NFA Confirms New Leverage Requirements for US FCMS

I have accounts with both FXSolutions UK and Dukascopy and they have not said anything regarding this. FXSolutions even transferred my account from their U.S. office to the UK office just before the new rule regarding margin went into effect.

I know there was some legislation that they were trying to pass for force Swiss banks to release information regarding their customers who are U.S. citizens but I haven't heard too much about it lately.

It's about to get even worse. I just got notice that our good 'ol buddies at the NFA are thinking about reducing leverage to a max of 10:1. They should just shut down forex trading in the US all at once instead of dragging it out and slowly torturing everyone.

everyone should check this thread http://www.forexfactory.com/showthread.php?t=215917
which is about the proposed 10:1 leverage from NFA ... the threads encourages to email the ppl doing that to prevent 10:1 from happening

I have read over the proposal a few times, and I'm a bit puzzled by the language. I have just one question...In the following statement,

"and require RFEDs or FCMs engaging in retail forex transactions to collect security deposits in a minimum amount in order to prudentially limit the leverage available to their retail customers on such transactions at 10:1"

what is meant by the term "prudentially" and how are they using the term? and how does that affect any of this?

Im wondering if what they're saying is they want the account holder to manage his account size so that any single trade does not overleverage the account. For example, with 100:1, if your account size is $10,000, and you place a trade with one standard lot, then your margin is $1,000 and your trade is controlling $100,000. In that case, the leverage in "the transaction", is $100,000:$1,000 or 100:1. But it is only $100,000:$10,000 or 10:1 within the account. But if you place a second trade of 1 standard lot, then the leverage within "the transaction" is again 100:1, but within the account is now 20:1.

Perhaps in this way, they would be able to prevent the trader from placing any additional trades and overleveraging his account, where the current limit of 100:1 imposed by NFA does not do that.

I don't know if this would address fraud, but I think it might have some impact on money laundering

This is just a question about the intent of the cftc. I hope this or something like this is their intent. Does anyone know?


Thanks.

the brokers have lawyers and they say it's 10:1 ... so for example if you have USD based account and you trade GBP/USD and it's at 1.6 then your real leverage will be 10/1.6:1 which is 6.25:1 so you'll have to have $100K/6.25 = $16K in your account to control a standard lot of GBP/USD ... $1600 to control 1 minilot and $160 to control 1 microlot of GBP/USD