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New Leverage rule for FX COMING?

  • #161
  • Jan 24, 2010 1:33am Jan 24, 2010 1:33am
Quoting hamlet
the cftc site says we have until march 22 to make a statement about the 10 to 1 leverage rule. then they will consider and decide. so i think the decision will be made in late march or early april. thoughts?

Yeah, seems like they've already made the decision and gathering public statements is just going through the motions.

When have they proposed something lately that hasnt been made a new rule?
  • #162
  • Jan 24, 2010 6:24am Jan 24, 2010 6:24am
Quoting hayseed
//----

hope that the 10:1 fails, but if it does not i'll just cowboyup and send in the additional required deposit.......

the sad part is that wealth is by no means a true measure of skill..... many small but skilled traders might not have the extra funds.... they will suffer.....h

This is what they are hoping you do and I think most traders will revolt because:

A: sending in more funds increases their risk or exposure.
B: the return on said funds is too low to be worthwhile.
C: they lack the additional funds required.
D: they can find a suitable off-shore broker that allows higher leverage and not required to obey No hedge and FIFO rules.

OR

E: ALL OF THE ABOVE!
  • #163
  • Jan 24, 2010 6:31am Jan 24, 2010 6:31am
I wanna ask: when will be the new leverage definitely decided? Because I want to open an account at US broker and donīt know if I should wait or open it immediately.
I am worried that if the new rule will be valid that the US brokers could go bankrupt and we will not get our money back. What do you think?
  • #164
  • Jan 25, 2010 4:57am Jan 25, 2010 4:57am
Quoting petern
I wanna ask: when will be the new leverage definitely decided? Because I want to open an account at US broker and donīt know if I should wait or open it immediately.
I am worried that if the new rule will be valid that the US brokers could go bankrupt and we will not get our money back. What do you think?

They are taking comments for 60 days from January 13, 2010 on the current proposals. It could be easily another 60 days from that point or longer for firms to get under compliance.

However, if the FXDC [FX Dealer Coalition] is truly interested in the U.S. Market they could bring a class action lawsuit which could potentially tie it up in the courts for years. It just depends on what the FXDC decides to do and how serious they are about the U.S. FX market. [Cut and run or stay and fight.]

But don't use this as a reason to not draft a letter in your own words to the CFTC. Any litigation going forward by the FXDC or any other entity for that matter will likely use any and all comments in their arguments against the proposal.

The more comments against it the better, even if you are a foreign trader and even if you are using a lower leverage amount.

Unlikely any of the firms in the US will go bankrupt due to the hefty capital requirements imposed by the NFA. To my knowledge all of them have plans to open brokerages or have already done so off-shore outside U.S. jurisdiction.
  • #165
  • Jan 27, 2010 7:21am Jan 27, 2010 7:21am
I have sent an email to my senator Bill Nelson here in Florida as did Nanningbob. here is link: http://billnelson.senate.gov/contact/email.cfm

I have been a forex trader for 4 years now and I am making a living from trading. However, due to new regulations Forex dealers and small time traders like myself are being forced out of the market. The CFTC(commodity futures trading commission) which also regulates forex. is proposing to reduce leverage from 100:1 to 10:1. At 10:1 I would have to increase my account by 10 times to trade the same way I am trading now.
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 and protected from broker bankruptcy.
If this proposal is passed, 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.
  • #166
  • Jan 27, 2010 7:49am Jan 27, 2010 7:49am
Quote
Instead of reducing leverage the cftc should try to be like the FSA in the UK where forex accounts are segregated and protected from broker bankruptcy.
Don't assume that the CFTC's goal here is to protect traders, it isn't. That's just the excuse that's bandied about.
  • #167
  • Jan 28, 2010 2:44am Jan 28, 2010 2:44am
Quoting Rabid
Don't assume that the CFTC's goal here is to protect traders, it isn't. That's just the excuse that's bandied about.
EXACTLY!!!
  • #168
  • Jan 28, 2010 7:12am Jan 28, 2010 7:12am
Quoting Rabid
Don't assume that the CFTC's goal here is to protect traders, it isn't. That's just the excuse that's bandied about.
Agreed. But the proposal has to be challenged on its stated purpose.
  • #169
  • Jan 28, 2010 8:21am Jan 28, 2010 8:21am
Quoting pipnu2me
Agreed. But the proposal has to be challenged on its stated purpose.
Unfortunately yes, or we risk looking like lunatics.
  • #170
  • Jan 28, 2010 9:07am Jan 28, 2010 9:07am
Quoting endroute
The rule being put forth is so hypercritical its not even funny, it is really designed to put otc brokers out of business so that the commodities brokers can step in and take the business. The whole leverage issue is a complete red herring as you can now trade mini forex futures contracts with the commodities brokers with like 50:1 leverage.


http://www.cmegroup.com/trading/fx/f...-e-micros.html
Agreed, seems like the CFTC is trying to inact this rule in order to break the retail forex industry in America so that the Commodities Brokers can step in and take over retail forex trading.

