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

  • #361
  • Jan 26, 2010 6:04pm Jan 26, 2010 6:04pm
Quoting The Fool
OTC spot forex is unregulated in the USA - you can start a spot forex brokerage without any affiliation to the NFA & subject to no regulation by CFTC - witness The Collective FX.

I have read that current proposed lawmaking will bring ALL OTC trading under regulatory jurisdiction of the CFTC (or some other governmental agency?)...

Somebody correct me if I'm wrong or fill in the blanks....
That is what think too. Reading about something that may happen does not a law make. If and when it happens, it may not be regulated by the CFTC, they have already admitted that they have no expertise with spot fx. Go figure.
  • #362
  • Jan 26, 2010 6:15pm Jan 26, 2010 6:15pm
Quoting stevejames
Juristiction was granted in 2008 in the 2008 Farm bill

Read .HR 6124 EH where it states that a person of any Retail Foreign Exchange or Futures Co. falls under the jurisdiction of the CFTC.
I dont believe so, do you have a link to that?

"While the Obama Administration’s Aug. 11 blueprint for regulatory reform seeks to cover nearly all over-the-counter derivatives cleared, it does not include forex. CFTC chairman Gary Gensler and the House Agriculture Committee have pushed to include forex."
http://www.futuresmag.com/Exclusives...-progress.aspx
  • #363
  • Jan 26, 2010 6:17pm Jan 26, 2010 6:17pm
Quoting Turveyd
Fool, if your trading at 0.2% per pip currently, you'll have to drop to .0625% per pip at best so you'll need 4 times realistically the capital to trade at your rate or accept 1/4 the profits ofcourse.

FXCM UK awaits you sir!!
I will be alright trading futures. But I am working on plans b, c, d ... etc

My brother is a Japanese citizen & he has said he will open an account with a japanese fx broker for me if I like.

I have been slowly working on setting up a Sociedad Anonima (SA - that's what they call 'corporations' in the mundo latino) - probably in Panama or Costa Rica. It will be easy to work from the SA with another offshore broker. A lot more work and capital & it would be pretty possible to start up a spot brokerage there - similar to how The Collective FX has done it. Something I am researching now, obviously interested in seeing how these new regs go down in the USA and if/how they may bleed over into the foreign spot fx industry, as well. It doesn't take a genius to figure out that the easiest money to be made in this game is on the dealer's side of the table....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #364
  • Jan 26, 2010 6:19pm Jan 26, 2010 6:19pm
Quoting Maxsmart
Not neccessarily. Lets Assume a trader has an 8k account and he uses 100:1 leverage. He doesn't neccessarily need to buy a 100k contract he can buy a 50k contract for a margine of only about $750 on the eur/usd. It just frees up capital and lets the trader decide what he was willing to risk. The trader could increase their stop loss from 30 pips to 60 pips using this change if they are worried about short term volatility during a strategy they may be implementing. Or the trader may choose to purchase a 30k contract. Its up to the trader
Forget it; it was just a silly example. I assumed fixed SL and you did not.

Quoting wwwin
Exactly, why are some people assuming that everyone is dumb and will leverage 100 to 1 if allowed
I think you may be going off of a wrong assumption here and piling me onto the list of people thinking that everyone is leveraged 100:1 all the time, where I specifically mentioned that most people here don't go near 100:1, and it was just an example.
Hindsight is 20/20
  • #365
  • Jan 26, 2010 6:20pm Jan 26, 2010 6:20pm
Quoting wwwin
That is what think too. Reading about something that may happen does not a law make. If and when it happens, it may not be regulated by the CFTC, they have already admitted that they have no expertise with spot fx. Go figure.
It really is surprising that people that supposedly make money trading don't even know the regulatory structure they work in.

