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

  • #1,081
  • Aug 24, 2010 12:32pm Aug 24, 2010 12:32pm
Quoting Slack
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.
Well, next time when they want to be seen doing something, why don't they enact some regulations against the "Big Boys" on the Wall Street for a change? You know like make them repay the bailout money by waiving the commissions or transaction fee they charge?
Make your losses in demo. Earn your profits live.
  • #1,082
  • Aug 24, 2010 4:27pm Aug 24, 2010 4:27pm
Quoting Forexia
Well, next time when they want to be seen doing something, why don't they enact some regulations against the "Big Boys" on the Wall Street for a change? You know like make them repay the bailout money by waiving the commissions or transaction fee they charge?
Hello Forexia...lol, you say "Big Boys"...who do you think controls all of this?

My guess is, the "Big Boys" aren't too fond of these upstart forex brokers...but it is admittedly a guess...

Regards,

Jeff
  • #1,083
  • Aug 24, 2010 6:06pm Aug 24, 2010 6:06pm
Quoting stljeffbb
Hello Forexia...lol, you say "Big Boys"...who do you think controls all of this?

My guess is, the "Big Boys" aren't too fond of these upstart forex brokers...but it is admittedly a guess...

Regards,

Jeff
Well exactly, and it's not a guess, this proposal was designed for the purpose to flatten out the Retail Forex industry which is made up of "upstart brokers" under the pretence of "protecting individual investors".

You want to do something to protect the old boys' club, that's fine but spare me the hypocricy.
Make your losses in demo. Earn your profits live.
  • #1,084
  • Aug 25, 2010 1:02am Aug 25, 2010 1:02am
Quoting Forexia
Well, next time when they want to be seen doing something, why don't they enact some regulations against the "Big Boys" on the Wall Street for a change? You know like make them repay the bailout money by waiving the commissions or transaction fee they charge?
Amen!
  • #1,085
  • Aug 25, 2010 1:10am Aug 25, 2010 1:10am
Excerpts from the Dodd-Frank bill:

Dodd-Frank SEC. 742. RETAIL COMMODITY TRANSACTIONS.
PROHIBITION-‘(I) IN GENERAL- Except as provided in subclause (II), a person described in subparagraph (B)(i)(II) for which there is a Federal regulatory agency shall not offer to, or enter into with, a person that is not an eligible contract participant, any agreement, contract, or transaction in foreign currency described in subparagraph (B)(i)(I) except pursuant to a rule or regulation of a Federal regulatory agency allowing the agreement, contract, or transaction under such terms and conditions as the Federal regulatory agency shall prescribe.

Dodd-Frank SEC. 929Y. STUDY ON EXTRATERRITORIAL PRIVATE RIGHTS OF ACTION.
(a) In General- The Securities and Exchange Commission of the United States shall solicit public comment and thereafter conduct a study to determine the extent to which private rights of action under the antifraud provisions of the Securities and Exchange Act of 1934 (15 U.S.C. 78u-4) should be extended to cover-

(1) conduct within the United States that constitutes a significant step in the furtherance of the violation, even if the securities transaction occurs outside the United States and involves only foreign investors;

(2) conduct occurring outside the United States that has a foreseeable substantial effect within the United States.

(b) Contents- The study shall consider and analyze, among other things--

(1) the scope of such a private right of action, including whether it should extend to all private actors or whether it should be more limited to extend just to institutional investors or otherwise;

(2) what implications such a private right of action would have on international comity;

(3) the economic costs and benefits of extending a private right of action for transnational securities frauds; and

(4) whether a narrower extraterritorial standard should be adopted.

(c) Report- A report of the study shall be submitted and recommendations made to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House not later than 18 months after the date of enactment of this Act.

