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18 JUNE 2011

US Seeks to Curtail OTC Highly Leveraged Retail Trading in Paper Commodities and Currencies

As part of the reform of derivatives, Dodd-Frank is seeking to prohibit Over the Counter (meaning non-exchange) trading of commodities at leverage of greater than 10:1.

The off exchange traders, particularly those trading in currencies, had expanded their markets into various commodities, offering non-product backed paper trading at very high rates of leverage.

The Congress and CFTC started taking a dim view of this sort of activity, and has tentative prohibited it as of July 15.

This does not curtail any on-exchange trading, such as the CME, or any ETFs, or any other product with a leverage of less than 10:1 or actually involving substantial physical backing or intended delivery of product within 28 days.

I have not quite gotten the time to assess the impact if any this might have on retail trading in forex itself. I have included a few forex related documents below. My initial take was that this is targeted at retail currency speculation, and gold and oil fall into it as a secondary effect. I have relatives visiting this weekend to celebrate my wife's recovery from her recent illness so I have not had time to inquire further.

This is my reading of the situation, subject to additional information. I am trying to obtain the forex type contracts detail to understand customer rights, if any, in obtaining delivery of spot commodities.

There *could* be something to this if there is in fact a means to obtain delivery in some reasonable way. But otherwise it looks like a crackdown on speculation by smaller specs in off exchange products and push to move them to exchanges for all but the larger 'exempt few' who enjoy privileged access to almost everything.

I am a little surprised that people were not screaming about 'currency controls' which might be a little more to the point that talk about prohibiting the trading in gold, oil, and silver.

For the most part it seems like much ado about nothing with regard to gold and silver and oil etc., but its good for clicks, and it helps to cheer up those sitting in depreciating paper on the sidelines who have missed the commodity bull markets.

Gold money was not private property in the 1930's, it was an instrument of the state, and subject to the state's disposal. That is not the case now.

Forex.com reportedly sent out this notice to customers on Friday.

Date: Fri, Jun 17, 2011 at 6:11 PM

Subject: Important Account Notice Re: Metals Trading

To: xxx

Important Account Notice Re: Metals Trading

We wanted to make you aware of some upcoming changes to FOREX.com’s product offering. As a result of the Dodd-Frank Act enacted by US Congress, a new regulation prohibiting US residents from trading over the counter precious metals, including gold and silver, will go into effect on Friday, July 15, 2011.

In conjunction with this new regulation, FOREX.com must discontinue metals trading for US residents on Friday, July 15, 2011 at the close of trading at 5pm ET. As a result, all open metals positions must be closed by July 15, 2011 at 5pm ET.

We encourage you to wind down your trading activity in these products over the next month in anticipation of the new rule, as any open XAU or XAG positions that remain open prior to July 15, 2011 at approximately 5:00 pm ET will be automatically liquidated.

We sincerely regret any inconvenience complying with the new U.S. regulation may cause you. Should you have any questions, please feel free to contact our customer service team.

Sincerely,

The Team at FOREX.com

Here is one of the relevant products offered by Forex.com:

How Leverage for Spot Gold Works

Leverage for spot gold trading is set at 100:1. This means that for every $1 you have in your account balance, you have $100 in buying and selling power for gold trading. As a result, leverage increase a client's buying and selling power and enables clients to participate in a market that may otherwise be cost prohibitive. Keep in mind that increasing leverage increases risk.

This is the long and short of it. If you want to trade paper, there are still plenty of ways to do it. But you might not be able to do it in the US unless you are using an exchange with structured counter party risk and contracts, and regulated leverage.

Here are some related documents, that interestingly enough deal with the Forex aspects of this ruling.

CFTC: Final Retail Foreign Exchange Rules

Hedge Funds Trading FX May Be Caught Out By Dodd-Frank

Dodd-Frank Dispatch: Retail Forex Transactions Rule for National Banks

Time Running Out On Retail Currency Business

Obama Threatens Forex; Says Goodbye to OTC Gold Trading

http://jessescrossroadscafe.blogspot.com/

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Ah Yes... Good Old Christopher Dodd and Barney Frank, the prime architects

of the Sub-Prime Mortgage debacle that started the whole fiscal mess we're

in if I'm not mistaken.

I'm sure we can trust their motivation in this new legislation.

So Dalite, or anyone else, "What does this mean for the Dinar World"?

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Ah Yes... Good Old Christopher Dodd and Barney Frank, the prime architects

of the Sub-Prime Mortgage debacle that started the whole fiscal mess we're

in if I'm not mistaken.

I'm sure we can trust their motivation in this new legislation.

So Dalite, or anyone else, "What does this mean for the Dinar World"?

At this point, I am not sure of what, if any affect, it will have on the small currency trader.

The legislation is about 848 pages long, and I admit, I haven't plowed very deep.

I like to use .PDF format and the search function to go through some of this junk.

There has been plenty of speculation going around today, and you can pick any issue, and get ant stance from today's comments.

I just grabbed this article for those in denial, saying no affect on Forex.

If it does limit shorting of metals on paper to falsely manipulate their value, to me it is good.

I 'm not a big JP Morgan / Chase fan..

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I every went and really read this you would see it has to do with our government and wall street bailouts it has nothing to do with Iraqi dinars. I has to do with our owe stock market and government funding to bankrupt business.

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18 JUNE 2011

US Seeks to Curtail OTC Highly Leveraged Retail Trading in Paper Commodities and Currencies

As part of the reform of derivatives, Dodd-Frank is seeking to prohibit Over the Counter (meaning non-exchange) trading of commodities at leverage of greater than 10:1.

