Implications of Dodd-Frank Act on Forex and Precious Metals?

Discussion in 'Commodity Futures' started by surfer25, Jun 21, 2011.

  1. LeeD


  2. LeeD


    No, it will only be illegal to trade metals via a bucket shop. Tradings spot forex or metal futures or forex futures is stil completely legal.
    Also it is going to be still completely legal to buy, hold and sell gold bullions or gold coins or silver coins.
  3. Thanks for correcting the link. It must have expired.
  4. As a result of the recently enacted Dodd–Frank Wall Street Reform and Consumer Protection Act, U.S.-based retail forex dealers such as OANDA are prohibited from offering leveraged trading in precious metals to retail clients after Friday, July 15, 2011.

    As a client based in the U.S., you will not be able to trade our four precious metal pairs (XAU/USD, XAG/USD, XAU/JPY, XAG/JPY) on a leveraged basis, effective end of day July 15. Leveraged trading in other currency pairs will remain unaffected, with the same margin requirements.

    You will still be able to trade precious metals, but only on a 1:1 non-leveraged basis (requiring substantially more margin). If you do not have sufficient margin to cover your open metal positions in full, you need to reduce your exposure to gold and silver pairs before end of day July 15, or risk a margin call of all your open positions when this change is implemented.

    We sincerely regret any inconvenience caused by this change in legal requirements. If you have any questions, please do not hesitate to contact our Customer Service Team at
    We appreciate your business with OANDA.

    - The OANDA fxTrade Team

    Why is this change required?

    Effective the end of Friday, July 15, 2011, Retail Foreign Exchange Dealers (RFEDs) registered with the Commodity Futures Trading Commission (CFTC) will be prohibited from offering leveraged retail trading in commodities, including precious metals such as gold and silver. This change in the U.S. law is being enforced by the CFTC as an outcome of The Dodd–Frank Wall Street Reform and Consumer Protection Act.
  5. dewton


    Would someone please explain what is the point of this Act and the intentions behind it? Why would the government restrict OTC leveraged precious metals trading?
  6. So you have to trade on an exchange.
  7. rew


    Because it can.

    Trading gold in an OTC leveraged forex account is no more dangerous than trading the Brazilian real in such an account, but the pinheads in government make these arbitrary distinctions because they always feel they must *do* something, anything, to justify their existence.

    You can trade gold and silver futures, or buy puts and calls on the GLD or SLV ETFs, so there are still ways to do leveraged trades on precious metals. You just can't do the trades with forex firms like Oanda. The law is arbitrary, like so many other laws.
  8. dewton


    It also seems that the big exchanges are influencing US lawmakers and are trying to eliminate their competition- which is the OTC market.
    #10     Jun 25, 2011