[DickP]

Is 10:1 Leverage Inevitable?


"The CFTC hasn’t finalized its January 2010 proposed rule changes for trading retail forex, including a reduction of leverage from 100:1 to 10:1."


"If 10:1 retail forex trading leverage is enacted by the CFTC/NFA, can U.S.-based retail spot forex brokers easily move their U.S. trading customers to their UK affiliates? It seems like the U.S. broker would be switching them to a foreign affiliate to evade U.S. regulations, and based on my colleague’s statement, I think it could be a problem."


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.

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

[TopTrader]

No, they compromised, big forex firms fought it well enough to make the CFTC back the hell off the ridiculous measure.

[sniper012]

I'm not sure about that. I would never have thought we would be where we are today, yet here we stand.

No, they compromised, big forex firms fought it well enough to make the CFTC back the hell off the ridiculous measure.

[McPott]

The question is, will it matter much at this point and will you be surprised by any new regulations? Not to complain about many of them which are in place to help protect traders. It's just 10:1 Leverage would just deflate this entire industry in this country, not only that, I wonder what the reprocussions on the dollar would be when millions of traders are no longer allowed to trade on margin while the rest of the world is. Some will argue that austerity (through reduced leverage) will refine traders while international traders using leverage up to 1000:1 are risking. That's a double edged sword though, there may be stellar traders using 1000:1 leverage putting those at 10:1 at a huge disadvantage. You basically need more money in your account to not be risking the same amount as before. You could say you need to make more with less, I look at it the way I just said it, you need more capital to be risking the same amount as before with reduced leverage.

I could see it just now, thousands of traders with pitchforks and blackberries marching on Washington.

[skynet]

10:1 leverage would make me give up on Forex..

[VietForex]

thank god this will never affect me.