CFTC News Release 4489-01
For Release February 8, 2001
CFTC ISSUES TWO ADVISORIES ADDRESSING THE OFFERING OF FOREIGN CURRENCY (FOREX) TRADING OPPORTUNITIES TO THE RETAIL PUBLIC
CFTC Outlines New Forex Regulatory Scheme and Also Alerts the Public To Foreign Currency Scams
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced today that it has issued an Advisory (#06-01) concerning the offering of foreign currency (FOREX) futures and options trading opportunities to the retail public. The CFTC also has revised and re-issued a 1998 Consumer Alert on foreign currency trading to help the retail public identify foreign currency trading scams.
The CFTC issued the Commission Advisory and re-issued the Consumer Alert in the wake of recently enacted federal legislation – the Commodity Futures Modernization Act of 2000 (CFMA). The CFMA, among other things, amended the Commodity Exchange Act (CEA) to make clear that the CFTC has jurisdiction over foreign currency futures and options trading involving retail customers, where the counterparty is not a regulated financial entity as enumerated in the CFMA.
CFTC Advisory Explains How Firms May Lawfully Offer Foreign Currency Trading Opportunities
The CFTC’s Advisory (#06-01) reaffirms that off-exchange trading of foreign currency futures and options contracts with retail customers by a counterparty that is not a regulated financial entity as set forth in the CFMA is unlawful. The Advisory describes the types of regulated entities and their affiliates that lawfully can offer foreign currency futures and options trading opportunities to the retail public. The Advisory also explains that the trading of foreign currency futures and options on organized exchanges continues to be permitted. Lastly, the Advisory identifies sources of information concerning the registration status of firms or individuals (see Advisory 06-01, February 5, 2001, www.cftc.gov/opa/press01/opaadv06-01.htm).
CFTC Revised FOREX Consumer Alert Warns the Public of the Risks of Foreign Currency Trading and of Foreign Currency Scams
In a separate Consumer Alert, the CFTC educates the retail public about foreign currency scams. The Consumer Alert warns consumers of sales solicitations appearing in newspapers, radio or television promotions, and increasingly, on Internet sites that tout high-return, low-risk investment opportunities in foreign currency trading. The CFTC also cautions the public to be wary of highly paid currency-trading employment opportunities. The CFTC urges the public to be skeptical of such claims and suggests some "red flags" to look for and cautionary steps to take before trading foreign currency products.
The FOREX Consumer Alert also identifies sources of information concerning companies and sales persons and general information about trading commodity futures and options. In short, the CFTC states that the public should always remember that if an investment opportunity sounds too good to be true, it probably is.
NOTES TO EDITORS:
In addition to its Consumer Alert on Foreign Currency Trading Frauds, the CFTC has issued the following Consumer Alerts that are posted on its Website at (http://www.cftc.gov/cftc/cftccustomer.htm ):
For public information, please contact the CFTC’s Office of Public Affairs at (202) 418-5080.
To report complaints concerning foreign currency futures and options trading, please complete the Enforcement Questionnaire Form on the CFTC’s Website at http://www.cftc.gov/enf/enfform.htm.
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