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Attachments: Could 10:1 be the new leverage in US Forex?
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Could 10:1 be the new leverage in US Forex?

So if Deutchse Bank can still offer 100:1...won't FXCM?

The CFTC has reduced leverage to 50:1 and 20:1, majors and minors, in its new regulation, not a lower as 10:1 first proposed in the first half of 2010 but continuing the tightening from 400:1 to 100:1 in May 2009. SEC/FINRA brokers like Citi, JP Morgan Chase Bank, Deutsche Bank Securities or Interactive Brokers won't be affected for this rule and they will be able to offer the current 100:1 leverage.

http://community.nasdaq.com/news/201...?storyid=34573
"The CFTC’s new leverage rule calling for a minimum 2% deposit on trading major forex currencies off-exchange (50:1) seems on par with what commercial banks like Citi FX Pro offer their retail forex trading customers now (50:1).

So it’s a wise move by the CFTC to reduce leverage by two-times - 100:1 industry standard now to 50:1 under the new rules - rather than going way over board with its original proposal of 10:1 leverage. Unlike most off-exchange retail forex dealers in the U.S., Citi FX is not regulated by the CFTC; it’s subject to bank regulation instead.

It’s important to note that the CFTC grants the NFA powers to set leverage rules higher than these new minimum percentages.

Thankfully, the CFTC responded to the pleas from the off-exchange retail forex trading industry saying the CFTC’s proposed 10:1 leverage rule would put the industry at a huge competitive disadvantage to on-exchange currency futures trading (30:1), commercial bank forex trading (50:1) and offshore off-exchange retail forex trading (200:1).

Regulators and Congress are often sensitive to chasing business abroad with new rules as well as taking business away from small-business and handing it over to big banks.

The new deposit rule for non-major currencies is 5% (20:1) and perhaps this will lead to many off-exchange retail forex traders seeking opportunities to trade on foreign platforms. But will that be possible?

We will study the new rules and see if offshore trading remains feasible for Americans under extraterritorial provisions of the Dodd-Frank Fin Reg bill. We discussed how offshore trading might be a problem for American’s using offshore forex platforms on our recent blog and podcast. Stay tuned for further observations here soon."

Source: http://www.greencompany.com/blog/index.php
Quoting Slack
A big to the CFTC! I cannot believe they read, and digested, all the comments even ones that came in after the expiration date.
Ha!! If I had known that they would read comments sent in even after the period-close date, I would've sent in all the comments that I posted here on FF. Honestly, I didn't think I covered as much details in my comment letters sent in during the comment periods. That was before I joined FF.

You guys really made me thought of more about this issue than I would otherwise.
Make your losses in demo. Earn your profits live.
Quoting pilotui
So if Deutchse Bank can still offer 100:1...won't FXCM?

The CFTC has reduced leverage to 50:1 and 20:1, majors and minors, in its new regulation, not a lower as 10:1 first proposed in the first half of 2010 but continuing the tightening from 400:1 to 100:1 in May 2009. SEC/FINRA brokers like Citi, JP Morgan Chase Bank, Deutsche Bank Securities or Interactive Brokers won't be affected for this rule and they will be able to offer the current 100:1 leverage.

http://community.nasdaq.com/news/201...?storyid=34573...
DBfx, Citi, Bank of America, Wells, Chase, IB, etc are all signed under Banking Laws and Registration. Bnaking laws are completely separate from CFTC laws. Ruling of 50:1 leverage is the doing of NFA/CFTC/CBOT/CME and will not affect banks.

Banks will continue to enjoy 100:1 leverage and reasonable regulations.. A lot of banks offer great fx trading, though it can be expensive.
Quoting pilotui
So if Deutchse Bank can still offer 100:1...won't FXCM?

The CFTC has reduced leverage to 50:1 and 20:1, majors and minors, in its new regulation, not a lower as 10:1 first proposed in the first half of 2010 but continuing the tightening from 400:1 to 100:1 in May 2009. SEC/FINRA brokers like Citi, JP Morgan Chase Bank, Deutsche Bank Securities or Interactive Brokers won't be affected for this rule and they will be able to offer the current 100:1 leverage.

http://community.nasdaq.com/news/201...?storyid=34573...

