2013-01-30 forexmagnates.com - NFA Looks Into Banning Credit Card Deposits

[Akka]

NFA Looks Into Banning Credit Card Deposits – The Impact

Earlier this month, the NFA sent its members a ‘Request for Comments’ letter are about the prohibiting of credit card payments. The NFA’s Compliance & Risk Committee (CRC) is concerned that these payment solutions promote depositing with borrowed funds and small sized deposits which barely cover minimum margin requirements. In their words “The CRC is concerned that retail customers may be opening accounts with funds that are not risk capital and are using credit cards as a source for borrowing funds to invest. The CRC’s overall concerns with this practice are compounded by the fact that many FDMs that offer this funding mechanism also permit retail customers to open an account with a very low deposit amount (e.g., $100) that merely covers the intended transaction’s initial margin requirement. Any slight movement in a customer’s forex position causes the customer to quickly fall below the margin requirement for the transaction.”

Single Mention of Bitcoin:

Therefore, while credit cards are an essential part of the US FX industry, it is safe to assume that alternate forms of payments won’t take long to fill the gap. On this point, Oanda’s CEO K Duker answered in a Reddit AMA that he expects digital currencies like bitcoin to play a bigger part of payment solutions for firms in the future.

Full Article: http://forexmagnates.com/nfa-looks-into-banning-credit-card-deposits-the-impact/


For all who don't know it NFA stands for National Futures Association.

Today there is also a second article with Bitcoin on Forex Magnates, about the Reddit AMA mentioned above:

Oanda’s CEO K Duker Hosts Reddit AMA

Oanda’s CEO K Duker hosted a Reddit AMA yesterday....

There was a question about bitcoin which Duker answered that “I wouldn’t expect to see (bitcoin) right away, but I definitely think alternative methods, like bitcoin, that focus on digitized exchange will become more prominent in the future.”...

Full Article: http://forexmagnates.com/oandas-ceo-k-duker-hosts-reddit-ama/

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[kakobrekla]

Interesting, thanks for sharing.

[TraderTimm]

They're probably more worried about charge-backs, than any customer risk. They don't give a toss if you put a minimum deposit on an account - it will soon be carved up with bid/ask spread fees that the different houses charge to place trades.

Funny how they try to cloak it in some kind of mock concern, though.

[ronfinberg]

@Akka - wow, you are fast at catching posts that include bitcoin.  I was going to post the link on the previous article I had written and replied about https://bitcointalk.org/index.php?topic=137203 but you beat me to it.

This is the deal in forex trading.  Forex is regulated by the Futures industry which doesn't like forex.  Therefore, forex has been getting hit hard by the US regulators.  But, forex has also shot themselves in the foot with all the shenanigans that occurred there for years. 

Please feel free to post comments at Forex Magnates about bitcoin and possible solutions for brokers. 

Ron

[Akka]

Google Alerts. I get a Mail the very moment there is new press  with the Word Bitcoin in it.

As I'm not familiar with Forex trading, I hold back from posting comments, but I hope that some others that have some knowledge in this area will post some.

Thanks for your offer, though.

[Beepbop]

I would say that they have a justified concern about regular Joes using credit cards (Mastercard, Diners, etc.) debt to buy foreign currency, and just have their potential earnings eaten up by fees and be left with a debt. People defaulting on debts is bad for the futures industry after all, except maybe for those who take a short position across the board.

They should still allow debit cards though (VISA for example).