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Explanation of currency conversion process and requirements - Multi-Currency Accounts

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  • Explanation of currency conversion process and requirements - Multi-Currency Accounts

    Explanation of the AMP currency conversion process and requirements:

    What is the reason for currency conversions?

    AMP has 10 different currencies available for funding a trading account: USD, EUR, GBP, CHF, CAD, AUD, HKD, JPY, NZD, SGD. This allows our customers from around the world deposit in their preferred currency. When a customer deposits in any of these currencies, the account’s “Base Currency” will be the funded currency type.

    Trading P&L is always calculated in the currency of the exchange. For example all US exchange traded contracts P&L settles in USD. If a customer funds the trading account in USD and trades only US markets there'll be no currency conversions required, because the account base currency is USD and all the trading P&L is also USD.

    If a customer funds the trading account with USD and trades European markets, the account base currency will be USD and the trading P&L will be in EUR. Because the trading P&L is different than the account base currency, on the trade statements - there will be 3 balances displayed on the bottom:

    1) USD account balance (base deposit)
    2) EUR trading P&L
    3) Final USD account balance using an estimated EUR to USD conversion rate

    An opposite example:

    If a customer funds the trading account with EUR and trades US markets, the account base currency will be EUR and the trading P&L will be and USD. Because the trading P&L is different than the account base currency, on the statements - there will again be 3 balances displayed on the bottom:

    1) EUR account balance (base deposit)
    2) USD trading P&L
    3) Final USD account balance using an estimated USD to EUR conversion rate

    These examples will hold true for all 10 available deposit currencies.

    When does AMP process currency conversions?

    1) Once a month, AMP covers all currency debit balances in our customer accounts, usually during the 3rd full week of the month. For example, if your base account balance in USD is 40,000.00 and your P/L balance in EUR is -10,000.00, AMP will convert an equivalent amount of USD to cover the negative EUR trading P/L. AMP does the conversions at prevailing bank rates for the time of the transaction. You will see these entries detailed on the daily statement as “FX Debit Balance Conversion.” If all currency balances are positive, (base account & trading p/l) there is no currency conversion required.

    2) When a customer is withdrawing the account balance. If there is any trading P&L, in a different currency than the base account currency, it will need to be converted before the funds are released. For example, customer is withdrawing account balance. The account base currency is USD, but there were EUREX trades – p/l either positive or negative in EUR, the EUR P&L will need to be converted to USD in order to withdraw the full USD balance.

    AMP has customers from over 100 countries around the world, the ability for us to accept multiple currencies for deposit we have found to be very useful for our customers. As always, our customers are the boss of their accounts and full control of all process. At any time our customers can request a currency conversion to any of the 10 available currencies of their choice. We are fully set up to manage multiple currencies per account - and will process any request to set up our customers account currency preferences.

  • #2
    Can you explain currency conversions and 1099 tax forms? If my base currency is USD and I have profit in EUR, the profit information needs to be sent to the IRS in USD form. This then determines my section 1256 capital gains for the year. When does this "translation" of EUR to USD happen? Is it based on the spot rate of the last day of the year? Thanks.

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    • #3
      chris55 The daily conversion is an estimated conversion rate based, which is processed during each nightly statements. This will show your foreign currency balance and your estimated converted USD account value.
      For your yearly IRS reporting, we will get you the exact "translation" for you shortly....just waiting on confirmation.

      Comment


      • #4
        chris55 Here is furthur clarification, - There is no set rate for the amount in USD of the EUR accrued. At the end of each trading day, a USD-value is assigned to any EUR Profit/Loss. The USD-value of the EUR PnL on the 1099B form is the summation of USD-values assigned to the EUR Profit/Loss. The USD-values were calculated using an End of Day rate for every day that trading took place. Essentially, the spot rate used is a weighted average across a range of rates used from whatever dates were traded within the year by the client.
        The "Amount in USD" is the summation of the amount of EUR on a given date multiplied by the rate on that given date across the range, in this case, all of 2016.

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        • #5
          please let us know if this information was helpful to you. thanks

          Comment


          • #6
            Originally posted by CollinPalmer View Post
            please let us know if this information was helpful to you. thanks

            Yes, that was helpful. Thank you.


            Last edited by chris55; 11-18-2017, 08:59 PM.

            Comment


            • #7
              I signed up and transferred my initial deposit in AUD, but have converted in into USD as I only trade US markets and don't want currency conversions happening on every trade. Can you please explain what the Reg. AUD, Secured AUD, Reg. USD, Secured USD and BASE CURRENCY USD sections on my statement mean.

              I've opened a sub account and funded that with USD from my primary account, so I don't have the AUD sections on that statement.

              Comment


              • #8
                Blackzipper here is the explanation spelled out for you. if you have any further questions please email [email protected]

                CFTC Regulations 1.20 and 30.7 are designed to protect customer funds through requiring the continuous segregation of customer assets supported by two main reports: (1) segregation statement and (2) secured amount statement (required for FCM’s that carry customer accounts/hold customer funds trading on U.S. or foreign commodity exchanges respectively).

                To comply with CFTC regulations, AMP provides each customer a recap of the activity on both CFTC 1.20 US Exchanges (Reg) and CFTC 30.7 Foreign Exchanges (Secured) each day. The amounts, as per CFTC regulations, are recapped and maintained separately on your customer statement identified as “Secured” (30.7) and “Reg” (1.20).

                On the money section of your statement, you will see two USD equivalent balances titled as follows: Reg. and Secured. The funds under Reg. are the monies in your account allocated to CTFC section 1.20 -- trading on US Exchanges. The funds under Secured are the monies in your account allocated to CFTC 30.7 – trading on foreign exchanges. AMP will, as a matter of course, move funds in your account between the two sections as required to maintain compliance with the CFTC regulation. These movements will not affect your overall balance, only the allocation of those funds to each regulatory section. In addition, any trading profits or losses will accrue to each section according to the exchanges on which the trades originated. AMP must remain compliant with the above regulations at all times. Your trade-able balance - as far as risk is concerned -- is the total balance across both sections.

                Example:

                In the below example, the client has USD Equivalent 1,055.74 in Reg. and 1,312.58 in Secured. This simply means the client’s balance is split between CFTC Reg Funds 1.2 and CFTC Reg 30.7 as $1,055.74 and $1,312.58 respectively. The total amount the client has available for trading on any exchange at any time is the summation of the two amounts or $2,368.33. AMP allows the full balance to be traded on any market.


                Comment


                • #9
                  Thanks very much for the detailed explanation. I can pretty much just ignore everything except the Base Currency total.

                  Probably not the right section for this question, but why are commission totals not on monthly statements, when they are on the daily?

                  Comment

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