Francesc Riverola,
Hi everyone
A few weeks ago I published here an interview with Dan Roth, President and CEO for the NFA.
At the end of last week I got an e-mail from one of the leading retail FX firms in the U.S. saying that in the interview with Dan Roth it was not mentioned what is a major threat to all FDM’s in the U.S.
This major threat is that Dan Roth is proposing that only companies that are mainly engaged in Futures business (IE. FCMs) could be allowed to offer Forex. This means that NFA is effectively trying to put U.S. FDM’s out of business.
Also this menace is approaching fast as the NFA is going through its semi-annual Re-authorization soon. As part of this, the government has to approve their regulatory status as well as any changes that the NFA recommends.
You can read Mr. Roth’s statement before the Subcommittee on General Farm Commodities and Risk Management Committee on Agricultur U.S. House of Representatives on September 26, 2007 by clicking below.
As you can imagine, this is a very important issue for FXstreet.com as it could turn the FX industry upside down, not only in the U.S. but worldwide.
To check the situation with other key players in the US industry, I contacted one of the most important CEO’s in the industry to get his feed-back.
He told me that he didn’t think all FDM’s in the U.S. will be out of business. He considers that what congressional testimony by the NFA president said was that the original intention of the CFMA was not to create the class of FDM’s. Now that they exist though the remedy for this "illness" is to raise the initial capital requirement to $20M instead of $5m which essentially will mandate most firms which would need $40M just as a starting point to stay in business and currently only OANDA, FXCM and GFT have this money.
He also told me that that top U.S. FDM’s are joining efforts to fight against such menace as the lobby against them is very strong.
I’ll keep you all posted.
Francesc