Phillip Capital Withdraws from US Retail FX after Two Weeks

The Chicago based broker dealer was expecting the SEC to rethink its position post-Dodd Frank in 2011.

Chicago based brokerage Phillip Capital Inc. (PCI) has been expecting the U.S. Securities and Exchange Commission to reassess its position on retail forex offerings, the CEO of the company Lynette Lim confirmed to Finance Magnates.

“We had actually just started offering Forex two weeks ago with a soft launch after spending two years on integration and had started to onboard some clients. Also, Phillip Capital has already been offering forex in the other countries and will continue to do so. The recent announcement only affects the U.S.,” Mrs Lim said.

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On May the 20th the SEC published a note addressed to brokers, dealers and swap dealers, reminding them that the extension which they were granted to terminate their offerings for retail clients in 2013 would lapse on July 31st 2016.

The SEC’s announcement has caught Phillip Capital wrong footed with the brokerage apparently expecting that the U.S. regulators could reassess their position regarding the retail forex business conducted by companies which are not registered as Retail Foreign Exchange Dealers (RFED).

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“The purpose of SEC Rule 15b12-1 which was originally adopted in July 2011 as 15b12-1T, extended in July 2012 & 2013) was to prevent Section 742(c) from the Dodd Frank act from going into effect and allowed registered broker-dealers to engage in Retail Forex transactions,” Mrs Lim explained.

Citing a statement by commissioner Luis A. Aguilar from 2013, the company’s CEO stated that in the view of the company, the rule provided the SEC “additional time to assess the Retail Forex market and determine whether, among other options, Retail Forex rules need to be proposed or the rule extension be allowed to expire”.

“The SEC chose to allow the rule to expire, thereby prohibiting SEC registered broker-dealers from further participating in the retail forex market effective July 31, 2016.,” Mrs Lim concluded.

Therefore the firm has effectively operated for about two weeks before withdrawing from the retail forex market.

Finance Magnates recently reported that the bulk of broker dealers in the U.S. have been well prepared for the lapsing of the SEC’s rule that effectively prevented Dodd Frank from fully coming into effect.

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