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SEC adopts final rule on retail foreign exchange transactions

  • SEC (US Securities and Exchange Commission) Image

Jul 11, 2013

The SEC has adopted a final rule that will permit a registered broker-dealer to engage in retail foreign exchange (retail forex) transactions as long as the broker-dealer complies with the Securities Exchange Act of 1934 and other regulations enacted by the relevant governing bodies.

The SEC will work closely with the Financial Industry Regulatory Authority (FINRA) to obtain information about the retail forex market, such as information about applications identifying retail forex business and any rules that FINRA may consider regarding its members’ retail forex activities. If the SEC does not take further action, the rule will expire on July 31, 2016.

Further, SEC Commissioner Luis A. Aguilar addressed the potential investor risk associated with retail forex transactions through a public statement he issued in July 2013. He expressed concern over the SEC’s delay in implementing Section 742(c) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which prohibits a regulated financial institution from entering into certain foreign exchange transactions with retail customers until the financial institution’s regulator has created rules that specifically address these transactions. He urged the SEC to work with FINRA to gather information about the retail forex market, discuss any rules that FINRA should consider for its members, and consult with other regulatory agencies to identify potential investor harm.

Please click for the following documents on the SEC's Web site:

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