FXOpen settles with the CFTC for accepting US clients

This was one of the biggest news items last year - CFTC sued 14 forex firms (and then 11 more) for various infringements of its laws including accepting US clients. Some firms (offshore ones) decided to ignore this all together and kept accepting American clients, some stopped accepting them but didn't settle and some managed to settle their cases. FXOpen was certainly the largest of the brokers sued and finally managed to settle this issue. This should help FXOpen reestablish its brand and become regulated more easily in various jurisdictions.

Illinois Federal Court Imposes $140,000 Civil Monetary Penalty on Foreign Currency Firm, FXOpen Investments Inc., for Acting as an Unregistered Retail Foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Dealer

Action part of CFTC’s nationwide sweep against foreign currency firms for failure to register under the 2008 Farm Bill, the Dodd-Frank Act, and CFTC regulations

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) has obtained a federal court consent order requiring defendant FXOpen Investments Inc. (FXOpen), a foreign firm, to pay a $140,000 civil monetary penalty to settle CFTC charges that it illegally solicited members of the public to engage in foreign currency (Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term) transactions and operated as a Retail Foreign Exchange Dealer (RFED) without being registered with the CFTC (see CFTC Press Release 5974-11, January 26, 2011).

The order, entered on December 22, 2011 by Judge Virginia M. Kendall of the U.S. District Court for the Northern District of Illinois, also orders FXOpen to close all U.S. customer accounts and return U.S. customer funds. The order also permanently bars FXOpen from engaging in any conduct that violates the Commodity Exchange Act (CEA) and CFTC regulations.

Specifically, the order finds that between October 18, 2010, and January 26, 2011, FXOpen acted as an RFED by taking or offering to take the opposite side of customers’ forex transactions without being registered as an RFED, which is in violation of CFTC regulations. The order also finds that during the same time period, FXOpen solicited or accepted customer orders to place forex trades without being registered, which is in violation of the CEA.

In the forex market, entities known as RFEDs or Futures Commission Merchants (FCMs) may buy forex contracts from, or sell forex contracts to, individual investors. Under the CEA and CFTC regulations, an entity acting as an RFED or FCM must register with the CFTC and abide by rules and regulations designed for investor protection, including those relating to minimum capital requirements, recordkeeping, and compliance. Further, with a few exceptions, such an entity also must be registered with the CFTC if it solicits or accepts orders from U.S. investors in connection with forex transactions conducted at an RFED or FCM.

The CFTC strongly urges the public to check whether a company is registered before investing funds. If a company is not registered, an investor should be wary of providing funds to that company.

A company’s registration status can be found at: www.nfa.futures.org/basicnet

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