This is so bizarre, jcl. Can't close a position!?!? That's nuts!
I've never run into these issues at several US brokers. I have to wonder if FXCM is misinterpreting or misimplementing the rules.
So if you follow their instructions and open an opposing position instead... why isn't that considered hedging? (Which definitely IS prohibited.) Do those two positions STAY open forever!? That would be a great way for someone to collect a lot of swap over time...