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

  • #1,061
  • Aug 4, 2010 4:56pm Aug 4, 2010 4:56pm
Quoting stljeffbb
Hello The Fool...if you mean, "what's the prob(lem)", in my opinion it is not too much of a big deal, except I like my current spot broker, and I will have to now find a new broker, learn the platform, get a charting service for the fx futures (which I've looked at a little bit....the price movements are similar and I can most likely adapt), and learn the lingo concerning fx futures....if I had a lot more cash and were doing well with spot, I'd be rather upset.

However, *IF* we need to migrate, and it does result in "more volume", then I...
Anybody trading futures or has actually traded future contracts here? Well let me go further what does happen to pricing when you eliminate competition?
Say good by to a cheap round trip and start blowing up your $5000 account because of the contract size limitation. The futures market has been designed for the big boys and not and I really mean not the retail traders. And please go and find a free platform including datafeed. If this law gets passed, just a matter of time poor US, you really need to calculate your monthly trading expenses. Don't forget that your few $10000 dollars in the future markets broker account does not even earn you 1cent of interest which will be an additional plus inflation. Amazing how quickly people can be fooled (sorry the fool) by their own government.
  • #1,062
  • Aug 4, 2010 6:34pm Aug 4, 2010 6:34pm
Quoting Trader KGB
As expected, no threat.
Whew, thanks KGB.
  • #1,063
  • Aug 4, 2010 7:56pm Aug 4, 2010 7:56pm
Quoting Trader KGB
As expected, no threat.
The interpretation that OTC forex would disappear was incorrect. What the big boys want is more regulation. Regulations ,regulations, regulations!

Kind of like the Mafia...if you want to play in our area, you will play by the rules...capitch !!
  • #1,064
  • Aug 4, 2010 8:10pm Aug 4, 2010 8:10pm
Quoting Platypus
The interpretation that OTC forex would disappear was incorrect. What the big boys want is more regulation. Regulations ,regulations, regulations!

Kind of like the Mafia...if you want to play in our area, you will play by the rules...capitch !!
Naturally...I don't think anybody thought retail OTC forex would vanish, it was more a concern with what kind of nonsensical regulations they were going to slap retail traders with in order to allow them to trade. But if the MBT guy is correct, it doesnt apply to most brokers anyway, so we're safe...for now.
  • #1,065
  • Aug 4, 2010 8:13pm Aug 4, 2010 8:13pm
http://www.financialsense.com/print/...hreatens-forex


Quoting jleblang
It will have no effect on us as traders. That article floating around the web is not correct in what it implies as the law does not apply to registered firms. As long as we remain registered with an approved Federal regulatory agency (i.e. the NFA), that section of the Bill does not apply to us. I had this confirmed by our legal department. (No, the government isn’t just going to pass a law that shuts down an entire market.) What they are looking to do is shut down unregulated trading where transactions can be harmful to someone or used as money...
  • #1,066
  • Aug 4, 2010 10:32pm Aug 4, 2010 10:32pm
It's really funny to read all this !

Anyway, Things always like this for thousands years!
Bad people hurt and damage the world, innocent people got regulation!!!

Does regulator whoever sit in the house -day dream the market and regulation know:::

Who caused this worst ever financial crisis?

Future market or forex market???
Did 1:100 ,even 1:400 leverage caused this worst ever financial crisis since 2007?
The leverage is really not a matter in financial market for crisis.
The stock is 1:1, But the stock market killed people no less than forex!!!

With this kind of Act and regualtion ,the financial cirsis will never dissapear
Someone call this economic cycle !!!

In terms of forex market,the non centralised price feed, non centralised order excution, non centralied market system killed much much more people than levarage !!!!
But they never got regualted !!!!

We do live in a funny world !!!
we call us human society with head and thinking !
but we do are no better than animal world !!!!
  • #1,067
  • Aug 4, 2010 11:18pm Aug 4, 2010 11:18pm
Quoting fxftime
It's really funny to read all this !

Anyway, Things always like this for thousands years!
Bad people hurt and damage the world, innocent people got regulation!!!

Does regulator whoever sit in the house -day dream the market and regulation know:::

Who caused this worst ever financial crisis?

