Thread: New CFTC margin requirements FAQ for International residents

New CFTC Margin Requirements FAQ (International Residents)

Please click on the appropriate link below to view the answer to your question:

• Who is the CFTC? Click here.
• What are the new CFTC margin rules? Click here.
• What does FXCM think about the CFTC rules? Click here.
• When will the margin requirements take affect? What are the key dates? Click here.
• How much are the margin requirements increasing? Click here.
• How do I calculate my new margin requirement? Click here.
• Will my positions be margined out? Click here.
• How can I avoid a margin call? Click here.
• How do I move to FXCM UK? Click here.
• What are the difference between FXCM LLC (US) and FXCM LTD (UK)? Click here.
• Why Is lower leverage important? Click here.
• How do I keep my account with FXCM UK? Click here

The new CFTC margin rules apply to all FXCM LLC (FXCM US) clients regardless of their location. International residents (outside of the U.S.) with accounts held with FXCM LTD (UK) are not affected by the new CFTC rules. If you need help to determine if your account is held with FXCM (US) or FXCM (UK), please click here to chat now.

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. To learn more, please register for the upcoming FXCM Live Webinar, contact FXCM by live chat, or click Post Reply now and we will provide you with an answer.

Who is the CFTC?

The Commodity Futures Trading Commission (CFTC) is an independent agency responsible for regulating the retail spot forex market in the United States along with the National Futures Association (NFA). A primary goal of both US regulatory organizations is to protect investors.

FXCM is a registered Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) and is a member of the National Futures Association (NFA). As a vocal advocate of increased investor protection, FXCM is proud to be one of the first foreign exchange firms to register as an FCM with the CFTC following the passage of the Commodity Modernization Act in December 2000.

The U.S. regulatory framework is widely regarded as one of the best in the world for investor protection. If a dispute with an FCM arises, investors can turn to the NFA or the CFTC.

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click Post Reply now and we will provide you with an answer

Return to Top

What are the new CFTC margin rules?

Recently, the CFTC announced new rules that allow for a maximum leverage of 50:1 for major currency pairs and 20:1 for exotic currency pairs for accounts held with FXCM LLC (FXCM US). The effective date for the new rule is October 18, 2010.

The new CFTC margin rules apply to all FXCM LLC (FXCM US) clients regardless of their location. International residents (outside of the U.S.) with accounts held with FXCM LTD (UK) are not affected by the new CFTC rules.

FXCM agrees with the new CFTC margin rules and has already implemented 50:1 as the default margin setting on new FXCM LLC standard forex trading accounts. As a result, the new leverage requirements will have a minimal impact on our Standard 10k LLC accounts.

New USD margin requirements with FXCM LLC:

To determine if your account is held with FXCM LLC, please log into myfxcm.com, run a report, and scroll to the bottom to view the FXCM address.

Your account is held with FXCM LLC (US) if the FXCM address displays as:

Forex Capital Markets LLC
Financial Square
32 Old Slip, 10th Floor
New York, NY 10005
USA

If the address displays a different FXCM address, then your account is held with another FXCM entity.

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click Post Reply now and we will provide you with an answer.

Return to Top

What does FXCM think about the CFTC rules?

FXCM agrees with the new CFTC Margin Rules

We believe the reduction in leverage is a reasonable compromise from the initial CFTC proposal of 10:1 leverage. The new margin requirements are intended to increase the likelihood of profitable trading and reduce risk by restricting traders from excessive leverage. In fact, FXCM has already implemented 50:1 as the default margin setting on new FXCM LLC standard forex trading accounts. We are actively helping traders make the transition to trading with lower leverage and are available 24 hours a day, seven days a week to assist you.

FXCM wants profitable traders

Our interests are aligned with our clients because, as a No Dealing Desk forex broker, we do not take a market position. We are paid by trading volume, therefore we want profitable traders because they tend to trade more. FXCM has invested in our award-winning FX Trading Station, institutional-level DailyFX+ research, and many other resources to help give traders a competitive edge.

FXCM believes lower leverage will benefit traders

FXCM’s experience in Hong Kong, where significantly lower leverage levels are mandated by law, suggests lower leverage results in more successful trading. FXCM believes lower leverage benefits traders as higher leverage can often result in a few losing trades offsetting many winning trades. To see how lower leverage compliments sound money management, visit the DailyFX+ Trading Course.

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click Post Reply now and we will provide you with an answer.

Return to Top

When will the new margin requirements take effect? What are the key dates?

