Francesc Riverola,
Two days ago I made a post with a very mistaken headline
With the honoring purpose of fighting fraud, the CFTC was about to issue this week its proposal to implement tighter controls and to better rule the market.
Well, the proposal is now public and the correct headline should have been:
CFTC to Kill US Retail Forex Market
How do they pretend traders not going offshore and forcing to close their doors to all US FDMs by limiting leverage 10 to 1???? while overseas you can have much bigger leverages like 200 to 1 in UK????
As soon as I gather more info, I’ll come back to you
This is non-sense
Francesc
Francesc,
I feel this is the time for the US FX industry to work together.
The changes are the direct result of pressure from the CME for a centralized market place.
Can you ask all the US FDMs what they are doing? Are they telling their clients that the CFTC is awaiting feedback from the public - quote the CFTC News release “Comments regarding the proposed regulations may be submitted by any of the means listed in the Federal Register release and should be received by the Commission within 60 days of the date of publication.”
Instructions for providing feedback can be found at:
http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/forexrulesproposal.pdf
Should that happen, am closing my account in US and moving it elswhere where nobody has such stupid ideas.
Hi Ed
Thanks for your comment… I made a couple of posts more that I think fulfill your requests
thanks i have been wondering about that
Dear Francesc
i think of similar situation - asking all people not to come to roads with their cars to avoid accidents.
Some police get afraid of criminals! and warn the civilians.
when leverage is reduced then it will be currency conversion trades,no market is needed.Transactions can be done through banks based on the banks’ daily perception of the currency levels.then it becomes transaction without any expectation,trades envisaging futures etc.how they are going to handle the futures and options market (derivative markets) then? - there the leverage is very essential.
regards
Dr.Sivaraman
This isn’t bad news at all as most retail traders will benefit from trading AT MOST 10:1 leverage. There is a very good reason why institutions and large players use around 5:1 margin.
Only losers are gonna be the robbing brokers and I will not be shedding a tear for them.
I happened to watch George Orwell’s 1984 last night and realized that this film was not actually a democratic anti-Communist view but it was in fact Orwell foreseeing the future of FX in the US!
Some American I came across in a bar over Christmas (who was merrily celebrating the season!) told me that he heard that the NFA are considering the possibility in the near future having all retail FX traders sit some kind of exam set by the CFTC/NFA, that will show they have a basic understanding of the dangers involved in FX trading, leverage, margin, market orders etc after which they will receive a certificate. Brokers in the US will by law only be allowed to accept US citizen accounts after proof of them having this certificate.
I smiled at him and thought to myself…no way, never. Today, after reading here about the 10:1 possibility, I am not too sure anymore. Do you honestly think that such a thing could be on the cards?? Has anyone else heard of such an absurd possibility??
glad i`m an european member … usa government sux
if this will happen i`m closing all my usa bussines … God knows what will be next.
I doubt it will kill US retail FX. I also doubt it’s going to be a fraud fighting measure: more money goin` to fund managers . Reminding me of Madoff and I take this opportunity to (re)quote him: “In today’s regulatory environment, it’s virtually impossible to violate rules.” - pure gold
The 10:1 proposed rule (in state of seeking comments) will most likely make a 25:1 or 50:1 look decent.
… my two cents
thumbs up to your initiative to fight against this proposed rule, though. I hope someone will listen to all the feedback sent to CFTC. I already sent mine due to your blog post, voicing my intention to move my accounts overseas.
have a cheerful weekend!
It will kill US retail market because forex became this big precisely due to the leverage offered before NFA meddled in. The reason it became bigger worldwide was due to small investors being able to use large leverage to trade. And some people are totally missing the point.
What they want US firms to do now is only offer standard accounts at 1:10 !!! NOTHING ELSE!!! Not 1:25, not 1:50 and certainly not 1:100 or 1:200. Whether 1:50 looks attractive or not is moot. They only want US firms to offer Standard at 1:10 !!!!!!!
This is what they want… most of US retail customers will now only be able to make couple of dollars per trade if 1:10 comes into rule unless of course you have $100,000+ sitting in your account.
Hey you know what? People will now probably get an almost as good exchange rate at any of the million Bureau de Change!! In fact, and going one step better, exchanging from one currency to another at your own bank and you will even save on the commission rate, all this without the dangers of slippage, margin calls, withdrawal problems….;-)
yes i agree with this ..
lot of people are losing money because of this hign leverage
*head desk*
Sorry people, I feel the question must be asked… Why the **** do you need more than 1:10 leverage anyway to trade the Forex markets?
I believe, If you need the high 1:100 to 1:200 leverage ratios because your account is small, then I’m sorry, but it’s best you don’t trade because probabilities are high that quite frankly you’re going to be wiped out anyway… and fast.
The only other reason I could think of as to why you would need to leverage would be to allow you have more positions open at once, but still fail why you need anything more than 1:10 (or even 1:5) unless you are truly in this for pure gambling for thrills.
Sorry people, Unless someone can provide a very good argument for having more than 1:10 leverage, I currently support the moves to limit leverage to 1:10. The retail forex industry is over run with enough scams and frauds as it is already and wholeheartedly support any moves to weed out the bad eggs in this currently rogue industry.