Commodities Options Trading

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US binary commodities options traders have been
stymied since the implementation of Dodd-Frank
legislation last year. Beginning in July 2011
binary option sites began winding down their
operations with the last contract going offline
at year-end. Today US investors do have some
alternatives in the commodity space. Here we take
a look at how Dodd-Frank changed how contracts
are traded and what traders are doing to continue
to invest and make money with binary commodities
options.
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Dodd-Frank Cuts Off Order Execution Many US
investors in binaries were caught off guard last
year when their brokers discontinued offering
positions on their favorite precious metals like
gold, silver, platinum, and copper. Similarly
stymied investors were those operating in the
Forex space. What was the common cause for their
sudden inability to trade their favorite assets?
Unfortunately the common cause was specific
clauses in the financial legislation which
prevented order routing on the back-end of
contracts. While no specific law or rule
prohibited the sale of these securities, brokers
were no longer able to legally route orders for
these futures related contracts. As a result the
brokers had to (one by one) discontinue offering
contracts as their back-end trade partners were
no longer able to route orders for them.
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US Residents Left Out of the Market It was not
long ago that a major market maker in the
binaries space folded up shop, according to
sources at the CBOE in Chicago. Although there is
no specific evidence as to why the market maker
discontinued operations in the space the timing
of the shut down (just after Dodd-Frank rules
began taking effect in April 2011) is probably
not a coincidence. Other firms remained open for
business however - allowing at least some binary
trading activity through year-end 2011. Once the
last firm shut its doors to US residents the only
known alternative at the time was to form an
off-shore partnership and or establish residency
outside the United States. Failing that the Forex
and commodities options trading space was closed
for US residents.
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Traders Await Rules Clarification As previously
Zulander Hack Review mentioned the trouble for US
residents trying to trade Forex or commodity
option contracts was not the expressed
prohibition of the practice, only the inability
of their brokers to legally route orders. Like
many financially related laws, many of the
details of implementation are left to industry
regulators (such as the SEC) to write and
implement - with time for commentary from the
public and interested parties. Many of the
leaders in the binary trading space fully intend
to offer assets again to US http//binarymetabot.c
om/zulander-hack-system-review-michael-wright/
residents once the rules get finalized - or the
law gets repealed in whole or in part.