• October 6, 2010 – Deadline for International residents to submit requests to transfer to FXCM LTD (UK) if they wish. Clients that opt to transfer their account(s) to FXCM UK prior to October 6, 2010 will be unaffected by the new FXCM LLC margin requirements outlined. Please note – US residents are required to maintain their accounts with FXCM LLC and do not have the option to transfer to FXCM LTD (UK).
• October 10, 2010 – FXCM LLC (US) will adjust leverage to 50:1 for major currency pairs and 20:1 for exotic currency pairs. International residents who choose to transfer to FXCM UK prior to October 6, 2010 will not be affected by the new margin requirements.
• October 18, 2010 – The effective date for the new CFTC rule that allows for a maximum leverage of 50:1 for major currency pairs and 20:1 for exotic currency pairs for accounts held with FXCM LLC (FXCM US).

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click Post Reply now and we will provide you with an answer.

Return to Top

How much are the margin requirements increasing?

The maximum available leverage will change to 50:1 (2% margin). The following examples show the increase in margin requirements for USD denominated accounts that are changed from 100:1 leverage (1% margin) to 50:1 leverage (2% margin) for the major currency pairs:

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click Post Reply now and we will provide you with an answer.

Return to Top

How do I move to FXCM UK?

Non-US residents can continue to trade on higher leverage by transferring their account to FXCM LTD (UK).

Non-US residents include:

• International residents located outside of the US and US territories.
• US citizens with international residency outside of the US and US territories.
• Clients with dual residency in the US and outside of the US or US territories.

Please note, while we strongly believe that traders tend to be more successful trading on conservative leverage, we also understand that some traders prefer the flexibility of trading on higher leverage. US residents are required to maintain their accounts with FXCM LLC and do not have the option to transfer to FXCM LTD (UK).
How do I transfer to FXCM UK?

To transfer your account to FXCM UK, simply review the FXCM UK Margins and Settings, and submit the opt-in form. Transfer Your Account to FXCM UK

What is the deadline to transfer my account to FXCM UK?

The deadline to transfer your account to FXCM UK is October 6, 2010. Clients that opt to transfer their account(s) to FXCM UK prior to October 6, 2010 will be unaffected by the new FXCM LLC margin requirements outlined.

Starting October 10, 2010, the maximum leverage available with Forex Capital Markets, LLC (FXCM LLC) for trading will be 50:1 for major currency pairs and 20:1 for exotic currency pairs.

All positions and orders created after October 10, 2010 will be subject to the new margin requirements. Additionally, open trades and active orders created before October 10, 2010 will also be subject to new margin requirements.

What changes affect my account if I transfer to FXCM UK?

Trading features, the methods available to deposit funds and regulation changes will occur once accounts are transferred from FXCM LLC to FXCM UK.

By transferring your account to FXCM UK, your account features will have:

• 0.5% maximum margin available (200:1 leverage)*. View table below for details.
• Stop/Limits from the Open Positions window. The ability to place stops and limits on individual trades from the "open Positions" window.††
• Modify trades from the Open Position window. The ability to modify and close orders from the "open Positions" window.
• Hedging. The ability to hold buy and sell positions on the same currency pair at the same time.

Methods Available to Deposit Funds

FXCM UK clients can deposit funds by credit or debit card, bank wire, or paper cheque (if funding in GBP or USD).

To fund an existing account, please log into www.myfxcm.com and click Deposit Funds.

Credit or debit card deposits get the additional flexibility to deposit funds in multiple currencies including USD, GBP, EUR, CAD, JPY, or NZD.

Regulation

Forex Capital Markets Limited (FXCM UK) is a subsidiary of FXCM Holdings, LLC and is regulated by the Financial Services Authority, one of the world’s most respected financial regulatory bodies. After the transfer, your account will be held with FXCM LTD which is regulated by the FSA (Firm Registration Number 217689).

What stays the same when I transfer my account to FXCM UK?

By transferring your account to FXCM UK, you have many of the same account settings and services including:

• Trading Platform – You will place trades with the same platform.
• Login, password, and account number – Your login details and account number will stay the same.
• Customer Support – You can still contact FXCM the same way 24 hours a day, 7 days a week. There is no difference in the level of support provided and you may contact FXCM by phone, by email at info@fxcm.com, or by Live Chat.
• No Dealing Desk Execution - Every trade is executed back to back with one of the world's premier banks or financial institutions, which compete to provide FXCM with the best bid and ask prices.

