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10 to 1 leverage suggestion by the CFTC - a death to the US forex market?

PipCollector
Jan 18 2010 at 19:31
92 příspěvků
Not sure how many here are aware of this, but the CFTC recently suggested to limit the leverage to 10:1.

This might be one of the worst moves for the US forex industry and the US economy in general.

I think they should hold with it at least until the economy is recovered.

Anyway, since the forex market in the US is very large, I think they should also make a poll and see what the traders have to say.

What do you think guys? Is there anyone here who agrees with such move?

Here's the original document: https://www.cftc.gov/newsroom/generalpressreleases/2010/pr5772-10.html
(There's also a 193 page document but I really don't have the time to read it all 😁)
bizWiz
Jan 18 2010 at 23:05
397 příspěvků
yeah i heard about it too, not a smart move i would say.

all of the offshore companies probably can't wait to get their hands on the us clients.

there will probably be some us brokers who will move their business offshore to protect their clients, i don't think they're going down without giving a fight.
PipCollector
Jan 19 2010 at 09:11
92 příspěvků
I really don't think they'll dare to continue with this move - it's like shooting yourself in the leg - what's the point? It will be just another step in USA's bankruptcy.
Elkart
Elkart
Jan 20 2010 at 02:58
941 příspěvků
I think this will happen and this will not only close the US retail forex industry, but close it to the US citizens.

Rest of the world doesn't want US clients anymore. I've had this conversation with a few Americans now. They struggle to open new trading accounts. Mostly only a real bucket shop will take them.

But clearly I need to move my accounts now.
bizWiz
Jan 21 2010 at 09:28
397 příspěvků
are you moving your funds yet Elkart? i think it's too early, and you should wait a bit for the dust to settle.

it is very unlikely they will go down that road.
Elkart
Elkart
Jan 21 2010 at 13:04
941 příspěvků
Well, I got some serious comm's from IBFX. The US forex companies are getting organized. They're going to fight. To me its like farting against thunder. No point, US goverment just going to steam roller them.

I think the agenda here is bigger than a small minority fx traders. They're moving for some bigger picture.

I guess I need to move. It's become such an unstable environment to try operate in. Only going to get worse. And I think London will follow in some way.

The east is calling my portfolio. Stupid farangs have gone nuts. I can say that of course, because I'm one.

But I know Hong Kong will be less inclined to buckle to US like the Swiss did and at the moment seem more stable an option than the West.

I'll rather set up my shop in Singapore and Hong Kong I think.

Basically I want a stable business environment. The new rule every 2 seconds thing is not on.
bizWiz
Jan 22 2010 at 11:46
397 příspěvků
elkart, if you're already moving your funds, then try to negotiate for a better deal with the brokers..i'm sure you can get a better deal just by asking (if you have a large enough account that is 😁)
jacky
Jan 24 2010 at 14:21
10 příspěvků
at least it will be valid 4 months from, as I chat with one of IBFX representative
dennerle
Jan 24 2010 at 14:55
71 příspěvků

Elkart posted:
    Well, I got some serious comm's from IBFX. The US forex companies are getting organized. They're going to fight. To me its like farting against thunder. No point, US goverment just going to steam roller them.

I think the agenda here is bigger than a small minority fx traders. They're moving for some bigger picture.

I guess I need to move. It's become such an unstable environment to try operate in. Only going to get worse. And I think London will follow in some way.

The east is calling my portfolio. Stupid farangs have gone nuts. I can say that of course, because I'm one.

But I know Hong Kong will be less inclined to buckle to US like the Swiss did and at the moment seem more stable an option than the West.

I'll rather set up my shop in Singapore and Hong Kong I think.

Basically I want a stable business environment. The new rule every 2 seconds thing is not on.
for those who worried that FSA will follow USA's CFTC or NFA ruling, it would be glad to know that it is unlikely

For more information you can visit FSA webite https://www.fsa.gov.uk/ and refer to the FSA's aims and objectives:


The FSA has set out its aims under three broad headings:

    * promoting efficient orderly and fair markets;
    * helping retail consumers achieve a fair deal; and
    * improving our business capability and effectiveness


Over here, you can refer more in-depth on these details and highly FSA will not follow what CFTC or NFA are doing...



