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SEC Extends Interim Rule On Retail Forex Trades for Three Years

Tuesday, July 16, 2013
The Securities and Exchange Commission July 11 extended for three years an interim final temporary rule that will allow registered broker-dealers to engage in retail foreign exchange transactions.

Interim Rule 15b12-1T under the 1934 Securities Exchange Act provides that registered broker-dealers may engage in such business if they comply with 1934 Securities Exchange Act requirements and applicable self-regulatory organization rules, was slated to lapse July 16. It now will expire July 16, 2016.

In a release, the agency said extending the rule “provides an additional opportunity for the Commission to assess the market for retail forex and determine whether to issue more targeted rules for retail forex, to consider any rules that an SRO may develop regarding its members' retail forex activities, to consider whether to take action to extend the rule, or have the rule expire.”

“To that end,” the SEC added, its staff periodically will consult with Financial Industry Regulatory Authority “to discuss and obtain additional information about the retail forex marketplace.”


Extensions
The commission first approved the interim rule in July 2011. Absent the rule, broker-dealers would be barred from entering into forex transactions with retail customers by Section 742(c) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The interim rule would have expired July 16, 2012, but last year the commission extended the rule to July 16, 2013.

At the time the rule first was adopted, Commissioner Luis Aguilar said he agreed to support the interim rule on the condition that the SEC Office of Investor Education and Advocacy issue an alert warning investors about the risks and conflicts inherent in over-the-counter forex transactions.

With the latest extension, however, Aguilar termed it “simply not acceptable for the Commission to continue to delay the fact-finding and decision-making process.” In a statement, he said “any further delay will only serve to heighten, rather than lessen, investor harm.”


To see the SEC release, http://www.sec.gov/rules/final/2013/34-69964.pdf. To see Aguilar's statement, go to http://www.sec.gov/news/speech/2013/spch071113laa.htm.

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