The CFTC final rules on the regulation of retail foreign exchange have now been officially published in the Federal Register. At the same time they have also authorized the NFA "to process and grant applications for initial registration, renewed registration and withdrawals of retail foreign exchange dealers (RFEDs) and their associated persons (APs)", effective from September 10th.
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At long last the CFTC have revealed what changes they have in store for US retail forex traders. Their new regulations will come into effect on October 18th, and according to CFTC chairman Gary Gensler they:
More on CFTC Reduces Forex Leverage to 50 to 1 (Amongst Other Things!)
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After a variety of trials and tribulations along the way the Wall Street Reform and Consumer Protection Act, now officially renamed Dodd-Frank after its two sponsors, was finally signed into law by US President Barack Obama on July 21st. According to The Economist magazine:
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The National Futures Association have made a couple of announcements recently that strongly suggest the number of US spot forex brokers and their associated introducing brokers are going to decline even further in the near future. Last week the NFA implied that the proposed new CFTC regulations about forex IBs are going to be implemented much as originally drafted. They pointed out that:
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Dukascopy have finally followed in the footsteps of MIG, and after a long wait they have at last received their banking licence from FINMA, the Swiss regulator. Consequently they now proudly call themselves "Dukascopy Bank SA". According to their press release:
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The publicity battle over financial reform in the United States gets ever hotter. A variety of glossy magazines are currently sinking their teeth into Goldman Sachs following the news that the investment bank is under attack by regulators on both sides of the Atlantic. Although its articles are sprinkled with the word "alleged", Time seems to have already judged Goldman Sachs and the rest of Wall Street guilty as charged. In one article this weekend Time highlights the irony that Gary Gensler, a former Goldman Sachs partner and now chairman of the CFTC, is currently gunning for his previous paymasters. According to Time:
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Last Friday the U.S. Securities and Exchange Commission charged the investment bank Goldman Sachs and their London based Vice President Fabrice Tourre with fraud:
The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.
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Following the example of the forex dealers a few weeks ago, a group of 6 introducing brokers have banded together to form the Introducing Brokers Coalition against the CFTC proposals for “Regulation of Off-Exchange Retail Foreign Exchange Transactions and Intermediaries”. Unlike the forex dealers, first on the IBs list of proposals they would like to see changed is:
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Is sounds as though some US congressmen have been reading some of the thousands of complaints the CFTC has received about its proposals to reduce leverage on spot forex from 100 to 1 down to 10 to 1.
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In the first response I have spotted made by a forex broker to their recent proposal to limit leverage to a maximum of 10 to 1, the CFTC earlier this week published a 6 page letter from Interbank FX on their website. Interbank FX welcome most of the other CFTC proposals, but say that the 10 to 1 leverage proposal:
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