The recent GME fiasco has exposed an unquestionable hypocrisy in this country. A call for change and increased regulation was brought about as soon as the underdogs secured the advantage and started using the same tactics that are used to manipulate our markets on a daily basis.
Any why? Because of the recently-exposed and obvious conflicts of interest that are legally-questionable at best and the illegal manipulation of the markets that continue to go unchecked and ignored, or, because retail traders did not play by the rules of âslow and gradual manipulationâ, all the while making use of tactics reserved only for the financial elite?
I suspect that we already know the answer to that question. This will likely leave most, in-the-know, either enraged or laughing âŚor maybe a little bit of both. Either way, I would bet money that any proposed regulatory measures will ultimately lean in favor of the minority-elite.
I do not trade stocks, personally, but what is happening now is all relative. This thread was brought about as a result of heavy-handed regulation in this country that has ultimately given birth to an unfair and overly-restrictive climate for the majority of retail traders, resulting in very limited and undesirable investment opportunities in a country that should have some of the best offerings in the world.
As a strong push for additional regulatory efforts are brought forth with what I suspect will be little-to-no push-back, I would only hope that the growing force of retail traders will not only see through the smoke and mirror reasoning being used as justification for such blanket regulation, but that they choose to stand their ground and insist on having their voices heard.
What these retail traders managed to accomplish should have sent a loud and clear message to the financial elite and the regulatory bodies that claim to protect us, however, the cynic in me expects that the rebel peasants will be made an example of for their foolish and short-lived defiance.
2000 meltdown = <25K pattern day trading rules
2008 meltdown = dod frank
If newbie traders/investors get their ass handed to them in the inevitable next market collapse, we all know what will be coming out of the SEC/CFTC/NFA & Congress.
This goes beyond market manipulation. And now that this has happened, it is likely to keep happening. It is a revolution in some ways. I suspect lawmakers and other groups are scrambling to figure out a way to stop it.
Meanwhile, some groups are prohibiting the buy of some of these stocks, while still allowing them to be sold. Google is deleting poor reviews for companies like Robinhood. So much illegal activity is taking place, yet, everyone has their attention on these âlowlyâ retail traders that decided to shake things up. Itâs really quite amusing and sad at the same time.
Here is a very simple explanation of what is happening:
They were B booking handing over their 90% lose newbie customer base information to hedge funds who were likely taking the other side of trades.
They have no institutional accounts, and they are now completely toxic on social media when they were heavily reliant on that same crowd to fuel their growth.
When a broker has tight spreads and no commissions⌠You Are The Product!
sorry if iâm a killjoy, but given that the CFTCâs reason for existence is to protect the public/consumers, it saddens me, in a trading forum full (like all of them) of horror stories about trading offshore with unregulated brokers, to find that one of the biggest, best attended, longest-running threads is called âGoing offshore to escape the CFTCâ
the words âbe careful what you wish forâ come to mind
The CFTCâs existence didnât stop the disasters⌠PFG Best, Refco, MFGlobal & FXCM. All 4 were huge market share brokers regulated by the CFTC. I lost 40K in 2005 with Refco⌠how exactly did regulation protect me? PFG Best was raiding their customers so called segregated funds.
You shouldnât trust any broker regulated or not.
Trading offshore with higher leverage allowed me to build my capital faster with significantly less capital @ risk on deposit for margin, which allowed me to keep my excess capital safely deposited in my bank account.
thatâs similar, in a way, to having a good trading system with a good expectancy, and losing a couple of trades (always possible) and saying âhow exactly did having a good system help meâ?
what matters (in both examplse) is getting the odds in your favor rather than against you
OVERALL, youâre likely to be better off and safer with a well regulated broker
thatâs what matters
and thatâs why âgoing offshore to escape the CFTCâ makes so little sense, given that the primary reason for the CFTCâs existence is to protect you, and thatâs so however much you might yourself choose to do something else, and however much you want to be right about it
FXCM were well known to be crooks for many years before they were eventually kicked out of the US - you only needed to look at their international regulatory record (the single most important aspect of any broker of that size) to see that just at a glance, and it was public information, and thatâs why itâs public information - even in this beginnerâs forum, there were loads of links posted to all the FXCM regulatory red flags years before that happened
thatâs what they want you to believe, look how the regulators are acting over gamestop stock when the little guy does the same thing as the big boys, who you think their trying to protect the little guy or the big boys?
Regulators didnât stop the housing crisis, even when alarms were ringing for years preceding. Who suffered the most? It wasnât the banks, they got bailed out.
Regulators didnât stop Bernie Madoff either, even when alarms were ringing for years preceding.
Securities & Exchange Commission Looking Into Trading Frenzy
As the dust settles slowly from the extraordinary GameStop frenzy, questions are now being asked as to how much or how little market regulation is needed. Some Robinhood app users are furious after the trading platform restricted purchases. And now prominent lawmakers are speaking out.
Regulation is about compliance, not protection. Anyone can argue its purpose, but at the end of the day, we can all see what it is really about. Maybe it started out as a righteous thing, but it has evolved into something else. This is why we see brokers being targeted, not for illegal activity, but for simply accepting US clients without first, paying for the privilege to do so and agreeing to terms that are both costly and inconvenient to maintain.
Most of us never asked to be âprotectedâ from ourselves; we just want the freedom to do as we wish with our own money. Risk comes with any investment, and it should be left to our own discretion whether or not we are willing to take on those risks. As such, anyone who chooses to do so should have to live with the consequences of possible loss or failure. Anyone that disagrees can continue to trade with US brokers, and cling to this idea that their money is in safer hands.
Another interesting article, putting things into perspective:
compliance with regulations about holding client funds in segregated accounts is designed for customer protection in the event of broker insolvency, so thatâs both âcomplianceâ and âprotectionâ
secondly, some countriesâ governments give a government-backed guarantee regarding reimbursement of client funds (in the event of broker insolvency) for clients of brokerages regulated in their countries, which is obviously âprotectionâ
your statement that it isnât about protection is therefore mistaken - sorry, not trying to start an argument here, but we can see for ourselves that what youâre saying is just wrong - itâs not as simple as youâd like it to be (things often arenât, you know?)
Are you so sure about that? But it does not really matter. You can be as specific as you want about regulation, protection, compliance, jurisdiction, reciprocity et al., but actions speak louder than words. You can tell me that you love me all day long, but if youâre spending all of your time with my cousin, then I do not see much of a future for us.
i gave a specific example of where âcomplianceâ and âprotectionâ overlap, and a further specific example of something thatâs just âprotectionâ
both examples are simply factual - you can argue with them as much as you like (and evidently you do like) but you canât stop them from being true
yes
itâs fairly well known in the UK that the first ÂŁ80,000 of clientsâ account-funds are government protected for all FCA-regulated brokerages (Google is your friend!)
it matters to people who lose ÂŁ80,000 unnecessarily (as many have, for example in the Swiss Franc debacle, some years back), maybe some of them because they were influenced by the prejudices of the participants in forum threads like this one, rather than learning how and why regulation can work in their favor
sorry, i hadnât seen the rule about needing to have been a member earlier than the thread started before posting in it
