Forex lpoa

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IC Markets. Axi Trader. Letter of Direction. Global Prime. Upon receiving the application materials listed above and any required supplemental documents e. We spoke informally to an NFA reviewer who stated that the committee hears cases once a week, on a first-in, first-out basis. That committee will review the circumstances of each disqualification independently and decide whether to approve registration or to recommend a proceeding to deny registration.

The NFA reviewer we spoke to said that a decision by this committee is generally made within 24 hours. If the application is denied, a denial letter is sent to the manager. A hearing can then be scheduled with the legal department and additional information regarding the registration may be provided. At the end of the hearing, the registration is essentially either denied, approved, or approved with conditions.

It is difficult to predict the amount of time it would take for a forex manager with a criminal record to get through the NFA registration process. If supplemental documents e. The NFA announced a workshop to inform forex managers about the various registration and compliance matters that managers will need to be especially aware of during the registration process. While we do not yet know what the final rules will look like, we do know a few things and believe that managers will need to focus on the following issues:. The full NFA announcement is reprinted below. In early , the Commodity Futures Trading Commission CFTC published its proposed rules regarding the regulation of retail off-exchange foreign currency forex products.

These workshops will outline the registration process and discuss regulatory requirements for each registration category.

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We appreciate the opportunity to comment on the Proposed Regulations, especially considering that the regulations, if adopted as proposed, would significantly affect the business of many of our clients. While we have discussed these views with our clients, and they share many of the same views, the comments expressed in this letter are our own. The Proposed Regulations would, among other things, i require certain retail forex market participants to register with the Commission, ii require counterparties dealing in retail forex to increase the security deposit for forex transactions, iii establish certain net capital levels for forex counterparties, and iv require introducing brokers to retail forex transactions to operate pursuant to a guarantee agreement with only one forex counterparty.

The landscape in which the Proposed Regulations were developed is important. Prior to the CRA, the Commission did not have an explicit grant of jurisdiction over the off-exchange spot forex markets and there was, accordingly, little regulatory oversight of certain market participants. Without a mandate to require registration of such market participants, run-of-the-mill common law fraud proliferated as regulators were impotent to stop these scams.

While state laws were able to address many of these cases after the fact, the Commission sought to regulate the industry as a proactive means to prevent fraud. We agree with many of the Proposed Regulations and believe they serve important investor protection functions, however we are concerned that some of the Proposed Regulations will not protect investors and will have a deleterious effect on the United States forex industry. It is within this context, and with the goal of helping to create a considered regulatory regime that emphasizes both investor protection and the continued economic viability of the domestic retail forex industry, we make the following comments.

The registered firms and APs would also be required to become members of a registered futures association. In addition to registration, Proposed Regulation 5. These measures provide both the Commission and the NFA with ample opportunity to review firms and individual applicants. Once registered, Member Firms will be required to implement recordkeeping and compliance programs under both Commission regulations and NFA Rules.

In addition to self-examination and compliance mandates, NFA Member Firms are subject to routine audit and the NFA has made it clear that it intends to heavily monitor Member Firms involved in the retail forex industry. The heavily criticized Proposed Regulation 5. The regulation would also require the RFED or FCM to collect an additional security deposit or liquidate the position if the account value drops below the The Release cites a number of reasons for limiting leverage including: i extreme volatility of the forex markets; ii potential customer liability for losses if positions are not closed out; iii counterparty risk; and, iv current and proposed margin requirements by other regulatory bodies, including FINRA.

It is unknown if the Commission spoke with any industry participants such as FCMs or forex customers when considering this provision. We strongly oppose Proposed Regulation 5. We believe that reducing leverage for retail forex transactions to will not serve to protect customers and will likely, instead, harm the domestic forex industry. Many of the reasons cited by the Commission for the reduction of leverage are simply ill-founded and have previously been examined by the NFA. Proposed Regulation 5.

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In proposing the rule change in which the NFA actually increased the leverage allowances , the NFA took a considered approach to the issue. The NFA i researched then current FCM and FDM practices with respect to leverage, ii researched the practices of other industry groups, iii solicited comments from FDMs on proposed rules, iv discussed the issue with an FDM advisory committee, and v independently investigated the issue.

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Unprecedented Industry Resistance to Lower Leverage. As of March 22, , the Commission published on its website almost 9, comments. We share the views expressed in many of the comments, especially with respect to the viability of the forex industry in the United States if lower leverage is required. As many comments noted, if lower leverage is instituted, customers will simply move their accounts to offshore brokers who provide leverage of or more.

It is common knowledge that these offshore brokers can be unreputable and may actually provide investors with fewer safeguards than domestic brokers who are and will continue to be subject to oversight by both the Commission and the NFA. The purpose of these requirements is to protect retail customers in the absence of bankruptcy protection for segregated funds by making sure that FCMs and RFEDs will be able to remain solvent.