This is the current regulatory structure:

In the US, retail forex brokers are regulated by both the Commodity Futures Trading Commission (CFTC) and the National Futures Authorty (NFA). Firms are therefore required to register as a Futures Commission Merchant (FCM) with the CFTC and to register as a member of the NFA as a Forex Dealer Member (FDM). The CFTC is given power pursuant to the Commodity Exchange Act (CEA) to require registration of firms participating in the sale of forex futures to retail customers, and to shut down any unregulated entity which is engaging in forex activities with retail customers.
  • #366
  • Jan 26, 2010 6:22pm Jan 26, 2010 6:22pm
Quoting wwwin
I dont believe so, do you have a link to that?

"While the Obama Administration’s Aug. 11 blueprint for regulatory reform seeks to cover nearly all over-the-counter derivatives cleared, it does not include forex. CFTC chairman Gary Gensler and the House Agriculture Committee have pushed to include forex."
http://www.futuresmag.com/Exclusives...-progress.aspx


Right. All OTC derivatives? Even at $2-3 trillion a day or whatever, Forex is a drop in the bucket compared to credit default swaps & god-knows-what other derivatives the banksters have dreamt up to trade. So I doubt they will get far with the latter - and will aim for the low-hanging fruit - the spot fx industry. So here we are....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #367
  • Edited 6:53pm Jan 26, 2010 6:23pm | Edited 6:53pm
Quoting endroute
It really is surprising that people that supposedly make money trading don't even know the regulatory structure they work in.

This is the current regulatory structure:

In the US, retail forex brokers are regulated by both the Commodity Futures Trading Commission (CFTC) and the National Futures Authorty (NFA). Firms are therefore required to register as a Futures Commission Merchant (FCM) with the CFTC and to register as a member of the NFA as a Forex Dealer Member (FDM). The CFTC is given power pursuant to the Commodity Exchange Act (CEA) to...
That is not correct...the bill says that if they are registered the CFTC has jurisdiction, it does not say that you are required to register
Here is the bill http://www.usda.gov/documents/Bill_6124.pdf

You are confusing fx futures with spot forex "It really is surprising that people that supposedly make money trading don't even know the regulatory structure they work in"
  • #368
  • Jan 26, 2010 6:23pm Jan 26, 2010 6:23pm
Quoting endroute
It really is surprising that people that supposedly make money trading don't even know the regulatory structure they work in.

This is the current regulatory structure:

In the US, retail forex brokers are regulated by both the Commodity Futures Trading Commission (CFTC) and the National Futures Authorty (NFA). Firms are therefore required to register as a Futures Commission Merchant (FCM) with the CFTC and to register as a member of the NFA as a Forex Dealer Member (FDM). The CFTC is given power pursuant to the Commodity Exchange Act (CEA) to...
forex futures are different than spot forex....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #369
  • Jan 26, 2010 6:24pm Jan 26, 2010 6:24pm
Quoting The Fool
I will be alright trading futures. But I am working on plans b, c, d ... etc

My brother is a Japanese citizen & he has said he will open an account with a japanese fx broker for me if I like.

I have been slowly working on setting up a Sociedad Anonima (SA - that's what they call 'corporations' in the mundo latino) - probably in Panama or Costa Rica. It will be easy to work from the SA with another offshore broker. A lot more work and capital & it would be pretty possible to start up a spot brokerage there - similar to how The Collective FX has...

Always good to have a plan B C D ..... Z I find to

And the only way to win at gambling is to be the bookie so I do like that plan, Dealers wouldn't be Dealers if not for making huge money.

Just force out the odd few which become profitable and take there losses to your bank which lets face it will be 99% of your clients.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #370
  • Jan 26, 2010 6:30pm Jan 26, 2010 6:30pm
Quoting The Fool
forex futures are different than spot forex....
You are correct ""It really is surprising that people that supposedly make money trading don't even know the regulatory structure they work in""
and don't know the difference b/t spot and futures. Go figure
  • #371
  • Jan 26, 2010 6:57pm Jan 26, 2010 6:57pm
Quoting wwwin
You are correct ""It really is surprising that people that supposedly make money trading don't even know the regulatory structure they work in""
and don't know the difference b/t spot and futures. Go figure
Clearly you let the word futures confuse your little mind. The commodities futures modernization act of 2000 required all forex brokers to register with the ctfc as FCMs even if they were not offering exchange traded futures.