__________
Source: http://www.greencompany.com/blog/index.php?postid=89
  • #1,086
  • Aug 25, 2010 4:44pm Aug 25, 2010 4:44pm
http://www.nydailynews.com/ny_local/...#ixzz0xcaSNfyW
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,087
  • Aug 25, 2010 4:59pm Aug 25, 2010 4:59pm
So the big question is: can I pay next year's taxes with 1:100 leverage (one dollar per one hundred I actually owe)?
Open to new approaches.
  • #1,088
  • Aug 25, 2010 5:22pm Aug 25, 2010 5:22pm
Quoting The Fool
http://www.nydailynews.com/ny_local/...#ixzz0xcaSNfyW
Just an FYI: This post should be in another thread. This thread is discussing about the new proposed 10:1 leverage limit for Retail Forex Brokers.
Make your losses in demo. Earn your profits live.
  • #1,089
  • Aug 30, 2010 8:53pm Aug 30, 2010 8:53pm
Well friends...it looks like they have done it!

http://www.cftc.gov/PressRoom/PressR...pr5883-10.html

http://www.cftc.gov/ucm/groups/publi...nalrule_qa.pdf

...basically....CFTC now says 50:1 on majors, 20:1 on non-majors....

If this is true, I'm breathing a big sigh of relief...I trade 25:1 on E/U, so I'm still good...OANDA customers (including myself) are probably totally fine....others who use 100:1 leverage might not be, but I'm not an expert, just reporting what I've read....sorry to those of you whom this affects...I do not believe in this change but at least they did not make either vehicle (CME or spot) dominant in my opinion.

Regards,

Jeff
  • #1,090
  • Aug 30, 2010 9:07pm Aug 30, 2010 9:07pm
[quote=stljeffbb;3988529]Well friends...it looks like they have done it!

http://www.cftc.gov/PressRoom/PressR...pr5883-10.html

http://www.cftc.gov/ucm/groups/publi...nalrule_qa.pdf

...basically....CFTC now says 50:1 on majors, 20:1 on non-majors....

Because I see this:


Do the new rules have a leverage requirement?
The proposed rules included a requirement that FCMs and RFEDs serving as counterparties in off-exchange forex transactions collect from retail customers a security deposit of 10 percent of the notional value of the transaction. This requirement has often been referred to as a "10 to 1 leverage" requirement.
The leverage requirement in the proposed rule has been replaced in the final rules with a mechanism whereby the Commission sets parameters (the release specifies a minimum 2 percent security deposit in the case of major currencies and 5 percent of the notional value of the transaction for all other currencies) and the Commission periodically reviews the appropriateness of those parameters. NFA is authorized to set specific security deposit levels within those parameters, and is required to review periodically and adjust as necessary both the particular
Scarlett
  • #1,091
  • Aug 30, 2010 9:10pm Aug 30, 2010 9:10pm
You're right...


Do the new rules have a leverage requirement?
The proposed rules included a requirement that FCMs and RFEDs serving as counterparties in off-exchange forex transactions collect from retail customers a security deposit of 10 percent of the notional value of the transaction. This requirement has often been referred to as a "10 to 1 leverage" requirement.
The leverage requirement in the proposed rule has been replaced in the final rules with a mechanism whereby the Commission sets parameters (the release specifies a minimum 2 percent security deposit in the case of major currencies and 5 percent of the notional value of the transaction for all other currencies) and the Commission periodically reviews the appropriateness of those parameters. NFA is authorized to set specific security deposit levels within those parameters, and is required to review periodically and adjust as necessary both the particular
[/quote]
Scarlett
  • #1,092
  • Aug 30, 2010 9:14pm Aug 30, 2010 9:14pm
Hello Scarlett....yes, lets hope the "periodically" part does not happen again for a long time

Regards,

Jeff
  • #1,093
  • Aug 30, 2010 9:18pm Aug 30, 2010 9:18pm
Looks like 50 to 1 majors and 20 to 1 all others. Well, congrats to the ones that hollered not to have it 10 to 1.

To those that post off topic drivel, you are on ignore. Too bad somebody quoted it for me to see.


Quoting Scarlett
You're right...


