SEC extends forex trading permission for another year

The U.S. Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Commission on Wednesday voted to delay by one year implementation of a rule blocking brokers from trading in foreign currencies for retail clients.

The bar on retail foreign exchange transactions, required under the Dodd-Frank Wall Street Reform and Consumer Protection Act, was set to go into effect Saturday. But in response to concerns from brokerage houses that the rule would hinder international stock trades, the SEC delayed its effective date until July 16, 2012, which will provide time for a review.

Dow Jones explains:

People wishing to invest in foreign stocks typically buy bank certificates called American Depositary Receipts that trade on U.S. exchanges and represent the shares of a foreign company. But some investors, believing they can get better pricing, seek to buy the shares through their broker directly on an overseas exchange.

To facilitate such stock trades, some brokerages offer to purchase foreign currency on behalf of their customers, thereby shielding them from foreign exchange risk. Other firms simply require customers to take on the foreign-exchange exposure tied to buying the foreign shares.

Brokerages argued that, without the certainty such conversion trades were still legal, they would be forced to require their customers to take on foreign exchange risk or to route the trades through a nonbrokerage sister company. The latter change could impose a fair amount of restructuring on brokerages and Clearing Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Read this Term firms that wish to permit the transactions.

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