Well the reason why those "Big Banks" is allowed to offer the higher leverage is simply because they are NOT under CFTC's jurisdiction; they are not RFED and thus is entitled to offer whatever leverage allowed by the jurisdiction that they fall under. I saw this in a post somewhere in this thread.

So another thing maybe for brokers to get around this is try to become a bank and gets signed under the Banking Law. Probably a long shot because I am sure the "Big Boys" on Wall Street kept the entrance requirements to their "exclusive club" pretty high.
Make your losses in demo. Earn your profits live.
Quoting Jhig
DBfx, Citi, Bank of America, Wells, Chase, IB, etc are all signed under Banking Laws and Registration and not the SEC. 50:1 leverage and any ruling the NFA/CFTC/CBOT/CME will not affect banks. 100:1 leverage will continue with those banks. A lot of banks offer great fx trading, though it can be expensive.
Yup!! Their spread is ridiculous. So not sure how somebody who do trade with them using their high leverage would ever make money?
Make your losses in demo. Earn your profits live.
Quoting Longshot
Yep. The GSEs (Fannie/Freddie) and big banks didn't get their leverage touched. Only we "dangerous" little FX traders have to be contained. Crazy, mixed-up world here.
Well of course, I have said it all along, ever since when have they ever liked us little guys to stand up and be able to compete on equal footing with them?

The high leverage already levelled playing field a little bit. If they really have their way, we will be trading Forex via bank deposits.
Make your losses in demo. Earn your profits live.
Quoting Jhig
That being my point. I doubt if the overall market picks up, we'll see regulators pushing leverage back up to 100:1 or even 400:1.

If the overall market is stable, we can expect leverage being the same.
If the overall market is great, we can expect leverage being the same.
If the overall market is terrible, we can expect leverage lowered.

Once it's down, it will always be down. US forex is the only market thats being babysat. So every year, forex traders will be at the mercy of regulators? Something doesn't sound right about that ruling. Ask...
At the end, it's the quality of our trading that counts. They have already "nurfed" (a gamer's term) our leverage, true, took some of our small traders out of the game, but they have still got us. We will work with the current leverage that they handed to us, make money and keep the "overall market great or stable", by that time, and they would have no incensive to lower leverage again. Because if they do, they will be really doing it to their own detriment because we will be bigger by then. If they are scared of us taking our business overseas now, you don't think they won't be scared if we take our business overseas when we are more capitalized as a whole from stacking our profit?

This is how "little guys" has always beaten the "Big Boys" throughout history. The "Big Boys" nurfs the "little guys" just because they can, but the "little guys" will work with what he has and then beat the "Big Boys" in their own game.

The battles are not over. We've got a long and treacherous road ahead but we will make it, one pip at a time. September is coming, we will be trading!! See you in the Market!!
Make your losses in demo. Earn your profits live.
Quoting Forexia
Well of course, I have said it all along, ever since when have they ever liked us little guys to stand up and be able to compete on equal footing with them?

The high leverage already levelled playing field a little bit. If they really have their way, we will be trading Forex via bank deposits.
Please explain your logic as no professional high net worth trader uses high leverage. The only people that do are the ones who like to blow accounts on a regular basis.
Some of you high rollers might be able to answer this question: I have heard a few times on FF that dealers will decrease your margin as you trade larger and larger size - is that true? If so, how large are we talking about - any concrete examples?
"If The Fool persists in his Folly he will become wise." - William Blake
Quoting pip_daddy
Please explain your logic as no professional high net worth trader uses high leverage. The only people that do are the ones who like to blow accounts on a regular basis.
No? LTCM, Barrings Bank, all kind of traders and big firms in 2007-2008. No offense, but have you been in a cave the last few decades?

Small traders blowing accounts takes care of itself. It's not dangerous to the financial markets.
Quoting Longshot
No? LTCM, Barrings Bank, all kind of traders and big firms in 2007-2008. No offense, but have you been in a cave the last few decades?