Do the new rules have a leverage requirement?
[font=Garamond,Garamond][size=3]The proposed rules included a requirement that FCMs and RFEDs serving as counterparties in off-exchange forex transactions collect from retail customers a security deposit of 10 percent of the notional value of the transaction. This requirement has often been referred to as a "10 to 1 leverage" requirement.
[size=3][font=Garamond,Garamond]The leverage requirement...
[/quote]
  • #1,094
  • Aug 30, 2010 9:22pm Aug 30, 2010 9:22pm
[quote=wwwin;3988570]Looks like 50 to 1 majors and 20 to 1 all others. Well, congrats to the ones that hollered not to have it 10 to 1.

To those that post off topic drivel, you are on ignore. Too bad somebody quoted it for me to see.

Has anyone seen anything about US residents trading in offshore accounts?
Scarlett
  • #1,095
  • Aug 30, 2010 9:24pm Aug 30, 2010 9:24pm
Not definite yet but...

http://www.forexfactory.com/showpost...postcount=1075

Quoting Scarlett
Has anyone seen anything about US residents trading in offshore accounts?
  • #1,096
  • Aug 30, 2010 10:17pm Aug 30, 2010 10:17pm
[quote=Scarlett;3988576]
Quoting wwwin

Has anyone seen anything about US residents trading in offshore accounts?
No, but I'll be contacting Deutsche Bank later this morning. Their legal team might not have enough time to issue an opinion, though.

This could be a problem for them, I believe they are classified as an Investment bank. Then, again, you know those Germans... they might just give the CFTC the bird
  • #1,097
  • Aug 30, 2010 10:17pm Aug 30, 2010 10:17pm
" “Otherwise regulated” entities, such as United States financial institutions and SEC-registered brokers or dealers, remain able to serve as counterparties in such transactions under the oversight of their primary regulators."

This means, I assume, that banks who provide retail fx trading accounts (like CitFX) wil still offer 100:1, unless their margin cap gets regulated down elsewhere.

When I have asked CitiFX account people about this before, I have been told that they would remain at 100:1.

Not sure about foreign banks.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,098
  • Aug 30, 2010 10:36pm Aug 30, 2010 10:36pm
Quoting The Fool
" “Otherwise regulated” entities, such as United States financial institutions and SEC-registered brokers or dealers, remain able to serve as counterparties in such transactions under the oversight of their primary regulators."

This means, I assume, that banks who provide retail fx trading accounts (like CitFX) wil still offer 100:1, unless their margin cap gets regulated down elsewhere.

When I have asked CitiFX account people about this before, I have been told that they would remain at 100:1.

Not sure about foreign banks.
I was told by citi that they'd be unaffected (along with any other bank that's already monitored by their own regulatory body) and could keep their current margin where it is.. But they also said 50:1 for most pairs. Their spreads are high, but FDIC insurance up to 250k.
Spreads and margin here:
http://www.citifxpro.com/trading-conditions
  • #1,099
  • Aug 30, 2010 11:10pm Aug 30, 2010 11:10pm
The rules are in the Federal Register. The new Risk Disclosure statement is especially ..... a hoot. Forex brokers now will be RFED's & will have to have the $20 million (+) capitalization that FCM's have had to carry. Since it won't affect me, I won't look, but I wonder if there are not more than a few US forex brokers who don't measure up to that as of now.

http://www.cftc.gov/ucm/groups/publi...ster083010.pdf
"If The Fool persists in his Folly he will become wise." - William Blake
  • #1,100
  • Aug 30, 2010 11:26pm Aug 30, 2010 11:26pm
Quoting The Fool
The rules are in the Federal Register. The new Risk Disclosure statement is especially ..... a hoot. Forex brokers now will be RFED's & will have to have the $20 million (+) capitalization that FCM's have had to carry. Since it won't affect me, I won't look, but I wonder if there are not more than a few US forex brokers who don't measure up to that as of now.

http://www.cftc.gov/ucm/groups/publi...ster083010.pdf
Actually the net capital requirement was raised to $20 million as of Sept. 30 of 2009 so this is nothing new.

If you are interested, you can find the annual financial information such as Net Adjusted Capital and etc. about your Forex broker on the CFTC site via the link below:

http://www.cftc.gov/MarketReports/Fi...FCMs/index.htm

They have the info. for each year.

Hope this helps. Thanks for the link, The Fool.
Make your losses in demo. Earn your profits live.
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