Thank goodness for those magnanimous Commodities Brokers from saving us from the mean CFTC and their 10:1 leverage, arent they great? (At least 50:1 is better than 10:1, right......)

Now this is good for the Commodities Brokers and this is good for the Gov't because this now turns retail forex from an unregulated industry to a regualted industry. This means new revenue generated from taxes.

Basically its just a good old money grab, dont know why I'm surprised, its been going on for the past two years with impunity.
  • #171
  • Jan 28, 2010 10:04am Jan 28, 2010 10:04am
I hate to put a downer on this thread but I'm going to anyway...sorry There are a few things that we need to consider about the new leverage laws. But first I want to say that I was one of the first to put my letter in to the CFTC in objection. Now here is why I don't think any of our piddley whining will make a bit of difference:

  1. The global ecconomic crisis was caused precisely because large companies were OVER leveraging their investments. In some cases as much as 5,00:1
  2. The "public" sees ALL investors (yes trader's like us) as gamblers and they blame the horrible ecconomic colapse on ANYone who takes risk instead of finding a "sensible" job...again us.
  3. The government regulating bodies have shown repeatedly they are inept at "keeping the little guy safe". (Enter Madoff)
  4. The US President, and Congress are reflecting a huge amount of populist outrage over the ecconomic crash.
  5. For every one of us who want to keep 100:1 leverage there are 95 others who have blown their accounts out because of it. And you better believe they are ALSO writing in with their comments to the CFTC.
  6. As much as we hate to admit it...regulatory bodies are extremely political and the political environment is NOT favorable to keeping the leverage. It is more in favor of REQUIRING that you have more at stake when you take a trade.

I think if you want to continue trading in the current environment that it would be wise to start looking for reliable off shore brokers. Perhaps we should concentrate our energy in finding a reputable off shore broker instead of banging our head against an impermiable barrier.

Either that or add more to your account and get used to trading with 10:1 because I think its here to stay...and we may even see 2:1 like the stock market.

  • #172
  • Jan 28, 2010 10:25am Jan 28, 2010 10:25am
Quoting gspajon
The global ecconomic crisis was caused precisely because large companies were OVER
leveraging their investments. In some cases as much as 5,00:1
No, that's a myth. The "crisis" was caused by people lending money to those that couldn't pay it back,
assuming property values could never decline, and building an entire empire of securities around these
very bad assumptions. To add insult to injury you had maybe a dozen participants in a very illiquid
market trading these without any effective counter-parties. The leverage was just along for the ride.
To blame this on leverage is nothing but populist rhetoric.

Quoting gspajon
2. The "public" sees ALL investors (yes trader's like us) as gamblers and they blame
the horrible ecconomic colapse on ANYone who takes risk instead of finding a "sensible" job...again us.
Not everyone in the public does, only those unwilling to see the value of entrepreneurship. Not that
it matters, all the "sensible jobs" are created by people willing to take the risk. The day we stop
valuing risk is the day or economy is done for. Might as well pack up our bags and play golf, you
can kiss upward mobility goodbye.

Quoting gspajon
The government regulating bodies have shown repeatedly they are inept at "keeping the
little guy safe". (Enter Madoff)
Which is just more reason not to regulate things you can't monitor.

Quoting gspajon
The US President, and Congress are reflecting a huge amount of populist outrage over
the ecconomic crash.
That's not a reason to do it, tho.

Quoting gspajon
5. For every one of us who want to keep 100:1 leverage there are 95 others who have blown
their accounts out because of it. And you better believe they are ALSO writing in with their comments to the CFTC.
If they blew their account then they probably aren't writing in to the CFTC.

Quoting gspajon
6. As much as we hate to admit it...regulatory bodies are extremely political and the
political environment is NOT favorable to keeping the leverage. It is more in favor of REQUIRING that you have
more at stake when you take a trade.
Well, they're popular to some. But that's precisely what's wrong with the political climate today,
it penalizes the very people responsible for job growth. It's dumb, and I can't abide the growing stupid.

Quoting gspajon
Either that or add more to your account and get used to trading with 10:1 because I think its here to
stay...and we may even see 2:1 like the stock market.
You do realize this is just an RFC period, right? It hasn't actually been made a rule.

