12:07 PM [gankans] Let me clear a couple things up about the foreign exchange law put in place by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
12:07 PM [gankans] This is what we know...
12:07 PM [gankans] As things currently stand, on July 16, when the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) becomes effective, Securities and Exchange Commission (SEC)-registered broker-dealers (BDs) will no longer be able to enter into many types of foreign currency transactions for their retail customers.
12:08 PM [gankans] Although the law is not entirely clear, there is even a question as to whether BDs may purchase foreign currency for retail customers in connection with foreign securities trades if the settlement date for the currency transaction extends beyond two days. The reason for these changes is that the Dodd-Frank Act included a requirement that the applicable functional regulator pass rules governing conduct of a regulated entity regarding retail forex in order for an entity to be able conduct such business. The Commodity Futures Trading Commission (CFTC) has passed rules and the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have proposed rules, but the SEC has done neither.
12:08 PM [gankans] The bad news for BDs does not end there. A provision in the Dodd-Frank Act disallows a BD from using its CFTC-registered futures commission merchant (FCM) to conduct such foreign currency transactions (even though a stand-alone FCM may legally carry out the trades), and the CFTC has provided in its rules that a BD may not solve its problem by registering as a retail foreign exchange dealer (Forex Dealer). Going forward, unless the SEC acts, the only types of entities that may solicit and effect foreign exchange transactions with customers that are not "eligible contract participants" (ECPs) are banks and stand-alone FCMs and Forex Dealers. Investment advisers that assist retail customers will also have to separately register as commodity trading advisers (CTAs) in order to advise on foreign exchange trades carried out at FCMs and Forex Dealers.
12:11 PM [gankans] It appears that Forex.com's interpretation of the law stems primarily from Section 742(a) of the Dodd-Frank act which "prohibits any person [which again includes companies]from entering into, or offering to enter into, 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."
12:11 PM [gankans] Key word is: eligible contract participant
12:12 PM [gankans] Other key words are leveraged or margined basis
12:12 PM [gankans] Look these up!
12:12 PM [stargate] hedge funds
12:12 PM [gankans] stargate yes
12:13 PM [stargate] this will not effect us
12:13 PM [elaine schembre] stargate ... thank you... that's what I wanted to know
12:14 PM [gankans] Section 413(a) of the Act alters the financial qualifications of who can be considered an accredited investor, and thus a qualified as eligible participant (“QEP”). Specifically, the revised accredited investor standard includes only the following types of individuals:
12:14 PM [gankans] 1) A natural person whose individual net worth, or joint net worth with spouse, is at least $1,000,000, excluding the value of such investor's primary residence;
12:15 PM [gankans] After RV we will have this covered.
12:15 PM [gankans] 2) A natural person who had individual income in excess of $200,000 in each of the two most recent years or joint income with spouse in excess of $300,000 in each of those years and a reasonable expectation of reaching the same income level in the current year; or
12:16 PM [gankans] Some are already covered in this category
12:16 PM [gankans] 3) A director, executive officer, or general partner of the issuer of the securities being offered or sold, or a director, executive officer, or general partner of a general partner of that issuer.
12:17 PM [gankans] Key word is "or". You can be in either of these three associations
12:17 PM [patchess4766] gankans While I thank you for this info, I must also ask for you to tell me (plain old lay person) what the heck this all means---in words that I can understand, thank you
12:18 PM [gankans] patchess4766 It means that they are making stricker regulations to gain more control of the transparency of all future transactions
12:18 PM [stargate] This will only affect a person if you are going to play the game of forex.
12:18 PM [gankans] They want to keep be able to see where the corruptions is starting, and track it.
12:19 PM [gankans] They are also making it harder for you and me to do business within the commodities realm.
12:19 PM [stargate] elaine schembre Yes I believe so, also doing anything with commodities of that nature.
12:19 PM [gankans] Based on this language, it is important to note that the revised accredited investor standard only applies to new investors and does not cover existing investors. However, additional subscriptions from existing investors are generally treated as requiring confirmation of continuing investor eligibility.
12:20 PM [nobs] gankans So does this mean we won't see a RV until this is enacted?
12:20 PM [gankans] Most of us would be considered new investors, but that's ok, we still qualify to exchange our foreign currency or IQD when RV occurs.
12:20 PM [elaine schembre] stargate ... again... this is only relating to hedge funds..
12:20 PM [stargate] A hedge fund is a private investment fund that participates in a range of assets and a variety of investment strategies intended to protect the fund's investors from downturns in the market while maximizing returns on market upswings.
12:20 PM [gankans] nobs Not sure, but likely
12:20 PM [JAD] gankans , is this for commodity accounts.?? You mean we have to be accredited as an investor if we want to trade commodities?
12:21 PM [gankans] I have to get going in a minute, but I wanted to clarify and ease the worry.
12:21 PM [stargate] I don't believe this has anything to do with exchanging currency held in hand.
12:21 PM [gankans] JAD Commodities and foreign exchange of currency
12:22 PM [patchess4766] stargate again, plain old english--to understand what a hedge fund is, thanks & plz
12:22 PM [elaine schembre] gankans ... good luck on your interview
12:22 PM [HEREIAM] gankans wasnt it signed in June 2010?
12:22 PM [elaine schembre] gankans ... hopefully we'll RV ASAP and won't need to take the J O B
12:22 PM [stargate] patchess4766 I would recommend looking it up yourself to get a better understanding. Not to be rude or anything but if you don't know what it is stay away from it.
12:22 PM [gankans] If any of you have traded online, you are asked these questions when setting up an account. Read up on "accredited investor"
12:22 PM [JAD] gankans , if that is correct, then that will take alot of participants out of the markets. Alot of comm. speculators do not have that kind of income or asset backing. don't see how this will help .
12:23 PM [gankans] elaine schembre TY!
12:23 PM [gankans] hereiam yes
12:23 PM [gankans] HEREIAM 180 from that time to be inacted
12:23 PM [gankans] elaine schembre I hope so.... smile
12:24 PM [gankans] JAD It will initially, but if they are true investors, they will get educated and meet the accredited investor requirements, or get someone to do it for them.
12:25 PM [stargate] Investing in the Forex, hedge funds or ETF's is not for the faint hearted.
12:25 PM [gankans] It helps to make certain that we have more transparency so that there are less ponzzi schemes.
12:26 PM [gankans] stargate Excellent point
12:26 PM [gankans] Ok, I gotta get going
12:26 PM [gankans] Be back later today.
12:26 PM [gankans] Have a wonderful day!
12:26 PM [gankans] Bye
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