Do let us know your views about FSA whether they will follow NFA /CFTC footsteps for discussion too
Slow and Steady Wins the Race :)
Pietpatat
Jan 24 2010 at 15:33
29 příspěvků
=-=-=-=-=- Comment from another message board -=-=-=-
Dear Lawrence,
Asaf also commented on 'required to house $1000 in the margin in order to trade 1 single mini'
'Everyone is focused on the 10:1 leverage and are missing the big change:

'Subject to certain exceptions (e.g., for certain regulated financial intermediaries not under the Commission ’s jurisdiction as established in the CRA), the Proposal would require persons offering to be or acting as counterparties to retail forex transactions but not primarily or substantially engaged in the exchange traded futures business, to register as retail foreign exchange dealers (“RFEDs”) with the CFTC. Registered futures commission merchants (“FCMs”) that are “primarily or substantially” (as defined in the Proposal) engaged in the activities set forth in the Act’s definition of an FCM would be permitted to engage in retail forex transactions without also registering as RFEDs.'

This means that if a foreign broker wants to offer trading services to US customer he needs to be registered by the CFTC which means it needs to comply to the rest of the restrictions - so if you were thinking - 'I will just open an account with a Foreign broker ...' Think again because these brokers will not accept US customers after this bill has passed.
bizWiz
Jan 24 2010 at 21:28
397 příspěvků
dennerle, that's some good info - thanks.

Pietpatat - if that will be the case, then I guess that usa based traders are out of luck.. maybe it's time to apply for a new citizenship? 😄
Elkart
Elkart
Jan 25 2010 at 00:46
941 příspěvků
lol...

Biz, they can't. The most basic freedom of them all is denied US citizens. Unless the US government agrees US citizens can't give up their citizenship. Only country in the world where you can't.

Best way forward for them is offshore companies or trust funds in offshore jurisdictions. Expensive. Bout $5000 US a pop.

Getting very difficult for them and these new rules will close retail fx to them. They'll have to start trading options on fx on the CME which is off course the goal here.

US is closing the retail fx industry. No doubt about it. Whatever their stated goals are.

Considering the amount of time, effort and money it takes to learn to do this, if I was a US citizen I'd sue the CFTC for taking away my ability to earn a living and future income. 20 years of compound growth!
PipCollector
Jan 25 2010 at 11:18
92 příspěvků

Elkart posted:
Considering the amount of time, effort and money it takes to learn to do this, if I was a US citizen I'd sue the CFTC for taking away my ability to earn a living and future income. 20 years of compound growth!

Under the circumstances, some will probably will.

I wonder if other countries will follow? After all, the entire world's economy was affected last year, and limiting your exposure to the markets is actually a good idea to minimize risk (Yeah, I know it's basic money management 😄).
Elkart
Elkart
Jan 25 2010 at 11:47
941 příspěvků
Just have to stay a step ahead mate. Fly like a butterfly, sting like a bee...!!
mettall
Jan 25 2010 at 14:36
27 příspěvků
so better we don't open Oanda accounts? damn. there is no other broker with such good web terminal.
Elkart
Elkart
Jan 25 2010 at 14:49
941 příspěvků
They're Canadian...

I struggle to tell the difference as well, they all look the same to me! But ask any Canadian and they'll correct you quite passionately...
bizWiz
Jan 25 2010 at 15:17
397 příspěvků
Elkart posted:
    They're Canadian...

I struggle to tell the difference as well, they all look the same to me! But ask any Canadian and they'll correct you quite passionately...

really? i was under the impression they're US based.
mettall
Jan 26 2010 at 09:35
27 příspěvků
aah, thanks :)

By decreasing the leverage the USD should become less volatile. This is good because then the USD will be much more stable. What do you prefer - to have non-volatile or volatile world currency? Obama is trying to save the status of USD like world currency...
PipCollector
Jan 26 2010 at 15:46
92 příspěvků
I'm sure some like the volatility - you can't increase the reward without increasing the risk.
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