Future market or forex market???...
Or Lobbying Washington till my dear friends at the CME get what they wanted.
No Hedging, no leverage and the list goes on all in the name to protect the Mum's and Dad's. Cheez the Politicians in Washington have really no confidence into their own people to manage their own money. Is it really that bad in the US?
  • #1,068
  • Edited 1:26am Aug 5, 2010 1:15am | Edited 1:26am
Much ado about nothing, IF you trade through a US broker, the provision does not apply to registered firms. Relax, the big boys need the retail traders to milk.
BUT, the legislation could be interpreted to mean that no US resident could trade with a firm that is not registered, so US residents may not be able to trade through foreign brokers, similar to prohibition of CFDs trading by US residents.
  • #1,069
  • Aug 5, 2010 7:31am Aug 5, 2010 7:31am
Quoting wwwin
Much ado about nothing, IF you trade through a US broker, the provision does not apply to registered firms. Relax, the big boys need the retail traders to milk.
BUT, the legislation could be interpreted to mean that no US resident could trade with a firm that is not registered, so US residents may not be able to trade through foreign brokers, similar to prohibition of CFDs trading by US residents.
What if you're a US citizen with a foreign broker regulated by FSA?
  • #1,070
  • Aug 5, 2010 8:25am Aug 5, 2010 8:25am
Quoting Toothman
What if you're a US citizen with a foreign broker regulated by FSA?
This is just speculation, but maybe that is what they are trying to do, to force the FSA and others to register and comply with US rules if they want to handle US residents. There are memos from Gensler to Congress stating that any foreign regulatory body that wants to service US residents should register with CFTC.

Big brother is really trying to control everything.
  • #1,071
  • Aug 5, 2010 11:46pm Aug 5, 2010 11:46pm
This may be a good place to watch for some informed discussion....

http://www.greencompany.com/blog/index.php
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,072
  • Aug 17, 2010 12:31pm Aug 17, 2010 12:31pm
...still waiting...the registration requirements likely will be the worst part of it for me.

http://forexmagnates.com/cftc-final-...expected-soon/

"The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) developed a new regulatory framework for much of the investment management community including the spot foreign exchange markets. While the language of Dodd-Frank is not always easy to understand, the important thing for the forex community to understand is that Congress did not kill the spot forex market. Indeed, the regulations we will see in the future will look more like what we have right now.

What exactly does Dodd-Frank say about spot forex?
Essentially Dodd-Frank created new section 2(c)(2)(E) of the Commodity Exchange Act which provides that persons who are not “eligible contract participants” may not enter into foreign exchange transactions unless a Federal regulatory agency has promulgated regulations governing the transactions. Dodd-Frank also requires the CFTC to implement regulations with respect to disclosure, recordkeeping, capital and margin, reporting, business conduct, documentation and other standards. Any prohibition under the new section 2(c)(2)(E) would not affect anyone trading spot forex if the CFTC promulgates regulations (which it proposed in January of this year). Essentially what this new section is doing is forcing the CFTC to speed up implementation of the forex regulations.

What forex regulations will be adopted?
This is the question that the industry has really been focusing on over the last 8 months. As was discussed in great detail during the comment period, the big issues were the reduction of leverage to 10:1 (from either 100:1 or 25:1 under current NFA rules) and having introducing brokers guaranteed by one forex dealer or FCM. Because of significant pushback from the industry it is likely that both of these provisions will be modified once the rules are finalized sometime in the next two months or so.

Other issues from Dodd-Frank
Dodd-Frank presents other issues for managers in the investment management industry. For those person who trade in the off-exchange spot metals markets, there will be new regulations on the manner in which those contracts may be traded. Dodd-Frank also requires credit default swaps to be subject to clearing and requires hedge fund and private equity fund managers to register as investment advisers with the SEC."

***

This article was written by Bart Mallon of Mallon P.C. [http://www.mallonpc.com], a law firm focused on the investment management industry. Mr. Mallon has also created a free Series 34 exam guide which can be found at www.series34exam.com.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,073
  • Aug 21, 2010 3:08pm Aug 21, 2010 3:08pm
ATTENTION ALL: Satan has taken human form as gary gensler.....
Attached Image
  • #1,074
  • Edited 11:01pm Aug 21, 2010 7:08pm | Edited 11:01pm
...found this by googling CFTC 10:1:

http://blogs.forbes.com/greatspecula...mepagechannels

There is a conference call link at the bottom of the article, the podcast of which can be found by using the links...

Regards,

Jeff

EDIT: Personally, I trade 25:1, and while I am upset that they are considering tinkering beyond 100:1 and hope they do not change it, my second-best hope is that they do move it to 25:1 (like I believe Canada and Japan have/will have done)...if not, then I guess I had better learn the CME products ...I do not believe 10:1 will suit my purposes...