Quoting gspajon
I think if you want to continue trading in the current environment that it would be wise to start
looking for reliable off shore brokers.
I think most people here already have a plan for that. But that's EXACTLY why we shouldn't do this, it will
accomplish nothing but killing a golden goose on the altar of populist stupidity.
  • #173
  • Jan 29, 2010 1:40am Jan 29, 2010 1:40am
Quoting gspajon
[*]For every one of us who want to keep 100:1 leverage there are 95 others who have blown their accounts out because of it. And you better believe they are ALSO writing in with their comments to the CFTC.
I agree with Rabid's responses. One more thing regarding the above comment. 100:1 leverage is NOT the reason people have blown their accounts. Lack of and/or inadequate risk management is the reason. You could give someone 5,000:1 max leverage and it would not cause an account to blow.

Besides, these people who blow their accounts are not victims to anyone but their own way of thinking. Everyone is free to succeed and fail by their own doing. Some people are built to fail. Tools used by a failure are not the reasons for their failing.

This reminds me of when I went through a training program that had an 80% failure rate. That 80% always had every excuse other then they could not hack it. It was not something they could handle. And, there's nothing wrong with the fact that they failed however, there is a whole lot of wrong going on when failure restricts the progress of others.

This is mental weakness being imposed, and promoted within our society. Don't take my word for it though... Just keep watching...

The "No loser" mentality is such a weak and completely idiotic philosophy. If no one is losing , then no one is also winning... except of course the ones regulating. That makes everyone a loser in the big picture.

“The person who risks nothing, does nothing, has nothing, is nothing, and becomes nothing."
~ Leo F. Buscaglia
  • #174
  • Jan 29, 2010 6:04am Jan 29, 2010 6:04am
Send some letters to the president. This farm bill came about before Obama took office.

If he is serious about finding ways to create jobs he should be serious about keeping the high paying jobs we currently do have.

That's precisely what your letter should be about is keeping jobs. Tell him if the 10:1 rule goes into effect all these jobs will go overseas.

You can contact the white house from here: http://www.whitehouse.gov/contact

Include within your comments: CFTC proposal identified by RIN 3038-AC61 CFTC Leverage change from 100:1 to 10:1 in spot FOREX transactions.

This should be in addition to sending your comments to the CFTC and your congressmen.
  • #175
  • Jan 30, 2010 1:44am Jan 30, 2010 1:44am
Quoting pip_seeker
Send some letters to the president. This farm bill came about before Obama took office.

If he is serious about finding ways to create jobs he should be serious about keeping the high paying jobs we currently do have.

That's precisely what your letter should be about is keeping jobs. Tell him if the 10:1 rule goes into effect all these jobs will go overseas.

You can contact the white house from here: http://www.whitehouse.gov/contact

[color=black][font=Verdana]Include within your comments: CFTC proposal identified by RIN...
He is NOT serious about finding ways to create jobs. That is contrary to their agenda. A weaker economy = an easily influenced populous. THAT is what they want.

Anyways, Obama is not the one calling the shots. He's a puppet show put on to entertain the masses of ignoramuses.

Adapt.... and overcome! Only YOU can prevent forest fires! ... ONLY YOU...
  • #176
  • Jan 30, 2010 5:40am Jan 30, 2010 5:40am
Quoting madmatz
He is NOT serious about finding ways to create jobs. That is contrary to their agenda. A weaker economy = an easily influenced populous. THAT is what they want.
Dude, please. Put down the Fox News crack pipe and think. If you want a malleable population keep them fat and happy, don't cut off the steady stream of unnecessary consumer goods and fatuous mass media for them to keep busy consuming. Weaker economy = hungry, homeless, angry citizenry. Where is my pitchfork?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #177
  • Jan 30, 2010 8:14am Jan 30, 2010 8:14am
Sorry I didn't mean to make this political, it is only about spreading the word and I think we should take as many avenues as possible to get out what these new rules will likely do to the U.S. industry.

He is the first president to allow you to speak your mind, whether it's criticizing or support. I think you should take the opportunity to do one of the two rather than biznatch and moan about what he is or isn't.

This isn't the spirit of the american people. Lest I remind you: "United we stand, divided we fall."
  • #178
  • Jan 31, 2010 3:23pm Jan 31, 2010 3:23pm
Quoting madmatz
The "No loser" mentality is such a weak and completely idiotic philosophy. If no one is losing , then no one is also winning... except of course the ones regulating. That makes everyone a loser in the big picture.
What do you expect in a country now run by liberal socialists?
  • #179
  • Feb 1, 2010 3:31am Feb 1, 2010 3:31am
Quoting kibescorp
What do you expect in a country now run by liberal socialists?
Partisanship is like football. My team is better than your team, but in reality, they are both pretty crap
  • #180
  • Feb 1, 2010 7:50am Feb 1, 2010 7:50am
Quoting kibescorp
What do you expect in a country now run by liberal socialists?
For your response to be "politically correct" it should read:

What do you expect in a country run by conservatives for the past 8 years and only in control by liberals for one year?

---------

If the conservatives were any good in this country we wouldn't be under liberal control right now... would we?
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