The off exchange traders, particularly those trading in currencies, had expanded their markets into various commodities, offering non-product backed paper trading at very high rates of leverage.

The Congress and CFTC started taking a dim view of this sort of activity, and has tentative prohibited it as of July 15.

This does not curtail any on-exchange trading, such as the CME, or any ETFs, or any other product with a leverage of less than 10:1 or actually involving substantial physical backing or intended delivery of product within 28 days.

I have not quite gotten the time to assess the impact if any this might have on retail trading in forex itself. I have included a few forex related documents below. My initial take was that this is targeted at retail currency speculation, and gold and oil fall into it as a secondary effect. I have relatives visiting this weekend to celebrate my wife's recovery from her recent illness so I have not had time to inquire further.

This is my reading of the situation, subject to additional information. I am trying to obtain the forex type contracts detail to understand customer rights, if any, in obtaining delivery of spot commodities.

There *could* be something to this if there is in fact a means to obtain delivery in some reasonable way. But otherwise it looks like a crackdown on speculation by smaller specs in off exchange products and push to move them to exchanges for all but the larger 'exempt few' who enjoy privileged access to almost everything.

I am a little surprised that people were not screaming about 'currency controls' which might be a little more to the point that talk about prohibiting the trading in gold, oil, and silver.

For the most part it seems like much ado about nothing with regard to gold and silver and oil etc., but its good for clicks, and it helps to cheer up those sitting in depreciating paper on the sidelines who have missed the commodity bull markets.

Gold money was not private property in the 1930's, it was an instrument of the state, and subject to the state's disposal. That is not the case now.

Forex.com reportedly sent out this notice to customers on Friday.

Date: Fri, Jun 17, 2011 at 6:11 PM

Subject: Important Account Notice Re: Metals Trading

To: xxx

Important Account Notice Re: Metals Trading

We wanted to make you aware of some upcoming changes to FOREX.com’s product offering. As a result of the Dodd-Frank Act enacted by US Congress, a new regulation prohibiting US residents from trading over the counter precious metals, including gold and silver, will go into effect on Friday, July 15, 2011.

In conjunction with this new regulation, FOREX.com must discontinue metals trading for US residents on Friday, July 15, 2011 at the close of trading at 5pm ET. As a result, all open metals positions must be closed by July 15, 2011 at 5pm ET.

We encourage you to wind down your trading activity in these products over the next month in anticipation of the new rule, as any open XAU or XAG positions that remain open prior to July 15, 2011 at approximately 5:00 pm ET will be automatically liquidated.

We sincerely regret any inconvenience complying with the new U.S. regulation may cause you. Should you have any questions, please feel free to contact our customer service team.

Sincerely,

The Team at FOREX.com

Here is one of the relevant products offered by Forex.com:

How Leverage for Spot Gold Works

Leverage for spot gold trading is set at 100:1. This means that for every $1 you have in your account balance, you have $100 in buying and selling power for gold trading. As a result, leverage increase a client's buying and selling power and enables clients to participate in a market that may otherwise be cost prohibitive. Keep in mind that increasing leverage increases risk.

This is the long and short of it. If you want to trade paper, there are still plenty of ways to do it. But you might not be able to do it in the US unless you are using an exchange with structured counter party risk and contracts, and regulated leverage.

Here are some related documents, that interestingly enough deal with the Forex aspects of this ruling.

CFTC: Final Retail Foreign Exchange Rules

Hedge Funds Trading FX May Be Caught Out By Dodd-Frank

Dodd-Frank Dispatch: Retail Forex Transactions Rule for National Banks

Time Running Out On Retail Currency Business

Obama Threatens Forex; Says Goodbye to OTC Gold Trading

http://jessescrossroadscafe.blogspot.com/

AGAIN THIS QUESTION COMES OF WITH DOOD LAW i SPOKE WITH FOREX AND THEY SAID IT REFERS TO PRECIOUS METALS AND NOT WITH FOREIGN CURRENCY LIKE YOU STRUPID BELIEVE SO FORGET FOREIGN CURRENCY AND STOP WORRYING THE RV WILL HAPPEN IN GODS TIME NOT OURS

GO AND HAVE A DRINK AND JUST RELAX TAKE A TRANQUALIZER OR VISIT A HAREM . JUST RELAX AND ONE DAY WHEN WE WAKE UP WE WILL ALL BE RICH

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AGAIN THIS QUESTION COMES OF WITH DOOD LAW i SPOKE WITH FOREX AND THEY SAID IT REFERS TO PRECIOUS METALS AND NOT WITH FOREIGN CURRENCY LIKE YOU STRUPID BELIEVE SO FORGET FOREIGN CURRENCY AND STOP WORRYING THE RV WILL HAPPEN IN GODS TIME NOT OURS

GO AND HAVE A DRINK AND JUST RELAX TAKE A TRANQUALIZER OR VISIT A HAREM . JUST RELAX AND ONE DAY WHEN WE WAKE UP WE WILL ALL BE RICH

In other words, Sheeple, sit back and relax. Don't do any of your own research. Steve just told us what to do. I bet he is a minister of sorts. He said it is in God's hands, and God doesn't want you using that brain he so graciously gave you. Don't look for a Plan B in case you are screwed, or Plan C if you are really screwed.

Don't use your brain, let someone else do it for you, and you will have absolutely no responsibility for the situation you will be in. So easy. Why didn't all of your smart, brainiac people think of that? Get off the Internet machine, have a drink, get laid, and just be rich. So easy. Thank God for Steve.

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