I still have one foot in the U.S. I maintain a small account at FXCM (New York).
The changes imposed by the CFTC over the past 2 years (increased capitalization requirements, restrictions on hedging, FIFO, and the recent 50:1 leverage limit) have not impacted me personally. But, that’s basically because of the way I trade, plus some work-arounds that FXCM has devised.
I don’t hedge, so that one doesn’t apply to me.
FXCM has tweaked their platform so that any selected position can be closed without regard to FIFO. Which means that from the front end, where I sit, there is basically no change (from pre-FIFO days) in the way I manage open positions. Compliance with the CFTC’s FIFO reg is handled in FXCM’s back office. Note that FIFO does not affect P/L; it simply clouds the trader’s view of his/her open positions, and serves as an unnecessary distraction.
The 50:1 leverage limit, which should be thought of as a DOUBLING of required margin from 1% to 2%, hasn’t hurt me for three reasons: (1) I never have a large number of positions open at one time, (2) I don’t bleed my account (through withdrawals) to the point of running low on available margin, and (3) I keep my risk per trade low, which means (among other things) modest position size, which in turn means that I don’t dip heavily into available margin.
As for the increased capitalization requirement, which the CFTC began implementing 2 years ago, that has been a good thing: it has driven the weakest brokers out of business (or into mergers with other brokers), and in some cases those driven out were shady operators to begin with.
So, what’s the gripe with the CFTC?
Well, first, and most important, some traders (who trade differently from the way I trade) [B]are[/B] severely, and negatively, impacted by the CFTC’s doubling of required margin.
Second, in my view, MARGIN is not a proper concern of the CFTC. No matter how reasonable, or unreasonable, their regulation of margin might be, the point is [B]it’s none of their damn business. [/B]
Furthermore, I’m not convinced that the CFTC is finished screwing around with margin. I will not be surprised in the least, if (when) the CFTC should decide to increase the margin requirement again, to 4% (corresponding to 25:1 maximum allowable leverage).
The CFTC behaves like a bully. The CFTC has demonstrated its ability and willingness to abuse U.S. retail forex traders, for reasons of its own, to satisfy its own urges. That is power the CFTC should not have, and Congress should strip that power from this bully agency
Cut the Federal government in half. And watch the American economy double.