http://docs.google.com/viewer?url=ht.../ogchr5660.pdf
  • #372
  • Jan 26, 2010 7:03pm Jan 26, 2010 7:03pm
Quoting endroute
Clearly you let the word futures confuse your little mind. The commodities futures modernization act of 2000 required all forex brokers to register with the ctfc as FCMs even if they were not offering exchange traded futures.

http://docs.google.com/viewer?url=ht.../ogchr5660.pdf
You are wrong again...this coming straight from the NFA, see page 8 (Page 8 of the PDF file, which is Page 12 of the document) at the bottom...only applies to forex futures and options...and they can only force to register companies dealing in futures or options
http://www.nfa.futures.org/NFA-inves...rary/forex.pdf
"but the NFA cannot adopt rules to regulate these transactions" Can you read english or should I use google translator?
  • #373
  • Jan 26, 2010 7:09pm Jan 26, 2010 7:09pm
Quoting endroute
Clearly you let the word futures confuse your little mind. The commodities futures modernization act of 2000 required all forex brokers to register with the ctfc as FCMs even if they were not offering exchange traded futures.

http://docs.google.com/viewer?url=ht.../ogchr5660.pdf

I'm not trying to get in the middle of anybody's pissing match here, because I really don't know, and I'm not that interested in "being right". But there is no trade in futures in the U.S. other than exchange traded futures. I am just wondering why there are evidently several spot forex brokers operating in the U.S. without NFA registration - Collective FX, as I have mentioned. If you look at the list on Forex Peace Army I suspect you would find others...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #374
  • Jan 26, 2010 7:09pm Jan 26, 2010 7:09pm
Quoting wwwin
You are wrong again...this coming straight from the NFA, see page 8 at the bottom...only applies to forex futures and options...and they can only force to register companies dealing in futures or options
http://www.nfa.futures.org/NFA-inves...rary/forex.pdf
We are not talking about the NFA we are talking about the CFTC and who has ultimate regulatory responsibility but anyway. The bottom of page 8 references leverage, I think you are referring to the bottom of page 12 where it clearly states that ctfc has regulatory authority which proves me RIGHT, or just read the commodities futures modernization act yourself.
  • #375
  • Jan 26, 2010 7:12pm Jan 26, 2010 7:12pm
Quoting endroute
We are not talking about the NFA we are talking about the CFTC and who has ultimate regulatory responsibility but anyway. The bottom of page 8 references leverage, I think you are referring to the bottom of page 12 where it clearly states that ctfc has regulatory authority which proves me RIGHT.
Nope, you need to go to page 8 of the PDF, which is labeled page 12 of the documetn,,,,bottom left of page....do I need to make a pic and post for you?
"but the CFTC cannot adpot rules to regulate this transactions"
  • #376
  • Jan 26, 2010 7:16pm Jan 26, 2010 7:16pm
Quoting The Fool
I'm not trying to get in the middle of anybody's pissing match here, because I really don't know, and I'm not that interested in "being right". But there is no trade in futures in the U.S. other than exchange traded futures. I am just wondering why there are evidently several spot forex brokers operating in the U.S. without NFA registration - Collective FX, as I have mentioned. If you look at the list on Forex Peace Army I suspect you would find others...
taken word for word from the collective fx FAQ sections on their website

http://www.thecollectivefx.com/membe...adminpages/FAQ

Are you regulated, and if so by whom and where?
We've actually gone to great legal lengths to make sure everything is forthright. The US regulations mandate that any firm that is counterparty to client trades be registered.