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click Post Reply now and we will provide you with an answer.

Return to Top

†If you choose to transfer your account to FXCM UK, any Net Stop or Net Limit Orders that you placed while trading with FXCM LLC will not appear in the Open Positions window, however they will execute once triggered. These orders will continue to show as pending on the combined account statement until they execute. New stops and limits placed on FXCM UK will be attached to individual tickets and will appear in the Open Positions window.
* Please remember that leverage is a double-edged sword, and can dramatically amplify your profits and losses.
†Based on price fluctuations, all margin requirements are subject to change without notice and will be adjusted up or down in increments of
10 units, determined by the account denomination (1000 yen for JPY accounts). At present, FXCM does not anticipate that margin requirements will have to be changed more than once a month. Up-to-date margin requirements are and will continue to be displayed in the "Simplified Dealing Rates" window of the trading platform by currency pair.

What are the differences between FXCM LLC (US) and FXCM LTD (UK)?

Trading features, the methods available to deposit funds and regulation changes are the major differences between accounts held with FXCM LLC and FXCM UK.

Trading Features

By transferring your account to FXCM UK, your account features will have:

• 0.5% maximum margin available (200:1 leverage).* View table below for details.
• Stop/Limits. The ability to place stops and limits on individual trades from the "Open Positions" window.
• Modify trades from the Open Position window. The ability to modify and close orders from the "Open Positions" window.
• Hedging. The ability to hold buy and sell positions on the same currency pair at the same time.

Methods Available to Deposit Funds

FXCM UK clients can deposit funds by credit or debit card, bank wire, or paper cheque (if funding in GBP or USD).

To fund an existing account, please log into www.myfxcm.com and click Deposit Funds.

Credit or debit card deposits get the additional flexibility to deposit funds in multiple currencies including USD, GBP, EUR, CAD, JPY, or NZD.

Regulation Changes

Forex Capital Markets Limited (FXCM UK) is a subsidiary of FXCM Holdings, LLC and is regulated by the Financial Services Authority, one of the world’s most respected financial regulatory bodies. After the transfer ,your account will be held with FXCM LTD which is regulated by the FSA (Firm Registration Number 217689).

What stays the same if I transfer to FXCM UK?

There are many similarities between FXCM LLC (US) and FXCM LTD (UK) that a client should be aware of.

As an existing client deciding whether to transfer to FXCM UK, you will have many of the same account settings and services including:

• Trading Platform – You will place trades with the same platform.
• Login, password, and account number – Your login details and account number will stay the same.
• Customer Support – You can still contact FXCM the same way 24 hours a day, 7 days a week. There is no difference in the level of support provided and you may contact FXCM by phone, by email at info@fxcm.com, or by Live Chat.

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click Post Reply now and we will provide you with an answer.

Return to Top

†If you choose to transfer your account to FXCM UK, any Net Stop or Net Limit Orders that you placed while trading with FXCM LLC will not appear in the Open Positions window, however they will execute once triggered. These orders will continue to show as pending on the combined account statement until they execute. New stops and limits placed on FXCM UK will be attached to individual tickets and will appear in the Open Positions window.
* Please remember that leverage is a double-edged sword, and can dramatically amplify your profits and losses.

How do I calculate my new margin requirement?

Your new margin requirement, or used margin, will depend on the size of all open positions when the new margin requirements take effect.

Steps to calculate your new margin requirement (used margin):

1. Write down the trade details for each trade you currently have open.

Include the currency pair and the trade size, like this: EUR/USD 10,000

2. Write down the NEW margin requirement for each trade.

For example, EUR/USD 10,000 $300

3. Multiply the NEW margin requirement by the number of lots traded.

For example, $300 X 1 lots (10,000) = $300

4. Add up all of the new margin levels that you just calculated. This number is your NEW used margin (USD MR). Subtracting this from your equity will give you your usable margin (USBL MR). Remember, when your usable margin (USBL MR) drops below zero your live trades are triggered to be liquidated.

For example, I have a 20k Buy EURUSD position and a 150k Buy USDJPY position:

• 20K EURUSD margin requirement $300 x 2 lots (20,000) = $600
• 150k USDJPY margin requirement $200 x 15 lots (20,000) = $3,000
• Margin requirement (used margin) $600 + $3,000 = $3,600

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click "Post Reply now" and we will provide you with an answer.

Return to Top

Will my positions be margined out?

To determine whether you are at risk for a margin call you must determine whether your usable margin (USBL MR) will be below $0 when your account is transferred. In the example below the trader has 3 open positions and $4000 in total equity.

