Here you have attached the statement released ty Forex Dealers Coalition (FXDC) against the CFTC proposal that went public yesterday.
GFT, Oanda, IBFX, Gain Capital, FXCM, FX Solutions, FXDD, PFG Best and CMS Forex consider that if the proposal passes:
90% of the account will go offshore, mostly to the United Kingdom
Thousands of high educated jobs will be lost
An industry worth over $1 billion gone, loosing millions in taxable revenue.
The proposal does not fix fraud, the subject the rule tries to adjust. Battle against unlicensed FDMs and IBs fix the fraud, not 10 to 1 leverage.
100 to 1 leverage is very popular. Traders simply will not accept 10 to 1 leverage.
Unregulated dealers from around the world will also benefit.
Conclusion: Thousands of jobs lost when unemployment is at 10%, consumers more vulnerable to fraud, and the United States tosses away one of the most promising export industries.
Right now if the government in the US does not want that I invest my money there, no problem. As long as the UK doesn’t start with similar rules. :rolleyes:
Don’t fret mates, there is no way the US gov will regulate the financial industry in such a way. Just look at the weak sauce “financial regulatory reforms” they are proposing.
Trillion dollar loopholes, not banning naked credit default swaps, or even regulating them at all. Just a request that 10% of them be disclosed publically.
If financial companies like US FOREX brokers want to keep 100:1 leverage they will do so, because the US government is a wholey owned subsidiary of the financial industry.
As for how 10:1 would theoretically affect me? Well it would certainly suck, as I am currently leveraged 12.5:1 over 11 trades. Its a stupid idea really, as with proper money management one could be leveraged 40:1 and not recieve a margin call ever, (5 trades: 8:1 leverage each, 15% of margin used/trade+5% capital risk/trade= maximum margin used/trade =20%).
In fact there is a carry trade system I am currently testing who’s goal is to get to 40:1 leverage or as close as possible. On an average carry trade of 2% you would earn 80% annually just on carry trades.
But again, remember that 10:1 regulation will never happen, so just go on as you were.
I moved my accounts to FXCM UK when the CFTC (and their puppet, the NFA) started screwing around with stops, limits, close-trade orders and hedging.
FXCM encouraged their U.S. clients to make that switch, and it was painless.
If this leverage limit is implemented,
[B]I think that all U.S. brokers will try to move their clients to their own branches or subsidiaries offshore.[/B]
I’d be interested in a side bet on your contention.
The CFTC and NFA have an agenda: to “harmonize” forex market regulation with futures market regulation. They think that one-size-fits-all when it comes to financial industry regulation.
If you think that they (the CFTC and NFA) will fail, due to the fact that forex is an off-exchange market and futures are exchange-traded, fasten your seatbelt, because a [B]forex exchange[/B] — a la the CME — is on their radar.
Huh? This rule is only a few months away from becoming the law of the land. Once it happens there is no turning back. Let’s not go quietly into the ovens people. contact <[email protected]> asap.
The only problem with harmonization is the 10:1 leverage rule doesn’t harmonize retail forex with futures, it kills it. You can trade currency on CME with 50:1 leverage. This rule is intended to kill the retail forex industry, not harmonize it.
Oanda just made a statement in their forum where they said they were “strongly against” the 10:1 leverage rule and encouraged people to let CFTC know they oppose it too.
While the “financial regulatory reforms” have to be passed by Congress, a reduction in leverage can simply be enacted as a mandate from the CFTC.
If you would like to voice your concern for or against the proposal you can submit your comment to the CFTC by sending an email to [B][email protected][/B]v with “[B]Regulation of Retail Forex[/B]” in the subject line. You must provide your address and contact information in the email in order for it to be considered by the CFTC. Also, you should be aware that the CFTC has the right to publish your comments, and will publish your email on a public page on their website.
While the Forex Dealer Coalition is actively lobbying against the proposal, traders will need to voice their concerns as well in order to have an impact on the proposal because the proposal is being made in the traders interests.
I'm with FXCM UK Division. The rule change won't effect clients in this division. Rightly or wrongly, the US regulatory agencies felt that Forex brokers were ripping off newbies by enticing them to over leverage their accounts in order to blow out quickly.
Worry not, Oanda have offices in Singapore and Canada although the latter will probably follow what America does so bung your coin of the realm with our slanty-eyed cousins in south east Asia and sleep soundly from here on in!
It would cause me a bit of a problem, but I’ve not seen anything official, I think it’s an Urban Myth, it doesn’t affect me in the U.K. but these things do tend to spread.
I suspect it’s probably come from some backroom gossip in the Dow tearooms.