This was done to protect clients, since when the broker is counterparty to the clients trades, if the client wins, the broker has to pay. They want to make sure the broker can pay the client.
  • #377
  • Jan 26, 2010 7:18pm Jan 26, 2010 7:18pm
Here you go, read below if you can read...straight from the NFA, page 8 of PDF file, labeled page 12, bottom left of page
http://www.nfa.futures.org/NFA-inves...rary/forex.pdf

PS. next time you try to put people down with your smart remark...be sure before you do that you know what you are talking about.
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  • #378
  • Jan 26, 2010 7:25pm Jan 26, 2010 7:25pm
Quoting endroute
taken word for word from the collective fx FAQ sections on their website

http://www.thecollectivefx.com/membe...adminpages/FAQ

Are you regulated, and if so by whom and where?
We've actually gone to great legal lengths to make sure everything is forthright. The US regulations mandate that any firm that is counterparty to client trades be registered.

This was done to protect clients, since when the broker is counterparty to the clients trades, if the client wins, the broker has to pay. They want to make sure the broker...
Right, what they say there is that they are not regulated BECAUSE they are not counterparty to any client's trades. I have added the red text to help you see what is written plainly, rather than seeing what you want to see. They are not licensed, they are not regulated, as far as I know, yet they still operate as a spot broker in the USA.

"Are you regulated, and if so by whom and where?
We've actually gone to great legal lengths to make sure everything is forthright. The US regulations mandate that any firm that is counterparty to client trades be registered.

This was done to protect clients, since when the broker is counterparty to the clients trades, if the client wins, the broker has to pay. They want to make sure the broker can pay the client.

We ourselves are traders, and had no intention of being involved with our clients trades. We just want to trade ourselves. So our Brokerage has been designed with multiple SEC aware law firms in the US, to make sure it is completely legal.

We are never, ever, ever, not even for an instant or a moment, never ever a counterparty to anyone's trades. Don't want to be, don't need to be, and make sure we never are. All trades are executed AT the counterparty, in the absolute purest sense of the word. We don't profit from getting in the middle of trader's trades.

The bottom line is that we are truly more a COLLECTIVE than a BROKERAGE. After a great deal of study of the laws involved, we weren't actually going to say it out loud, but the truth is that registering as a FCM is the legal license to profit from a trader's losses.

WE DON'T WANT THAT LICENSE. So we abstain. No counterparty for us. And in fact, now we are legally barred from taking the other side of our members' trades.

We feel we are truly unique, and there isn't anyone else like us. The reason is that THEY have to be commercial. They have to make their money by widening the spread, trading against you and hoping you lose, running stops, etc, etc, etc."
"If The Fool persists in his Folly he will become wise." - William Blake
  • #379
  • Jan 26, 2010 7:25pm Jan 26, 2010 7:25pm
Quoting wwwin
Here you go, read below if you can read...
PS. next time you try to put people down with your smart remark...be sure before you do that you know what you are talking about.
See here we go, you are picking out what you want to pick out to make yourself look like you have a clue. Forex brokers still have to be registered as FCMs per the commodities futures modernization act. Your comments earlier were that they did not require to register as fcms because you got the word futures all goofed up and thought it really was meant for those guys that trade soybeans contracts.
  • #380
  • Edited 7:39pm Jan 26, 2010 7:28pm | Edited 7:39pm
Quoting endroute
See here we go, you are picking out what you want to pick out to make yourself look like you have a clue. Forex brokers still have to be registered as FCMs per the commodities futures modernization act. Your comments earlier were that they did not require to register as fcms because you got the word futures all goofed up and thought it really was meant for those guys that trade soybeans contracts.
You are wrong again...I am not picking out anything, I originally posted the whole document, but you could not find page 8 of the pdf file, you were reading margin on what is labeled page 8...I had to post it because you could not find it that's all. It's in plain english.

"Under the CEA. the CFTC has the authority to shut down any unregulated entity that acts as a counterparty to forex futures or options transactions with retail customers. The CFTC also has the authority to take action against registered FCM, and their affiliates for violating the anti-fraud and anti-manipulation pro­visions of the CEA in connection with OTC forex transactions involving retail customers, but the CFTC cannot adopt rules to regulate these transactions."
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