Petition to repeal US 'Hedging'/FIFO Rule

Dear friends,

I wanted to let you know about a new petition I created on We the People, a new feature on WhiteHouse.gov, and ask for your support. Will you add your name to mine? If this petition gets 100,000 signatures by October 19, 2014, the White House will review it and respond-

You can view and sign the petition here:

http://wh.gov/ilWF8

Here's some more information about this petition:

Petition to repeal NFA Compliance Rule 2-43(b) for FIFO / Offsetting Transactions for ForEx trading

I wish to express opposition to NFA Compliance Rule 2-43(b) concerning Offsetting and FIFO (First In-First Out) Transactions and call for the repeal of this section as it pertains to retail-level ForEx trading for US residents and brokerages. This rule has since prohibited the freedom to utilize beneficial trading resources such as offsetting (commonly referred to as 'hedging'), as well as the freedom to close each trade, choose take profit, stop loss and trailing stop values for each order without the interference currently caused by the FIFO aspect of the rule. I did not ask for these restrictions and firmly disagree that those freedoms now prohibited 'were of no benefit to the trader'. I believe that restoring these freedoms will help ForEx clients manage trades more successfully.

short video at http://youtu.be/GIXeoA53jmE

Good luck. Ya don't stand a chance.

US gov is extracting major financial benefit from its current role as extortioner in general. It was unimaginable ta think even a few months back that they'd play themselves into an unsustainable position, but they have. London is lookin rosy and those that will necessarily have had to deal onshore with the US are now finding alternatives.

US - you've just about killed your golden goose. A pity, because I love ya, but you've blown it. HK and London can take the weight and will be happy to do so. Off-shoring in Ireland was just the start.

Instead f the major players worrying about their ability to be based in the US it's now the US players worried about their ability to be accepted off-shore. Not welcome at home - not welcome abroad.

I smell premium.

Hi Pat,

Oh believe me, I joined in the exodus of ForEx clients & brokerages and was perfectly happy to trade with non-US firms until even that was banned in 2011. This latest phase-in of First-In First Out (FIFO) just looks like the final straw. As it is now, we do look quite unattractive for foreign investors and brokerages unwilling to accept these rules. It seems unfair for me to uproot and move just to trade with the freedom the rest of the world enjoys, so my aim is to give a voice to those who sign the petition- Cheers!

Just to clarify, only 150 signatures are required for the petition to remain available at the WhiteHouse.gov site and will also be submitted to the NFA once a sizable number is reached- If this petition gets 100,000 signatures by October 19, 2014, the White House will review it and respond-

The rule only applies to the trades made at the exact same units, you can get around it just by changing the position size. The sizes just have to be different.
http://depthtrade.blogspot.com/

Hi fxmade2trade,

Thank you for posting, the link unfortunately looks like it is not making it to the article you've mentioned, but I would definitely be interested if you could kindly post more information

The rule for example exempts ECPs, but this petition though aims to address the way the rule affects the class of retail-level forex traders as US residents, and I am not aware of any exemption for where the rule has two distinct consequences for that class, and applies to all orders whether of equal or unequal lot sizes-

One is prohibition of offsetting (commonly called 'hedging') where long and short orders of the same currency pair cannot be opened at the same time in one account.

the second, FIFO mandates that for more than one open order of the same currency pair, orders opened first must be closed first- unless you wish to enter a value for stop loss, take profit or trailing stop in any one open order, which will then be made common for all orders of the same currency pair and closed together. The only variation of this I've heard of is an EA that allows partial close and works with the latest build of MT4, but is still subject to the rule as other platforms would be.

I responded via message

Thank you fxmade2trade for providing the link: http://fxtrade.oanda.com/help/close-trades-fifo
I've just tried to use the OANDA FxTRADE web-based platform, but it is Friday morning and says it is down for maintenance, I will try later and would like to see if this is still valid as it might be at least a partial way to manage the FIFO aspect of the rule...

The MT4 platforms I tested show a 'prohibited by FIFO rules' error message, but won't close any open orders when manually trying to close an open order out of sequence, of any lot size.

A different web-based platform though did close open orders but the FIFO result can be seen in how earlier orders will be closed in proportion to the size of a later order when trying to close it- i.e. a 0.3 lot order opened later can be selected to be closed, but all earlier orders will be closed until 0.3 lots worth is reached, then the later order moves to a new spot in the queue.

If the later order you are trying to close is smaller than the first order, that lot size will be closed and deducted from the first order. Same-lot size open orders could not be closed together without affecting earlier orders of a different lot size. What is important to note is that these earlier orders may not have been opened at the same price as shown in the later orders and will be closed whether or not it would be at an advantage to the customer.

I will have to look into that I hope I was able to help