Leverage is coming down | Forex Factory

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Leverage is coming down

  • #1
  • First Post: Jul 27, 2015 10:15pm Jul 27, 2015 10:15pm
With the recent withdrawal of prime brokers additional costs and reduced Net Open Position the days of high leverage is coming to an end.

Only those who B-Book will show at 400:1 leverage and are they safe?

You make money from a B-Book broker and you will either be kicked off or never see them again .

At a stretch an STP broker will do 100:1

Times they are a changin
  • #2
  • Jul 28, 2015 2:15am Jul 28, 2015 2:15am
Source?
  • #3
  • Jul 28, 2015 10:56pm Jul 28, 2015 10:56pm
Quoting merquise
Source?
http://www.financemagnates.com/insti...aller-clients/

And there is more to come.
  • #4
  • Jul 29, 2015 3:27am Jul 29, 2015 3:27am
And have you read the article, and what is it about? I am asking because the article has nothing to do with us, retail traders but with increased margin and capital requirements for brokers which partner up with Prime Brokers... Google prime brokerage and you'll figure it out.
  • #5
  • Jul 29, 2015 3:36am Jul 29, 2015 3:36am
Quoting lasty
With the recent withdrawal of prime brokers additional costs and reduced Net Open Position the days of high leverage is coming to an end. Only those who B-Book will show at 400:1 leverage and are they safe? You make money from a B-Book broker and you will either be kicked off or never see them again . At a stretch an STP broker will do 100:1 Times they are a changin
Hybrid models will stay alive and flourish.
Prime brokers were always hard to jump in.
  • #6
  • Jul 29, 2015 3:40am Jul 29, 2015 3:40am
Quoting merquise
And have you read the article, and what is it about? I am asking because the article has nothing to do with us, retail traders but with increased margin and capital requirements for brokers which partner up with Prime Brokers... Google prime brokerage and you'll figure it out.
i have read the article and knowing that some retail brokers cant meet the capital requirements that the likes of Citibank have announced, there leaves a gap.

This means that retail brokers now have to look at other avenues to get pricing from or merge with larger firms.

Most will opt for pricing from a tier 1 broker ( those who has enough capital to meet the prime brokers conditions,) and get a price stream/liquidity from them .

Tier 1 brokers will have conditions attached including stricter Net open positions and margin requirements.
  • #7
  • Jul 29, 2015 3:43am Jul 29, 2015 3:43am
Quoting lasty
{quote} i have read the article and knowing that some retail brokers cant meet the capital requirements that the likes of Citibank have announced, there leaves a gap. This means that retail brokers now have to look at other avenues to get pricing from or merge with larger firms. Most will opt for pricing from a tier 1 broker ( those who has enough capital to meet the prime brokers conditions,) and get a price stream/liquidity from them . Tier 1 brokers will have conditions attached including stricter Net open positions and margin requirements.
Who are tier1 brokers?
  • #8
  • Jul 29, 2015 3:50am Jul 29, 2015 3:50am
Quoting lasty
{quote} i have read the article and knowing that some retail brokers cant meet the capital requirements that the likes of Citibank have announced, there leaves a gap. This means that retail brokers now have to look at other avenues to get pricing from or merge with larger firms. Most will opt for pricing from a tier 1 broker ( those who has enough capital to meet the prime brokers conditions,) and get a price stream/liquidity from them . Tier 1 brokers will have conditions attached including stricter Net open positions and margin requirements.
And hence, their leverage which they offer to us, retail clients, will not change. It would be counterproductive to them because they would lose a lot of clients.
  • #9
  • Jul 29, 2015 5:38am Jul 29, 2015 5:38am
Quoting entheos
{quote} Who are tier1 brokers?
I think Interactive Broker is 1st-class broker, they require minimum $10k.
  • #10
  • Jul 29, 2015 8:15pm Jul 29, 2015 8:15pm
Quoting merquise
{quote} And hence, their leverage which they offer to us, retail clients, will not change. It would be counterproductive to them because they would lose a lot of clients.
So Japan who have dropped their retail margin have lost alot of clients ?

100:1 is ample for retail clients

200:1 at a stretch is ok

400:1 wont exist unless B-Booked and in any case those flows don't go to market so no real impact for the bigger brokers. The risk remains for the smaller brokers who cater for that business and if the broker gets it wrong then good luck getting your money out .
  • #11
  • Jul 30, 2015 2:53am Jul 30, 2015 2:53am
Quoting lasty
{quote} So Japan who have dropped their retail margin have lost alot of clients ? 100:1 is ample for retail clients 200:1 at a stretch is ok 400:1 wont exist unless B-Booked and in any case those flows don't go to market so no real impact for the bigger brokers. The risk remains for the smaller brokers who cater for that business and if the broker gets it wrong then good luck getting your money out .
Japan is extended arm of the US..their citizens have the same problems of opening accounts overseas as US..

And I see that you are another one who just doesn't understand the leverage and its impact on margin requirements.. Educate yourself first, then start to express your opinions, which are not facts.

As I can see no broker reduced his leverage to this day. So your gloom and doom thread is pointless.
  • #12
  • Last Post: Aug 2, 2015 6:36pm Aug 2, 2015 6:36pm
Quoting merquise
{quote} Japan is extended arm of the US..their citizens have the same problems of opening accounts overseas as US.. And I see that you are another one who just doesn't understand the leverage and its impact on margin requirements.. Educate yourself first, then start to express your opinions, which are not facts. As I can see no broker reduced his leverage to this day. So your gloom and doom thread is pointless.
Please enlighten us ..
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