New Leverage rule for FX COMING?

Will this limit leverage rule of the CFTC also include oanda?

Here's a statement from OANDA.
http://www2.oanda.com/cgi-bin/msgboa...;f=16;t=012016

Here's a statement from PFGBEST regarding the CFTC's proposal

http://www.businesswire.com/portal/s...15&newsLang=en

I noticed several people have written letters. I am taking a slightly different approach and that is writing my Senators in Florida. These restrictions are killing a legitimate business and when Congress passed the law I do not think that was their intention. So here is my letter and you can write your senators accordingly:

Here is a letter I sent to my Senators from Florida. You may want to send letters to your Senators. Time to get involved guys, but probably too late.

Senator Bill Nelson
Washington, D.C.
United States Senate
716 Senate Hart Office Building
Washington, DC 20510

Senator George LeMieux
United States Senate
356 Russell Senate Office Building
Washington, DC 20510

Dear Senator,

I have been a Forex trader for 3 years now. Even though my winnings have been modest I have enjoyed being a trader. However, due to new regulations Forex dealers and small time traders like myself are being forced out of the market. Please read the following and understand I am tired of govt. regulators joining forces with big time companies and wiping out the little guy. Please read the following story and let me know if there is anything that can be done. Otherwise I have to do my trading overseas in England or Australia where they dont punish the little guy. Why export more business and jobs when we need them here in the USA. I consider these men dangerous to this industry and they only want a small group of traders and companies to enjoy trading.


Goodbye US Forex industry

* Posted by Michael Greenberg in Brokers, Traders

So what do you when someone is constantly bullying and harassing you at your neighbourhood? Do you call the police, try to take a stand yourself or just run? Well, sometimes when nothing else helps and the situation is escalating, and this has been going on for ages it’s better just to find a new home. You tried your best and it’s not surrendering rather it’s an understanding that if someone powerful doesn’t want you there you can find better places where you can have your old quality of life back.

And my US Forex trading friends, the CFTC doesn’t want you there.

It doesn’t want you trading Forex with the US brokers who will gradually shift their operations to offshore locations where the regulator doesn’t have a conflict of interest or a powerful futures lobby forcing it to make all the wrong decisions.

Latest from CFTC is that it is “seeking public comment” on proposed leverage reduction to 10-to-1. We all know what this means: the rule is all but finalized and they just let you feel as if you are important to their decision making process. Whether you are a large broker or a small time retail trader, this will probably make no difference to these guys with a very clear agenda.

Now, I’m sure i’ll surprise you here but I’m actually a fan of a lower leverage. HOWEVER, I don’t think it should be forced on ALL forex traders. High leverage is a number one reason that newbie forex traders lose all their money. However, many professional traders as well as money managers, hedge funds, etc use high leverage in order to achieve better returns or just because their strategies require that. Some also use high leverage in order to cheaply hedge their exposure in other forex transactions.


(These are my comments not the authors. I disagree with the author on this point. High leverage is the best way to learn this industry. WHY? Because I risk less money to learn. For example, If I use 500 dollars at 400:1 leverage. My maximum loss would be 500 dollars. I will need to risk 2000 dollars to trade the same way at 100:1. My maximum loss would be 2000 dollars. With the new laws I will need to risk 20,000 at 10:1. When you are learning to be a trader which is better for you. Risk 500 dollars or 20K. This is obvious. Leverage is not my enemy it is my friend and the friend of every new trader. It allows us to lose small sums of money in the hopes of one day learning to trade larger sums. I would never have wanted to learn to trade FOREX if my minimum investment was 20K dollars. However, learning at 500 dollars was worth the price of training. The men who are writing the regulations are not protecting the small time investor they are killing them so that only a few big boys can trade. This is not an American concept. I want the freedom to trade, to learn, to lose or gain money in a free and open market. These regulators are not protecting the small investor they are wiping them out so only a privileged few can trade. Please protect my freedom to trade as I wish. I wish to trade with USA brokers but if govt. regulators wipe them out then I will be forced to use a foreign broker.)

Limiting leverage to novice traders is a great thing. Limiting leverage to ALL traders is horrible. I would recommend the CFTC to differentiate in their requirements and instead of imposing rules on all traders as if they were all identical set some kind of proficiency/experience test which will determine whether the trader can you use the leverage of his choice or be subject to a low leverage. Such test can be that trader’s testament to years of experience in trading or something of this nature.

I’ll send them this note, but I doubt it’ll make any difference. If anyone else would like to comment on that they are welcomed to send a note to: [email protected] with “Regulation of Retail Forex” as the subject line. People, be nice or they will just throw your emails to garbage and ignore all other more balanced emails.

CFTC also oversees the vast Futures industry where many high leveraged products are present. Some are as leveraged as the spot forex right now. So why are these products aren’t limited to 10-to-1 leverage ratio? Why is it only the spot forex that is dealt with regulatory blows over and over again?

