If the CFTC wants to impose such restrictions on its own brokerages, it’s a Global market. Where I live there are no local FX brokerages here. I can and have opened FX accounts in our countries. In the UK for example is an obvious choice.
I would suggest the awesome guys behind BabyPips get ready to start a section or guide for U.S. based traders to overseas brokers, which countries offer similar protections to the U.S., legit regulating bodies, toothless regulating bodies, recommended ways to find, select, etc a foreign broker.
I think it is good for us. Dont you think so?
It seems the US is the only one doing this. There is an entire world outside of the US, full of forex brokers, and in my opinion the EUR brokers are much better. If you are US client there as still ways to open up these accounts in Europe and other places. Don’t let the low leverage issue be problem.
I have two reactions to this post. The first is a bit of mild shock that of all the things that could be regulated, our control over leverage is the thing they come down on. But then again, that’s the way things have been since the beginning. It happens. no biggie. At the end of the day, there are just as many decent off-shore brokers as there are homefield ones. Traders are just going to have to learn to be more discretionary when choosing their broker.
My second reaction is a not-so-mild shock that the Spot FX investors’ world has not been completely overrun with this information… Leverage has been the one thing the ‘little guys’ have been using to play the ‘big guys’ game. I can’t believe there isn’t more outrage, flamboyant blogs, chain-email protests… I mean, SOMETHING, Gahd… Britney Spears shaving her head got more attention than this, and Britney can’t even make us all money…
which non usa broker do you recommend?
matt
Matt,
Personally, I would use Alpari UK if I had the option. I’m not sure if US residents are allowed to use their UK branch, because they’ve got a US branch, but if possible, I would try there. I currently use FXOpen, and so far I have no complaints to speak of. There is also FXPro based in Cyprus, but I have no experience with them personally, though I haven’t heard anything bad about them.
~JoshG
Regarding Fxpro i use them since 3 months now and everything is ok (spread on eur/usd is around 1.5 pips most of the time during london and NY session, fast order execution).
My online broker has a policy where they will close my positions before letting my account go negative. Of course this assumes I’m not using stops. If I have to fund my account with 10 times the capitol don’t I stand to lose 10 times as much? I’ve just started learning Forex so I’m probably missing something.
The $/pip is based on the lot size not the leverage, correct? I would probably still fund my account to use a $10K lot size initially or move up once I had accrued enough profit.
Larry
I don’t understand, doesn’t the CFTC know that this will simply force US based traders to move all of their accounts overseas… 
Doesn’t this move by CFTC just feel like a way to shove out independent, retail investors? At the risk of sounding like one of those zeitgeist fans, this seems suspiciously stacked against boutique traders. A way to keep the small guys out of business to protect the big lazy cats up top. Imagine an America where the small guys have just as much decision making freedom as Wall Street. You really think Goldman Sachs wants that? Wall Street gets a multi-billion dollar bailout, and we get leverage restrictions. Smells funny to me.
Actually its a move to force U.S. traders out of forex and into options, which the cftc has a direct interest in. That market is declining compared to forex.
The thing they dont realize is that many will just move to UK brokers. Options plain sucks compared to forex. Low liquidity and host of other problems.
Has anyone seen an update to possible regulation changes? Comment period has been over for a while now.
I think they are going to leave it alone for now. They’ve had a lot of complaints and people telling them how it’s going to ruin U.S. brokers. So, I dont think they want to give it a try, and actually ruin U.S. brokers and then catch crap from traders and the goverment asking questions about why they would cause even more businesses to tank in this economy.
lets hope it doesn’t occur.
In my personal opion even though it may seem like this law will actually pass -I highly doubt it because America knows that will just seek other brokers outside of the US that offer between 500:1 and 1000:1 leverage.
How much longer to we have to wait. I have spoken to several high executives at US FX brokerage firms and they all say they have lost a lot of business and many have moved over to their overseas locations already. I believe this rule will not pass as the CFTC and law makers now know this will only hurt the US. We shall see, hopefully very, very soon.
Nice thing about this is that you have the option to either remain or look elsewhere.
Hi, I have suddenly found myself involved in this de-leveraging buisiness! I live in the UK by the way.
This week i opened an account with Oanda, basically to run a stategy i have been working on that needs tight spreads.
Anyway, i’m wondering now if this was a good idea, given all this crap going on. Oanda currently offer 50:1 leverage max, which is fine. But as will be using 10 pip stops or less, 10:1 leverage will mean maintaining huge margin for so little risk. which will mean having to deposite £1000’s just to make a decent profit.
Anyway im not asking about this what im asking is if its a stupid idea going to the US while half the world is moving out?
Any thoughts welcome, im not that genned up on all this stuff.
thanks.
[B]highland trader,[/B]
At present, most retail forex brokers in the U.S. offer maximum leverage of 100:1. This is the maximum leverage dictated by the National Futures Association (NFA), not to be confused with the CFTC; and all brokers which are members of the NFA must comply with this maximum.
The Commodity Futures Trading Commission (CFTC), which previously did not have legal authority to regulate retail forex in the U.S., now has that authority, and has proposed a ton of new regulations, including the infamous restriction on leverage to 10:1.
The above is fact. The following is conjecture on my part.
I believe that all of the CFTC’s proposed new regulations will become law, EXCEPT the 10:1 leverage limit.
I think there is a 50/50 chance that the CFTC will endorse the NFA’s limit of 100:1, and a 50/50 chance that the CFTC will impose a limit of 50:1 on U.S. retail forex.
I think there is almost no chance that the proposed 10:1 leverage limit will become law.
If I’m right, then probably nothing will change for you and your new Oanda account. If I’m wrong, then I guess you’ll be joining the rush to get your account out of the U.S.
I wonder what odds the London bookies are giving on the CFTC leverage decision.
By the way, I liked your avatar. Sorry you took it down.