NFA Hedging Ban Delayed – Partly!

As we suggested it seems as though some forex brokers have complained to the NFA that they cannot implement the programming changes necessary in time for the original deadline of May 15th for the now notorious compliance rule 2-43(b).  In their new notice I-09-12 the NFA say that:

NFA has received several requests to extend the effective date due to the complexity of the programming changes required to comply with the FIFO requirement. After considering those requests, NFA has decided to extend the effective date for the FIFO part of the rule until July 31, 2009. Therefore, FDMs may not carry offsetting positions in the same account if either of those positions was established after May 15, 2009, but FDMs may offset positions on some basis other than FIFO through July 31, 2009.

Although implementation of the first-in, first-out provisions has been delayed until the end of July this will be of no comfort to MetaTrader users who currently use more than one expert advisor per currency pair in a single account. Brokers will still have to offset positions entered on May 17th or later, though they now are free to use any method they choose until trading opens on August 2nd. If one EA is already long, and a different EA decides to go short on or after May 17th, the broker will be obliged to offset the two positions and both EAs will get awfully confused.