We believe that absent bankruptcy protection for segregated funds, high net capital requirements are the best way to protect the assets of retail investors. We do note, however, that high net capital requirements limit the groups who are able to participate as principals in these markets. Proposed Regulation 1. The Commission will prepare a new Part C guarantee agreement to the Form 1-FR-IB which, according to the Release, will make FCMs and RFEDs jointly and severally liable for all obligations of the IB with respect to the solicitation of, and transactions involving, all retail forex customer accounts of the IB entered into on or after the effective date of the guarantee agreement.

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We strongly disagree with Proposed Regulation 1. We believe it will effectively eliminate almost all forex IBs and put a number of honest and ethical forex IBs out of business.

We also cannot support this proposal because we believe that there is strong oversight of forex IBs and that registration will further weed out unscrupulous players. As we discussed above, the NFA is tasked with significant oversight responsibilities and does not take this mandate lightly.

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While a forex CPO or CTA may be able to become initially registered within a matter of weeks assuming the firm and principals have clean regulatory histories , a forex IB application may take three to six months or longer to be approved. In our opinion this existing regulatory framework of review procedures and net capital rules is more than sufficient to ensure investor protection. Furthermore, we concur with a number of commenters who have noted that there are fairness concerns vis-a-vis introducing brokers to on-exchange traders.

We believe that the Commission can achieve its goal of investor protection through less anti-competitive means. In the event the Commission adopts the proposed regulation as drafted, we believe the Commission should provide a grandfathering provision for current forex IBs who would be put out of business if the proposed regulation was passed as currently written. Additionally, the Commission should clarify the manner in which independent IBs are treated if they make introductions to both exchange traded futures products in addition to retail forex.

We agree that technical adjustments to current rules are necessary and applaud the Commission for trying to streamline regulation as much as possible. Certain technical aspects of the rules, however, should be revised with appropriate industry input. Additionally, any adopted leverage regulation will likely necessitate a change to certain provisions which currently reference the NFA leverage rule.

Proposed Regulations 4. We completely understand the purpose of this requirement and we also understand that this practice would mirror the current requirements for CPOs and CTAs. However, we do not believe that consumers actually read long paragraphs of legal disclaimers in large capital letters.

In the future, the Commission should consider a succinct bullet point list. We believe that consumers are more likely to read and understand information in such format. We believe that Proposed Regulation 5. The proposed rules seek to develop a comprehensive regulatory structure for the off-exchange retail forex industry.

We appreciate the opportunity to comment on the Release. If you have any questions regarding this letter, please contact the undersigned at The much anticipated off-exchange retail foreign currency regulations were proposed today by the CFTC. The release announcing the publication in the Federal Register is reprinted below and can be found here.

We will be providing an overview of the major provisions shortly. Washington, DC — The U. Commodity Futures Trading Commission CFTC today announced the publication in the Federal Register of proposed regulations concerning off-exchange retail foreign currency transactions. In particular, the Farm Bill:. Pursuant to this authority, the Commission is proposing a comprehensive scheme that would put in place requirements for, among other things, registration, disclosure, recordkeeping, financial reporting, minimum capital, and other operational standards.

Specifically, the proposed regulations would require the registration of counterparties offering retail foreign currency contracts as either futures commission merchants FCMs or retail foreign exchange dealers RFEDs , a new category of registrant created by the Farm Bill. Persons who solicit orders, exercise discretionary trading authority and operate pools with respect to retail forex would also be required to register, either as introducing brokers, commodity trading advisors, commodity pool operators, or as associated persons of such entities.

The proposed regulations also include financial requirements designed to ensure the financial integrity of firms engaging in retail forex transactions and robust customer protections. Leverage in retail forex customer accounts would be subject to a to-1 limitation. All retail forex counterparties and intermediaries would be required to distribute forex-specific risk disclosure statements to customers, and comply with comprehensive recordkeeping and reporting requirements.

Comments regarding the proposed regulations may be submitted by any of the means listed in the Federal Register release and should be received by the Commission within 60 days of the date of publication. Mallon also runs the Forex Law Blog. By Bart Mallon, Esq. Forex investment managers who offer forex separately managed account programs need to be aware of the risks of offering trading programs which use PAMM accounts.

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In the following securities release , reprinted in full below, the Pennsylvania Securities Commission announced an action against a forex manager who was managing forex accounts for individuals through a PAMM structure. In our opinion this action is odd, but forex managers should be aware that states can make such claims and if a state does make such a claim, the manager will either need to comply with the state order or fight the state in court.

If the manager does the former then he is essentially forfitting the right to have clients from certain state.