Unlike its US based competitor Gain Capital which chose to completely shut down spot metal trading beginning July 15th, OANDA decided to continue offering spot metals trading without any leverage. The language of the law requires RFEDs such as Gain and OANDA to stop offering leverage spot metals trading however it doesn’t say not to offer spot metals trading at all. OANDA interpreted this as a permission to allow non leveraged spot metals trading. Question is of course how attractive will this be to US based spot metals traders who don’t really have any other options except NADEX.

This is the email OANDA sent to its US based clients:

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As a result of the recently enacted Dodd–Frank Wall Street Reform and Consumer Protection Act, U.S.-based retail forex dealers such as OANDA are prohibited from offering leveraged trading in precious metals to retail clients after Friday, July 15, 2011.

As a client based in the U.S., you will not be able to trade our four precious metal pairs (XAU/USD, XAG/USD, XAU/JPY, XAG/JPY) on a leveraged basis, effective end of day July 15. Leveraged trading in other currency pairs will remain unaffected, with the same margin requirements.

You will still be able to trade precious metals, but only on a 1:1 non-leveraged basis (requiring substantially more margin). If you do not have sufficient margin to cover your open metal positions in full, you need to reduce your exposure to gold and silver pairs before end of day July 15, or risk a margin call of all your open positions when this change is implemented.

We sincerely regret any inconvenience caused by this change in legal requirements. If you have any questions, please do not hesitate to contact our Customer Service Team at frontdesk@oanda.com.

We appreciate your business with OANDA.

– The OANDA fxTrade Team

Why is this change required?

Effective the end of Friday, July 15, 2011, Retail Foreign Exchange Dealers (RFEDs) registered with the Commodity Futures Trading Commission (CFTC) will be prohibited from offering leveraged retail trading in commodities, including precious metals such as gold and silver. This change in the U.S. law is being enforced by the CFTC as an outcome of The Dodd–Frank Wall Street Reform and Consumer Protection Act.

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