Gain Capital (Forex.com) warns US clients – no more Gold or Silver trading
We wanted to make you aware of some upcoming changes to FOREX.com’s product offering. As a result of the Dodd-Frank Act enacted by US Congress, a new regulation prohibiting US residents from trading over the counter precious metals, including gold and silver, will go into effect on Friday, July 15, 2011.
In conjunction with this new regulation, FOREX.com must discontinue metals trading for US residents on Friday, July 15, 2011 at the close of trading at 5pm ET. As a result, all open metals positions must be closed by July 15, 2011 at 5pm ET.
We encourage you to wind down your trading activity in these products over the next month in anticipation of the new rule, as any open XAU or XAG positions that remain open prior to July 15, 2011 at approximately 5:00 pm ET will be automatically liquidated.
We sincerely regret any inconvenience complying with the new U.S. regulation may cause you. Should you have any questions, please feel free to contact our customer service team.
Sincerely,
The Team at FOREX.com
The Forex.com message apparently stems from Forex.com’s interpretation of some of the Dodd-Frank rules which prohibit “…a transaction in any commodity with a person that is not an eligible contract participant or an eligible commercial entity, on a leveraged or margined basis.”
It is unclear whether or not the other NFA-licensed US firms will follow suit in their understanding of the rule, and also shut down precious metals trading for US retail clients next month. If so, all that will be left to trade for US clients of these firms are “pure” Forex pairs, as US clients are already precluded from trading CFDs such as stock indices and individual stocks – the US Securities and Exchange Commission (SEC) has a longstanding rule which prohibits over-the-counter trading in instruments which directly mimic the price of an underlying security which is listed on a recognized exchange.