NFA (CFTC) ban on credit cards in the U.S. effective January 31, 2015

NFA credit card ban

US Forex brokers no longer accept credit card deposits

The time has come, and the earlier approved proposal on banning credit card funding for Forex accounts with US brokers is now in effect starting from January 31, 2015.

The official NFA documents can be found here:
CFTC approves NFA’s prohibition of credit cards to fund retail forex accounts

Would credit card ban further impact US Forex brokers?

Although several US Forex brokers stated that it would NOT have any significant impact on their business, we tend to disagree: credit card funding is by far one of the easiest and fastest ways to top up your trading account.

On the other hand, the need to seek for alternative funding methods should create positive grounds for better money management & decision making among traders.

What do you think?

What about Paypal funding?

Paypal funding will not be available with all US Forex brokers.

What about debit cards?

Debit cards – yes. They will be accepted by US Forex brokers.

Broker discussion area

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Australia is weighing up the benefits of a cap on leverage in FX, with Greg Medcraft, chairman of the Australian Securities and Investments Commission (ASIC), reportedly concerned that Australia is being “picked off” by FX brokerages because of its tolerance of high levels of leverage. The data suggest that there has been less than an overall 3% decline in FX trading volumes in the US Alexandra Dobra, Kinetic Partners Australia is not alone. The European Securities and Markets Authority is also looking at the issue and there is a recognition that in Europe the Markets in Financial Instruments Directive (Mifid) – the ruling concerned with the protection of retail investors – has a blind spot when it comes to FX. Mifid was written with securities and derivatives markets in mind, and FX does not explicitly fall under its remit. It has therefore failed to prevent excessive leverage in FX transactions from building up, as high as 3,000 times, brokers tell Euromoney. In Australia, ASIC reports similar levels of leverage in FX transactions. Currently, ASIC limits the provision of licences to institutions that have demonstrable business ties with Australia, in an attempt to prevent speculation on the Australian dollar by those outside the country with no material onshore business. It has also limited the licensing for firms offering excessively high amounts of leverage, without introducing an explicit leverage cap. Read more:

This is indeed a good move genuinely to protect the interest of the traders when you see this move in the light of the statistics that more than 85% traders lose money. So if you have risk capital, why fund by credit card. Wire your money from your bank account and aligns with the statutory warning “Do not risk money you cannot afford to lose”and credit money is definitely not worth risking.

US guys are still doomed to trade with US brokers. Nothing changes, and they won’t leave.
…but they might opt to deposit less, since now it’s your actual cash, not credit 🙂