Interbank FX Comment on CFTC 10 to 1 Leverage Proposals

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:

Is unnecessary to protect retail investors because this goal is already achieved through rigorous capital requirements…

Will make retail forex trading in the United States uncompetitive and hence drive retail business either offshore… or to trading venues including futures exchanges and potentially banks or other financial intermediaries not regulated by the CFTC.

Runs counter to the considered judgement of the NFA, which late last year began to apply a 100:1 leverage limit…

Is inconsistent with the intent of Congress…

Is inconsistent with the Commodity Exchange Act's requirement that the CFTC "take the least anticompetitive means of achieving the objectives of" the Act…

They then take another 4 pages justifying those bullet points, before reaching the following sobering conclusion:

The Solution is Regulation, Not Prohibition

Most of the CFTC's proposed rule is sound. Indeed these parts of the rule presuppose that there will be a U.S. retail forex industry to be regulated. Unfortunately, if the leverage limitations are adopted, no such industry is likely to exist.