Forex Regulation: A "Double-Edged Sword"?

I live in BC where forex regulations are quite strict. I’ve been trying to figure out the affects of these regulations and this is what I came up with:

Margin Rate affects MAXIMUM Leverage

If Margin Rate is 3%, my maximum leverage is 33:1.

However:

  • I can chose to leverage myself LESS than the max (ex. by limiting # of positions and/or # of lots)

  • Even if my actual leverage is lower than the max, I still have to put up the same margin rate as set by the government (ie. 3%)

Margin Regulation a Double-Edged Sword?

So while a higher margin rate limits the amount that I can leverage (making things “safer”), it also lowers how much unrealized losses I can take/absorb before a margin call (not “safe”).

Can some of the more experienced/knowledgeable forex traders weigh in on this? I think this is my “Ah ha” moment and I would really appreciate feedback on it (whether I’m right or wrong).

Thank you.

[Attached is the Excel model I created to come up with these conclusions]

BC Forex Model.zip (15.9 KB)