CFTC Final Retail Forex Rules - 50:1 Leverage

It's official.

http://www.favstocks.com/cftc-releas...rules/3023603/

New Regulations Effective as of October 18, 2010

The final retail Forex regulations (which requires registration for forex CTAs, CPOs and IBs) have been published in the Federal Register. The final regulations will be effective as of October 18, 2010. The regulations were adopted essentially as written with the execption of two major issues:

Leverage – while the proposed rules called for a maximum leverage of 10:1, the final rules allow the NFA to determine the margin requirements for the currencies within a defined set of CFTC parmeters. Currently the parameters include 50:1 leverage for major currencies and 20:1 leverage for all other currencies.
Forex Introducing Brokers – the proposed rules called for all forex introducing brokers to be guaranteed by a single FCM or RFED. The final rules allow a forex introducing broker to be either guaranteed or independent, consistent with other regulated futures IBs.
We have not yet had a chance to talk with the NFA or the CFTC about the new rules, but we recommend that all groups who may have to register with the NFA to begin the forex registration process as soon as possible (which includes taking the Series 34 exam) because of the large amount of applications the NFA will receive because of the final regulations.

now what about US folks who have UK accounts???

Grrrrrrrr!!!.... This really sucks. 2K per lot unavailable. I predict more margin calls - not the worse that could have happened but slows down the profit compounding progress for smaller investors.

50:1 for the majors is not too hard to swallow. Is that final or, are they still hashing it out?

So.... I take it US residents are still allowed to have offshore accounts?

Yeah, it's only a proposed study at this point.

Proposed? I thought they were final. And now set to go into effect on Oct 18.

Not according to this ...

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.

This came out before the new ruling though, however ...

That is an excellent find...so we are entering a trial phase...Hmmmm

So if Deutchse Bank can still offer 100:1...won't FXCM?

The CFTC has reduced leverage to 50:1 and 20:1, majors and minors, in its new regulation, not a lower as 10:1 first proposed in the first half of 2010 but continuing the tightening from 400:1 to 100:1 in May 2009. SEC/FINRA brokers like Citi, JP Morgan Chase Bank, Deutsche Bank Securities or Interactive Brokers won't be affected for this rule and they will be able to offer the current 100:1 leverage.

http://community.nasdaq.com/news/201...?storyid=34573

No, FXCM is not a SEC/FINRA broker.

I'm betting MBT is regretting not combining their FX entity with their equities/futures division, otherwise they'd be in the excluded SEC/FINRA group too.

Trader KGB,

Actually, we don’t regret that at all. Obviously, our legal team has been following all of this all year with great interest. We are very pleased that the CFTC listened to the comments from traders and recognized that their initial 10:1 proposal was too restrictive. We feel that 50:1 is a much better place to land, and most of our customers will not be affected by this change from the perspective that our average account is not typically margined beyond 50:1.

Regarding the SEC/FINRA situation, it is our understanding from general knowledge of the situation that those brokers will shortly end up with 50:1 as well as the SEC doesn’t want to get into the situation and become the lead regulator for FOREX. The playing field will be level for US brokers and most likely will be level globally for companies based out of most countries soon. We’re fine right where we are from that perspective, although that should not be taken as a comment about whether we are or are not going to be opening offices abroad.

In general, we’re pleased with the outcome and we feel that the improved regulations over the last few years should help customers feel more secure with their deposits with regulated firms and also should help improve the broader public’s willingness to consider the FOREX market.

I agree that 10:1 would have been awful.

someone rejected my comment on that in the other thread. but seems that no, us residents will not be allowed to have offshore accounts.

check the text on the frontpage of www.jadefx.com - it does not accept US residents and citizens as customers.

Try not to get your news/opinion based on comments at bucket shop websites.

There are several brokers who don't take US clients for their own reasons. My offshore broker hasn't implied that my account will be shut down.

No bucketshops allow US customers! Fxpro, jadefx etc... it's been that way for A LONG TIME...nothing new

the point is that jadefx was originally based in US and earlier this year moved offshore and now came with the idea of not allowing US citizens to trade with them. I would assume it has to do sth with the new regulations.

Or they are smarter than the avg crook knowing how easy it is for the US regulators to seize/freeze their bank accts. Focus the saps that cannot fight back = better long term strategy.

The language in the Dodd Frank Act prohibits US customers from trading forex with offshore entities. The Act says that the only counterparty that can offer forex to retail customers is a US financial institution. To me, this means that US customers will need to come back to US brokers.

It was originally proposed as a study. Am not sure they have even done that yet ... albeit from the sounds of it, they have passed the new leverage restrictions. The two are not necessarily one and the same though.