PIP Sharing with Forex Dealer Members (Pip Rebates)
The forex industry has many supporting players in addition to managers and investors. One group which tries to hook investors up with managers or managers up with forex dealer members are what are called “introducing brokers.” The way that many introducing brokers are compensated, with specific reference to off-exchange forex transactions, is through a pip [...]
California and Forex Regulation
California forex managers should research whether or not they will need to register with the CFTC because of the California Commodity rules. While the SEC and the CFTC / NFA currently do not regulate spot forex managers (except at the FCM level), many states (such as California) do attempt to regulate spot forex trading. Specifically, [...]
Forex Dealer Member – Defintion of Forex Dealer Member
This article focuses on the definition of a “Forex Dealer Member” as defined by the National Futures Association. This article will address the following items: (i) overview of Forex Dealer Members, (ii) NFA Bylaw 306, (iii) NFA Bylaw 1507(b), (iv) net capital requirements for Forex Dealer Members, (v) financial statements and (vi) other issues.
NFA Bylaw 306
BYLAW 306. FOREX DEALER MEMBERS.
(a) Except as provided in section (b), Members of NFA are Forex Dealer Members if they are the counterparty or offer to be the counterparty to forex transactions (as defined in Bylaw 1507(b)).
NFA Bylaw 1507(b) - Definition of Forex for NFA Purposes
BYLAW 1507. DEFINITIONS.
Except as provided in this Bylaw, the terms used in these Bylaws shall have the same meaning as in the Articles.
(a) …
(b) The term “forex” means:
Forex Tax Issues - Notice 2007-71
This notice effective reverses a previous IRS Notice (see IRS Notice 2003-81). Many forex tax practitioners used Notice 2003-81 as justification for treating off-exchange foreign currency transactions as available for taxation as Section 1256 contracts in order to receive 60/40 treatment on any such gains in the spot forex market. After this notice it is [...]
Forex Tax Issues - IRS Notice 2003-81
Prior to the IRS’s recent Notice 2007-17, tax practitioners used the principles from this case to argue that forex managers, with regard to spot forex transactions, could opt into Section 1256 status for such transactions. This tax treatment is obviously very valuable for forex managers and made a very good reason forex managers to establish [...]
Advisory on Foreign Currency
The following advisory is from the CFTC website and can be found here.
Advisory on Foreign Currency
(Originally published as Advisory 06-01 on February 5, 2001)
The Commodity Exchange Act (the Act) was amended to make clear that it is unlawful to offer foreign currency futures and option contracts to retail customers unless the offeror is a regulated [...]
Forex Law Case: CFTC v. Erskine
Along with CFTC v. Zelener, this is the case which got Congress to move toward regulation of the off-exchange foreign currency markets.
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 04-00016—Christopher A. Boyko, District Judge.
Argued: July 25, 2007
Decided and Filed: January 9, 2008
Before: BATCHELDER and DAUGHTREY, Circuit Judges; ACKERMAN, District [...]
More on Forex Fraud from the CFTC
Below is another notice from the CFTC on fraud in the off-exchange foreign currency markets. Please also see their other fraud advisory[[[[[[. The notice below, can also be found here. [[[[
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Fraud Advisory from the CFTC: Foreign Currency Trading (Forex) Fraud
Know How to Spot Forex Fraud
The CFTC has witnessed a sharp rise in foreign currency trading [...]