Prior to the account transfer the weekend of October 15, 2010:

- 20K EURUSD Buy position $150 x 2 lots (20,000) = $300
- 40K GBPUSD Sell position $170 x 4 lots (40,000) = $680
- 120K USDJPY Buy position $100 x 12 lots (12,000) = $1200
- Used Margin $300 + $680 + $1200 = $2180
- Usable Margin $4000 - $2180 = $1820

After the account transfer the weekend of October 15, 2010:

- EURUSD margin requirement $300 x 2lots (20,000) = $600
- GBPUSD margin requirement $340x 4 lots (40,000) = $1360
- USDJPY margin requirement $200 x 12 lots (120,000) = $2400
- Used Margin $600 + 1360 + 2400 = $4360
- Usable Margin $4000 - $4360 = -$360

In this example the usable margin (USBL MR) would be below zero. Therefore, at trading open on October 17, 2010 all the live trades would trigger to be liquidated.

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click “Post Reply” and we will provide you with an answer.

Return to Top

How can I avoid a margin call?

A margin call is triggered when usable margin reaches zero. When a margin call happens, all open positions are closed at the next available price.

It is important to monitor your usable margin before the new margin requirements go into effect to make sure that you have enough usable margin to hold existing positions. As a general rule of thumb, we suggest that usable margin (%) remain above 80% after you calculate your new used margin requirement.

Steps to calculate your usable margin (%):

1. Find your new margin requirements (used margin) after the account transfer.

o For example, my new margin requirement is $4,360.

2. Calculate usable margin by subtracting used margin from equity.

o For example, my equity is $10,000.
o Usable margin $10,000 - $4,360 = $5,640.

3. Calculate usable margin (%) by dividing usable margin by equity.

o Usable margin (%) $5,640 / $10,000 = 56.4%

Usable margin of 56.4% is below the suggested usable margin of 80%. This account may be overleveraged, increasing the likelihood of a margin call.

There are two ways to avoid a margin call from happening:

1. Deposit funds: Adding funds to your account will increase your equity and your usable margin. To deposit funds, visit myfxcm.com and log in with your live account details.

2. Reduce open positions: Closing open positions will free up usable margin by making the used margin deposit available as usable margin.

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click “Post Reply” and we will provide you with an answer.

Return to Top

Why Is lower leverage important?

One of the main reasons that new traders lose money is because they over-leverage their account.
When you use excessive leverage, a few losing trades can quickly offset many winning trades. To clearly see how this can happen, consider the following example.

Scenario: Trader A buys 50 lots of USD/JPY while Trader B buys 5 lots of USD/JPY.
Questions: What happens to Trader A and Trader B account equity when the USD/JPY price falls 100 pips against them?
Answer: Trader A loses 41.5% and Trader B loses 4.15% of their account equity.

By using lower leverage, Trader B drastically reduces the dollar drawdown of a 100 pip loss.

Does lower leverage really work?

FXCM’s experience in Hong Kong, where significantly lower leverage levels are mandated by law, suggests lower leverage results in more successful trading.
As another example, many professional traders use up to 8:1 leverage and typically much less. The reason to use low leverage is to make sure that that a losing position does not make a significant negative impact on the overall account.

How can I use lower leverage?

The Dailyfx.com Research and Education team has created a variety of trading videos to help you identify trading opportunities using lower leverage. To learn more about money management and the benefits of trading with lower leverage, log into the DailyFX+ Trading Course.

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click “Post Reply” and we will provide you with an answer.

Return to Top

How do I keep my account with FXCM UK?

If you are a non-US resident as defined below that would like to keep your account with FXCM UK, then you can:

1. Update your address online at myfxcm.com.
2. Send proof of residence for the new address to admin@fxcm.com

Once your address is verified and updated , then you will be able to remain with FXCM UK.

Non-US residents include:

• International residents located outside of the US and US territories.
• US citizens with international residency outside of the US and US territories.
• Clients with dual residency in the US and outside of the US or US territories.

We aim to provide you with all the answers you need to manage your account as a result of the new CFTC rules. If you have any questions, please click Post Reply now and we will provide you with an answer.

Return to Top

Hedging is a best way to reduce your losses or break even when market move against you why are the US goverment doesn't allow hedge ?

I like this blog.Tiffany Engagement NecklacesTiffany Chanel Jewelry Cartier Jewelry Tiffany ,This blog is valuable.