As you may know, the Commodities Futures Trading Commission (CFTC) and the National Futures Association (NFA), which determine leverage (and the resulting margin) requirements for futures and forex trading, have established new forex leverage and maintenance requirements. We want to be sure you are aware of these changes.
What you need to know:
- These new requirements, which will take effect Sunday October 17, 2010, at 5 p.m. EDT (4 p.m. CDT), will impact all of your current open forex positions, as well as any new forex positions you open on or after October 17.
- The maximum leverage requirements on all major currency pairs will decrease due to the rule revisions. Major currency pairs will change from 100:1 to 50:1 maximum leverage (from 1% to 2%). Exotic or minor pairs will change from 25:1 to 20:1 maximum leverage (from 4% to 5%).
- Major pairs consist of any pair with two of the following currencies: Australian dollar (AUD), British pound (GBP), Canadian dollar (CAD), Danish krone (DKK), Euro (EUR), Japanese yen (JPY), New Zealand dollar (NZD), Norwegian krone (NOK), Swedish krona (SEK), Swiss franc (CHF), or US dollar (USD). All other pairs are considered by the NFA to be exotic and are subject to the higher margin requirement.
- For a listing of all currency pairs that TD Ameritrade offers, please go to tdameritrade.com and choose "Forex" (under Trade).
- You will also need to maintain a 100% equity-to-margin ratio (risk level) at all times.
- Liquidation of positions will occur once daily, at 5 a.m. EDT (4 a.m. CDT), if the risk level in your account falls to less than 100%, and intraday if the equity-to- margin ratio in your account falls to 25% or below, whichever comes first.
What you need to do:
- To avoid the liquidation of any forex position due to insufficient funds, please be sure that your forex account has the necessary funds at the close of trading on Thursday, October 14, 2010.
- This is necessary to ensure funds will be credited to your account by October 17, 2010, at 5 p.m. EDT (4 p.m. CDT).
- For more information, visit tdameritrade.com and choose "Forex" (under Trade).
If you have any questions, or if we can be of any assistance, please log on to your account and click "Message Center" (under Home) to write us. A representative will respond to your query through your Message Center inbox. You can also call Client Services at 800-672-2098, option 4.
Thank you for choosing TD Ameritrade. Please rest assured that we value your business and will continue to do everything we can to make your trading experience a positive one.
