The US NFA board has recently approved a ban on credit card deposit to fund retail forex account. The ban is now a subject for approval by the Commodity Futures Trading Commission (CFTC).

The US National Futures Association (NFA) board has recently approved a ban on the use of credit cards to fund retail forex and futures account. The ban is now a subject for approval by the Commodity Futures Trading Commission (CFTC).

US

Deposit and withdrawal facilities in online forex broker are commonly done through three methods: bank wire, credit card, and e-payment. While the use of bank wire and e-payment for forex account deposit imply that the account owner uses already-owned money to trade forex, credit card indicates that the account owner uses borrowed money to fund high-risk forex trading. Of course, that is not always the case. It could be that geographic problem of cross-country payment is much more easily settled by credit card facilities, as internationally known credit card issuers such as Mastercard and VISA are accepted practically everywhere.

However, the US NFA's inspection to more than 15,000 retail forex account found that the majority of credit card-funded accounts are unprofitable. Therefore, the agency aims to increase consumer protection by preventing people from getting into financial trouble in case they repeatedly wipe their account. Leaprate quoted NFA President and CEO Dan Roth said, Forex and futures markets are both high-risk and volatile, and individuals who wish to participate should use only risk capital to fund their accounts. Allowing customers to fund accounts with credit cards encourages them to trade with borrowed money.

If effected, the rule most likely will stir US-regulated forex broker, such as FXCM, IG Markets, Alpari US, OANDA, and others which accept deposit through credit card method. For the time being, it is still unknown whether non-US based clients could use the credit card deposit or if the rule applies to any client who deal with US-regulated forex broker. The US CFTC ruling on the matter too, remains to be seen. We will continue to monitor the development of this ban for you.