2nd EDIT: I find it a bit ironic that, on the one hand, the Dodd-Frank bill has helped to bring this about, but on the other hand, the same Barney Frank is pushing to legalize online poker...
  • #1,075
  • Aug 22, 2010 12:35pm Aug 22, 2010 12:35pm
Quoting wwwin
This is just speculation, but maybe that is what they are trying to do, to force the FSA and others to register and comply with US rules if they want to handle US residents. There are memos from Gensler to Congress stating that any foreign regulatory body that wants to service US residents should register with CFTC.

Big brother is really trying to control everything.


http://blogs.forbes.com/greatspecula...mepagechannels
  • #1,076
  • Aug 22, 2010 1:09pm Aug 22, 2010 1:09pm
I have a feeling it will come down but not to 10:1
BarrySDCA Commercial Network Services
  • #1,077
  • Aug 22, 2010 4:55pm Aug 22, 2010 4:55pm
Quoting stljeffbb
...found this by googling CFTC 10:1:

http://blogs.forbes.com/greatspecula...mepagechannels

There is a conference call link at the bottom of the article, the podcast of which can be found by using the links...

Regards,

Jeff

EDIT:...
Unbelievable how quickly the low leverage issue has been accepted.
The only institution gaining form that is your broker and all liquidity providers such as banks because you as a retail trader have to deposit more money into a trading account to be able to trade the same volume. You basically will lend your hard earned money to your banks for free (no interest paid on dead money and in the mean time increasing artificially the institutions balance sheet).
Leverage is a great tool and is not the cause of traders blowing their account up. Faulty Money Management is the real cause of traders donating their account balance. I wonder sometimes, the USA has trillions of $ in debt because of bad Money Management and the same people lecture other people and companies on how to manage their affairs.
  • #1,078
  • Aug 22, 2010 6:52pm Aug 22, 2010 6:52pm
The regulators could care less about retail traders. Their only motivation is to look like they are doing something. We all know the large banks, brokers, hedge funds, will find ways around whatever is enacted. Unfortunately, the little people, will probable get steamrolled in the process.

I hope I wrong, but the past several administrations have been extremely incompetent and proven themselves to not work for, or represent, the people.
  • #1,079
  • Aug 24, 2010 3:37am Aug 24, 2010 3:37am
I had a good read through their proposals and they are very clear on their 1:10 requirement:

§ 5.9 Security deposits for retail forex
transactions.
(a) Each futures commission merchant
engaging, or offering to engage, in retail
forex transactions and each retail
foreign exchange dealer must collect
from each retail forex customer a
minimum security deposit in the form
of cash or other financial instruments
that comply with the requirements
specified in § 1.25 of this chapter for
each retail forex transaction equal to:
(1) Ten percent of the notional value
of the retail forex transaction;

http://www.cftc.gov/ucm/groups/publi.../2010-456a.pdf
  • #1,080
  • Aug 24, 2010 12:19pm Aug 24, 2010 12:19pm
Quoting cloggie
I had a good read through their proposals and they are very clear on their 1:10 requirement:

§ 5.9 Security deposits for retail forex
transactions.
(a) Each futures commission merchant
engaging, or offering to engage, in retail
forex transactions and each retail
foreign exchange dealer must collect
from each retail forex customer a
minimum security deposit in the form
of cash or other financial instruments
that comply with the requirements
specified in § 1.25 of this chapter for
each retail forex transaction equal to:
(1) Ten percent...
Hello cloggie....those are proposed rules:

(from your pdf link above)

Quote
COMMODITY FUTURES TRADING
COMMISSION
17 CFR Parts 1, 3, 4, 5, 10, 140, 145,
147, 160, and 166
RIN 3038–AC61
Regulation of Off-Exchange Retail
Foreign Exchange Transactions and
Intermediaries
AGENCY: Commodity Futures Trading
Commission.
ACTION: Proposed rules.
Of course, we then had the comment period, and now with the Dodd-Frank bill being passed, perhaps (wild speculation on my part) they are just waiting for the right moment, probably during "crazy season" when all the politics are in full bloom and any chance an incumbent gets to say "look, I've done my part against 'Wall Street'" they will take it...

It is just very hard for me to believe that retail forex led to the collapse...personally (again, wild speculation) I think too many people have learned how to trade forex and the government is taking steps to keep wealth in the hands of the wealthy...sure even if "5%" do make it (I'm not there quite yet, but I am to break even....go me!), that is still probably too much for the powers that be...blah blah blah...

Regards,

Jeff
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