CFTC should have long time ago required all brokers to switch to ECN trading model and reduce leverage to novice traders. That’s it. That would have been so much better to the whole US forex industry, but I guess CFTC has it’s own considerations here…

Unfortunately as far as I know other regulators like FSA (UK) and FINMA (Switzerland) may take a similar approach as they look to work closely with the CFTC/NFA. Let’s hope they don’t but time will tell.

So my US forex friends, I suggest you don’t wait 60 days till the comment period is over or till the requirements are imposed – and they will be imposed as-is, find yourself a nice cosy offshore home and forget about all the problems you had at your old place.

Sincerely,

Perfect example and an example the rich that trade at 10:1 don't understand because they don't have to. However, this is an additional reason to support the cause. [not the only reason] I am glad to see people are really beginning to think openly about this.

No matter the amount of money you trade with or the leverage you use. The amount of money in your trading account is risk capital. Here in the U.S. that risk capital is now protected better than previously before the NFA / CFTC got involved. You can't lose any more than what you deposit in the FX account and you worry less about a fraudster who could just abscond with your money.

If we are forced to go overseas the risk of losing your funds to an unscrupulous broker running off with the funds goes up... but at least we would be afforded high leverage so we don't have to give them so much money to test them out and see for sure they are who they say they are.

Glad to see everyone is getting more vocal on this and presenting different ideas... keep it up y'all! It's not over till it's over.

The rules proposed will force all U.S. spot FOREX dealers to be registered [from what I have read]

It will close all loopholes, the brokers will need 20million plus in reserve capital and need to be registered. Mom+Pop fx dealers / bucket shops forced out.

All brokers that reside in U.S. waters will be forced to comply.

If you would like to read the full proposal it's attached. Be prepared for a long read.

Just got my reply from CFTC.

Your submission has been received by the Commodity Futures Trading Commission. Please be
advised that this acknowledgement does not constitute either Commission approval of the
subject proposal or a determination that the proposal is consistent with the Act and the
regulations thereunder.

I did not get anything ... did you include your full address including a phone number ?

I only included city name and state ...

No, i just sent it there. But it was yesterday...

Thankfully with this new fangles thing called the internet it's quite easy I'm fairly sure to open a account out side of the USA


How long before America classifies Forex trading as Gambling and just bans it.


How does america enforce there outside of the US no gambling rules ?? Do they just block all None US Gambling sites and then block all none US people from accessing there internal sites ??


Makes me happy to be in the UK, it takes 10years for USA Rules to trickle down to us, but they always get here

Some interesting tidbits in there that haven't come up in discussion yet..

"In addition to the regulations explicitly mandated by the CRA – including new registration requirements and enhanced financial requirements – require counterparties to disclose, with the Risk Disclosure Statement, the percentage of profitable nondiscretionary forex customer accounts"

Pretty clever CFTC, I wonder what those numbers will reveal..

The GAIN IPO prospectus provided several interesting details along those lines. Speaking of which, I wonder how this ruling will affect their IPO..

US banks, by law, are forbidden from processing transactions dealing with online gambling. US citizens can freely access the sites and setup accounts, funding is the issue. I haven't kept up on the latest loopholes, but after the law change, funding for poker sites was typically handled by the paypal clones (Firepay, eCheque, etc), or by direct check.

This was practically a given. No point in having net capital requirements if a broker can simply keep operating in the US on an unregistered basis with zero capital requirement.

At 10:1 Leverage I am forced to increase my account from $10,000 to $100,000 to trade the way I've been trading.
So what happens if the broker goes bankrupt as Refco did in 2005. The account holders received only 20% of their accounts after the bankruptcy. My account was less than $10,000 then so I received 40%
after the bankruptcy and I had to wait a year. Traders with larger than $10,000 account received 20%.
Where is the trader protection?
I try to keep as little as possible at a broker in case this happens again and I withdraw
the profits every month.
Instead of reducing leverage the cftc should try to be like the FSA in the UK where forex accounts are segregated.

MP

Stopped it at the source, making it hard enough for only the Pro's to bother to do while making the drunk amatuers go out and commit crimes instead for there kicks!!

Therein lies the solution - the UK. Segregation of funds & 100:1 (or is it 200:1?). The CFTC thinks their kickback pals at the CME will benefit from this, but they're sadly mistaken, it's the UK forex industry that's licking its chops...

Yep I get 200:1 currently just keeps my min account value nice and low so no money tied up for no reason.


Yep FXCM UK's loving the huge increase in traders from America, a small sattelite company is likely bigger than the US's once main branche

I wonder if I should move my Oanda US to Oanda Singapore.

If this is passed, will effect Oanda business outside of the US?

Oanda should open in Canada soon ...

http://www.iiroc.ca/English/About/Ou...eRegulate.aspx