brokers needs someone above their heads , why some us fx brokers closed their operations in the US ? they dont like regulations they are after your money . period .
Sometimes extra regulation and restrictions hurts and annoys but to tell the truth i like what the NFA is doing in the US , more regulation is better , these fx brokers needs someone above their heads , why some us fx brokers closed their operations in the US ? they dont like regulations they are after your money . period .
you call the likes of GFT thieves? did NFA prevent PFG from stealing your money?
you call the likes of GFT thieves? did NFA prevent PFG from stealing your money?
Brokers left USA because, it is very hard to justify a requirement of $20 Million dollars of capital in cash and $1 million per year for NFA only to have your first customer through the door. It is still a mistery how the regulators came up with this figure???
Brokers left USA because, it is very hard to justify a requirement of $20 Million dollars of capital in cash and $1 million per year for NFA only to have your first customer through the door. It is still a mistery how the regulators came up with this figure???
the figure on itself is ok and makes sense, but was not the reason why brokers like IG and GFT who had more than enough cash left, other small and annoying requirements like hedging, leverage and now credit cards have helped them understand there’s no future in the US with the NFA being the forex regulator
the figure on itself is ok and makes sense, but was not the reason why brokers like IG and GFT who had more than enough cash left, other small and annoying requirements like hedging, leverage and now credit cards have helped them understand there’s no future in the US with the NFA being the forex regulator
I have been in the Forex trading from the beginning. I watched the Forex “programs” that claimed instant wealth with FOREX programs ..However, I NEVER read or saw any information on the great losses that the NFA/CFTC claimed. I never knew anyone that lost “everything” trading forex. Over the years I’ve helped over 40 friends/realitives make enough money to pay off homes,cars,vacations and college. This week alone I made 300 pips on NZD/JPY I buy in lots of 50 and bought 10 lots. Do the math 300X 10.89(JPY pip is higher) X 500. How often? About 6 times a year.… Read more »
user base is dwindling – Avatrade is largest client – they also have some business with Markets.com and a few smaller firms.
user base is dwindling – Avatrade is largest client – they also have some business with Markets.com and a few smaller firms.
I have been in the Forex trading from the beginning. I watched the Forex “programs” that claimed instant wealth with FOREX programs ..However, I NEVER read or saw any information on the great losses that the NFA/CFTC claimed. I never knew anyone that lost “everything” trading forex. Over the years I’ve helped over 40 friends/realitives make enough money to pay off homes,cars,vacations and college. This week alone I made 300 pips on NZD/JPY I buy in lots of 50 and bought 10 lots. Do the math 300X 10.89(JPY pip is higher) X 500. How often? About 6 times a year.… Read more »