Small traders blowing accounts takes care of itself. It's not dangerous to the financial markets.
It is my understanding these rules mostly affect retail traders not banks. When I say high net worth professional traders I am talking retail traders.
Quoting Longshot
No? LTCM, Barrings Bank, all kind of traders and big firms in 2007-2008. No offense, but have you been in a cave the last few decades?

Small traders blowing accounts takes care of itself. It's not dangerous to the financial markets.

At the height of LTCM they were leveraged 30:1, when Meriwether set up his new fund (JWM) after LTCM collapsed he limited his leverage to 15:1. Within a year of LTCM collapse Meriwether was upto 250 mill AUM in his new fund... go figure. When he closed his new fund he had close to 2Bn, with a high of 3.5Bn AUM.

StatArb really only works in either high frequency or high leverage.
Quoting Scarlett
Look it up...

Dems are overwhelmingly the recipients of campaign/PAC from the banks. This is an example but there is much more....neo-cons are, by no means, off the hook but the dems stick their noses deeply up the butts of the banks for personal and career enrichment...
http://www.opensecrets.org/pres08/co...&cid=n00009638

GS was his second biggest contributer
What the hell is a public university doing donating to any campaign... damn, that really pisses me off!
Quoting pip_daddy
Please explain your logic as no professional high net worth trader uses high leverage. The only people that do are the ones who like to blow accounts on a regular basis.
Anyway, I went through that debate in other threads before. I am not going to do it again here.

I will be concentrating more on my trading from now on because that's more important.

It's Money that talks. If they see we've got money, they won't dare to touch us. They are not touching the "Big Bank" because they've got Money.
Make your losses in demo. Earn your profits live.
Quoting pipmutt
Granted it's only a small percentage of spot, and micro is practically non-existent apparently, but wouldn't that change if more and more traders made the move across?
There are 3 main participants listed in weighting:

1. Banks
2. Hedge Funds / Institutions
3. Retail Trader

Remove #1; banks don't trade in the futures fx market, and you have hedge funds left as counter party. I see the banks as a giant Whale shark shallowing everything that gets near in mouth. Hedge Funds are more like a Great White; actively seeking prey -- other fish, seals, turtles, old car tires... it doesn't care.

Quoting pipmutt
Is there perhaps some sort of derivative (?) of futures that could be introduced and offered as an alternative?
A derivative of a derivative. Do you work for Goldman?
Attached Image
Quoting Slack

3. Retail Trader
Why so quick to dismiss the retail trader, at the moment he provides liquidity for retail forex MM's, trading what is in effect a derivative (for want of a better word) of the underlying spot market, why couldn't they have a similar set-up but based on futures, or would we just be going round in circles?

Quoting Slack
A derivative of a derivative. Do you work for Goldman?
lol, yeah ok point taken, but it worked for them (for a while anyway!). If they can come up with such complex instruments I'm sure someone can put something simple together.

Sorry, I've forgotten the reason why we started this!
It's 50:1 now.

http://online.wsj.com/article/BT-CO-...31-712935.html

UPDATE: Retail Forex Industry Wins Some In CFTC Leverage Rules
You are in a maze of twisty little passages, all alike.
Quoting Jhig
While everyone is 'patting themselves on the back' for a job well done, the fact of the matter is we'll be here next year in the same situation. For the past 3 years, forex market has had to defend itself against unjust regulation. Well I don't see this ending anytime soon. Every year seems we give back a little more than before. (...) Last year was 100:1. this year its 50:1. What will next year bring?
Yes, I have skimmed the 170 page PDF and it does say:

http://i13.photobucket.com/albums/a2...effbb/nFa1.jpg
http://i13.photobucket.com/albums/a2...effbb/nFa2.jpg

....I guess we had better keep our writing utensils sharp...it could even be less than a year

Jeff
Quoting stljeffbb

...I guess we had better keep our writing utensils sharp...it could even be less than a year
Yeah, let's stay sharp by pissin away as much time as possible writing in this thread.
"If The Fool persists in his Folly he will become wise." - William Blake
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