6 Responses to “How the Dodd−Frank WS Reform act will affect the Forex Market?”

1. on 09 Aug 2010 at 5:17 pm1Asaf

   Trading forex in the US is definitely going to change but I think that the change is going to affect the industry positively (at least in the US).

   There is no reason to waive registration for money managers that have less than 15 investors. This is a big loophole that currently is being abused by money managers. The big problem with lack of registration is that these money managers do not follow a clear guidance of how to present their performance and what to disclose to the prospective customers.

   As for the OTC, the meaning is, if I understand it correctly is that US residence would not be able to trade with an off-shore broker if that broker is not registered by the CFTC or SEC. Also a good step towards the right direction as the main differences are leverage, which is being reduced now in other places like Japan, and the Hedging which most of the brokers in the US have managed to develop an acceptable work-around.

   The positive side of all this is that serious investors would feel more comfortable participating in this market and there is a great opportunity to expand this market into the “active investor” segment first and into the main street as an investment option next.

   – Asaf.

2. on 10 Aug 2010 at 9:21 am2Francesc Riverola

   Thanks Asaf for your great contribution…. Once more

3. on 10 Aug 2010 at 7:24 pm3Jeff Langin

   Asaf, I wish I could feel as optimistic as you but I’m afraid I simply cannot.

   I as see it the first and foremost question is; WILL THERE BE A RETAIL FOREX MARKET IN THE U.S. AT ALL?

   Being in Canada, I could tell you I have no dog in this fight but the fact is I do…everyone single person in the U.S. who is currently live trading or who envisions an income from live trading in the future.

   RE: ELIMINATION OF OTC FOREX

   The Bill States:
   ————————————————————

   Effective 90 days from its inception, the Dodd-Frank Act bans most retail OTC forex transactions. Section 742(c) of the Act states as follows:

   “…A person [which includes companies] shall not offer to, or enter into with, a person that is not an eligible contract participant, any agreement, contract, or transaction in foreign currency except pursuant to a rule or regulation of a Federal regulatory agency allowing the agreement, contract, or transaction under such terms and conditions as the Federal regulatory agency shall prescribe…”

   This provision will not come into effect, however, if the CFTC or another eligible federal body issues guidelines relating to the regulation of foreign currency within 90 days of its enactment. Registrants and the public are currently being encouraged by the CFTC to provide insight into how the Act should be enforced. See CFTC Rulemakings regarding OTC Derivatives located at the following website address, under Section XX – Foreign Currency (Retail Off Exchange). As this provision is potentially devastating to the forex industry, affected readers are encouraged to voice their opinions to the CFTC directly. To do so commentary should be forwarded to via email to:
   ———————————
   Secretary@cftc.gov
   Attn: David A. Stawick, Secretary
   Commodity Futures Trading Commission
   Three Lafayette Center
   1155 21st Street, NW
   Washington, DC 20581
   ———————————-

   It is essential that OTC forex participants seek professional help to discuss possible operational and regulatory contingency plans

   ————————————————————

   My understanding from theabove literature is that that it’s now up to the CFTC
   (within 90 days of passage of the bill) to recommend how Retail Forex shall
   be traded going forward…

   MOREOVER>>>> That No Response By The CTFC Prior to the 90-day period means NO
   MORE U.S. Retail Forex trading.

   DEAR AMERICAN FRIENDS: PLEASE WRITE TO THE CFTC (AS ABOVE) AS SOON AS POSSIBLE. ASK THEM TO ACT ON YOUR BEHALF TO ALLOW THE FOREX TO CONTINUE `AS IS` OR SAY GOODBYE TO YOUR RIGHT TO TRADE THE FOREX IN THE U.S.A. and ELSEWHERE… Note: `ELSEWHERE` BECAUSE THAT`s WHAT THIS MEANS TOO!

   THERE IS NOT MUCH TIME!

   Sincerely

   Jeff Langin

4. on 11 Aug 2010 at 10:09 am4Francesc Riverola

   Hi Jeff

   Thanks a lot for your contribution.

   I was very concerned when I saw it as the bill mandates the CFTC to rule in less than 90 days. That is a very short period of time for any regulator in the world, but I’ve spoken with several compliance officers from US retail forex brokers and they seem to be very confident that the CFTC will do its job quickly and efficiently so I’m in a wait and see mode.

5. on 13 Aug 2010 at 8:24 pm5Asaf

   The CFTC folks are definitely busy and if I had to guess what the outcome would be I would guess that they will probably go with something that is close to what the NFA is regulating today - I think that big surprises will generate the wrong perception of them and you can always change the regulations and make it tighter.

   – Asaf.

6. on 06 Apr 2011 at 7:12 am6Kristy

   Francesc,

   Could you consider updating this post. I am sure there has been a few new realizations and points that are now clearer than they were before in relation to Dodd Frank, and as how it affects USA traders, and the legal ways around it.

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