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National Futures Association Announces: No Hedging for US Forex Brokers

Tadawul FX, in an effort to keep our clients updated on important forex industry announcements, must bring to the attention of our clients the new compliance rule which has been adopted by the National Futures Association (NFA) in the US, the self regulatory organization for forex brokers in the United States. All members of this organization, which includes all US brokers, must adopt the new compliance rule 2-43 which states that ‘as from May 15, 2009, customers of forex dealer members will no longer be allowed to open ‘hedged’ positions in their accounts.’

You can read more on this announcement on the official NFA website here:

This new regulation means that hedging (taking a long and short position in the same currency pair in same account) can no longer be done by clients of US brokers, and the NFA came to this decision as they feel that “customers do not understand either the lack of financial benefit or the financial costs involved”.

Tadawul FX, as a Swiss Forex Broker operating in the EU, is not bound by this regulation and whilst we appreciate the NFA’s concerns over the risks associated with hedging, we still offer our traders the option to use hedging strategies. We believe that many profitable traders do carry out hedging strategies and many of them do understand the risks and costs involved.

If you wish to trade using hedging strategies, you can visit Tadawul FX where our online live forex account opening form will allow you to easily and quickly open your account with us, and you can also fund your account using credit card or PayPal on our secure online funds deposit page.

If you are a Tadawul FX client and would like further information or have any questions on the above NFA regulation, we would be happy to provide further clarification for you.

OFFICIAL NFA ANNOUNCEMENT REGARDING COMPLIANCE RULE 2-43

The NFA has received notice that the Commodity Futures Trading Commission has approved new NFA Compliance Rule 2-43 regarding forex orders. The prohibition on carrying offsetting transactions will be effective for any positions established after May 15, 2009.

The NFA is prohibiting hedging because it believes that “customers do not understand either the lack of financial benefit or the financial costs involved” in carrying long and short positions in the same currency in the same account. Therefore, Compliance Rule 2-43(b) bans the practice and requires FDMs to offset positions on a first-in, first-out basis (FIFO).