(a) Application of purchases and sales. Any banking institution
that—
(1) Engages in a retail
forex transaction involving the purchase of any currency for the account
of any retail forex customer when the account of such retail forex
customer at the time of such purchase has an open retail forex transaction
for the sale of the same currency;
(2) Engages in a retail forex transaction
involving the sale of any currency for the account of any retail forex
customer when the account of such retail forex customer at the time
of such sale has an open retail forex transaction for the purchase
of the same currency;
(3) Purchases a put or call option involving foreign currency for
the account of any retail forex customer when the account of such
retail forex customer at the time of such purchase has a short put
or call option position with the same underlying currency, strike
price, and expiration date as that purchased; or
(4) Sells a put or call option involving
foreign currency for the account of any retail forex customer when
the account of such retail forex customer at the time of such sale
has a long put or call option position with the same underlying currency,
strike price, and expiration date as that sold shall:
(i) Immediately
apply such purchase or sale against such previously held opposite
transaction with the same customer; and
(ii) Promptly furnish such retail forex
customer with a statement showing the financial result of the transactions
involved and the name of any introducing broker to the account.
(b) Close-out against oldest open position. In all instances in which the short or long position in a customer’s
retail forex account immediately prior to an offsetting purchase or
sale is greater than the quantity purchased or sold, the banking institution
shall apply such offsetting purchase or sale to the oldest portion
of the previously held short or long position.
(c) Transactions to be applied as directed
by customer. Notwithstanding paragraphs (a) and (b) of this section,
the offsetting transaction shall be applied as directed by a retail
forex customer’s specific instructions. These instructions may not
be made by the banking institution or a related person.
