Federal Register, Volume 76, Number 149, August 3, 2011, Pages 46595-47054 Page: 46,662
viii, 47054, iii p. ; 28 cm.View a full description of this periodical.
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Federal Register/Vol. 76, No. 149/Wednesday, August 3, 2011 /Proposed Rules
(4) Sells a put or call option involving
foreign currency for the account of any
retail forex customer when the account
of such retail forex customer at the time
of such sale has a long put or call option
position with the same underlying
currency, strike price, and expiration
date as that sold shall:
(i) Immediately apply such purchase
or sale against such previously held
opposite transaction with the same
customer; and
(ii) Promptly furnish such retail forex
customer with a statement showing the
financial result of the transactions
involved and the name of any
introducing broker to the account.
(b) Close-out against oldest open
position. In all instances in which the
short or long position in a customer's
retail forex account immediately prior to
an offsetting purchase or sale is greater
than the quantity purchased or sold, the
banking institution shall apply such
offsetting purchase or sale to the oldest
portion of the previously held short or
long position.
(c) Transactions to be applied as
directed by customer. Notwithstanding
paragraphs (a) and (b) of this section,
the offsetting transaction shall be
applied as directed by a retail forex
customer's specific instructions. These
instructions may not be made by the
banking institution or a related person.
240.6 Disclosure.
(a) Risk disclosure statement required.
No banking institution may open or
maintain an account that will engage in
retail forex transactions for a retail forex
customer unless the banking institution
has furnished the retail forex customer
with a separate written disclosure
statement containing only the language
set forth in paragraph (d) of this section
and the disclosures required by
paragraphs (e), (f), and (g) of this
section.
(b) Acknowledgement of risk
disclosure statement required. The
banking institution must receive from
the retail forex customer a written
acknowledgement signed and dated by
the customer that the customer received
and understood the written disclosure
statement required by paragraph (a) of
this section.
(c) Placement of risk disclosure
statement. The disclosure statement
may be attached to other documents as
the initial page(s) of such documents
and as the only material on such
page(s).
(d) Content of risk disclosure
statement. The language set forth in the
written disclosure statement required by
paragraph (a) of this section shall be asRisk Disclosure Statement
Retail forex transactions generally
involve the leveraged trading of
contracts denominated in foreign
currency with a banking institution as
your counterparty. Because of the
leverage and the other risks disclosed
here, you can rapidly lose all of the
funds or property you give the banking
institution as margin for such trading
and you may lose more than you pledge
as margin.
You should be aware of and carefully
consider the following points before
determining whether such trading is
appropriate for you.
(1) Trading foreign currencies is a not
on a regulated market or exchange-
your banking institution is your trading
counterparty and has conflicting
interests. The retail forex transaction
you are entering into is not conducted
on an interbank market, nor is it
conducted on a futures exchange subject
to regulation by the Commodity Futures
Trading Commission. The foreign
currency trades you transact are trades
with your banking institution as the
counterparty. When you sell, the
banking institution is the buyer. When
you buy, the banking institution is the
seller. As a result, when you lose money
trading, your banking institution is
making money on such trades, in
addition to any fees, commissions, or
spreads the banking institution may
charge.
(2) Any electronic trading platform
that you may use for retail foreign
currency transactions with your banking
institution is not a regulated exchange.
It is an electronic connection for
accessing your banking institution. The
terms of availability of such a platform
are governed only by your contract with
your banking institution. Any trading
platform that you may use to enter into
off-exchange foreign currency
transactions is only connected to your
banking institution. You are accessing
that trading platform only to transact
with your banking institution. You are
not trading with any other entities or
customers of the banking institution by
accessing such platform. The
availability and operation of any such
platform, including the consequences of
the unavailability of the trading
platform for any reason, is governed
only by the terms of your account
agreement with the banking institution.
(3) You may be able to offset or
liquidate any trading positions only
through your banking institution
because the transactions are not made
on an exchange, and your banking
institution may set its own prices. Youroffset positions is limited to what your
banking institution will offer to you, as
there is no other market for these
transactions. Your banking institution
may offer any prices it wishes. Your
banking institution may establish its
prices by offering spreads from third
party prices, but it is under no
obligation to do so or to continue to do
so. Your banking institution may offer
different prices to different customers at
any point in time on its own terms. The
terms of your account agreement alone
govern the obligations your banking
institution has to you to offer prices and
offer offset or liquidating transactions in
your account and make any payments to
you. The prices offered by your banking
institution may or may not reflect prices
available elsewhere at any exchange,
interbank, or other market for foreign
currency.
(4) Paid solicitors may have
undisclosed conflicts. The banking
institution may compensate introducing
brokers for introducing your account in
ways that are not disclosed to you. Such
paid solicitors are not required to have,
and may not have, any special expertise
in trading, and may have conflicts of
interest based on the method by which
they are compensated. You should
thoroughly investigate the manner in
which all such solicitors are
compensated and be very cautious in
granting any person or entity authority
to trade on your behalf. You should
always consider obtaining dated written
confirmation of any information you are
relying on from your banking institution
in making any trading or account
decisions.
(5) Retail forex transactions are not
insured by the Federal Deposit
Insurance Corporation.
(6) Retail forex transactions are not a
deposit in, or guaranteed by, a banking
institution.
(7) Retail forex transactions are
subject to investment risks, including
possible loss of all amounts invested.
Finally, you should thoroughly
investigate any statements by any
banking institution that minimize the
importance of, or contradict, any of the
terms of this risk disclosure. Such
statements may indicate sales fraud.
This brief statement cannot, of course,
disclose all the risks and other aspects
of trading off-exchange foreign currency
with a banking institution.
I hereby acknowledge that I have
received and understood this risk
disclosure statement.
Dateability to close your transactions or
46662
follows:
Signature of Customer
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United States. Office of the Federal Register. Federal Register, Volume 76, Number 149, August 3, 2011, Pages 46595-47054, periodical, August 3, 2011; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc52326/m1/76/?rotate=270: accessed April 25, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.