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Author Topic: 50:1 is Here in the U.S.  (Read 2897 times)

Offline jsp

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50:1 is Here in the U.S.
« on: August 31, 2010, 06:12:13 PM »
From Robert A. Green, CEO Traders Association (Note: he's been great at fighting leverage limits and helped keep us from 10:1--consider joining his new association [$50] to continue protecting us):


The CFTCs new rule calling for a 2% deposit on trading major forex currencies off-exchange (50:1) seems on par with what commercial banks like Citi FX Pro offer their retail forex trading customers now. So its a wise move by the CFTC to reduce leverage by two-times (100:1 industry standard to 50:1), rather than going way over board with its proposal of 10:1. Unlike most off-exchange retail forex dealers in the U.S., Citi FX is not regulated by the CFTC; its subject to bank regulation instead.

Thankfully, the CFTC responded to the pleas from the off-exchange retail forex trading industry saying the CFTCs proposed 10:1 leverage would put the industry at a huge competitive disadvantage to on-exchange currency futures trading (30:1), commercial bank forex trading (50:1) and offshore off-exchange retail forex trading (200:1). See http://online.wsj.com/article/BT-CO...730-715762.html

Regulators and Congress are often sensitive to chasing business abroad and taking business from small-business to hand it over to big banks.

The new deposit rule for non-major currencies is 5% (20:1) and this will probably lead to lots of retail traders asking about the opportunities to trade on foreign platforms.

We will study the new rules and see if offshore trading remains feasible for Americans under new provisions in Dodd-Frank Fin Reg. We discussed how it could be a problem for Americans using offshore platforms on our recent blog and podcast.

Robert A. Green, CEO Traders Association.

Offline jsp

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Re: 50:1 is Here in the U.S.
« Reply #1 on: August 31, 2010, 06:41:19 PM »
By the way, government-sponsored enterprises (Fannie/Freddie) and big banks didn't get the leverage reduction.  Only we "dangerous" little FX traders got thrown under the bus.  And we couldn't cause a financial crisis if we wanted to!    >:(

Offline robl

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Re: 50:1 is Here in the U.S.
« Reply #2 on: September 01, 2010, 03:38:25 AM »
I believe the new leverage reduction is EXCELLENT!

Although it will be less competitive it will prevent many from entering the most risky and volatile trading format prematurely.

Robert

Offline jsp

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Re: 50:1 is Here in the U.S.
« Reply #3 on: September 01, 2010, 04:16:31 AM »
I believe the new leverage reduction is EXCELLENT!

Although it will be less competitive it will prevent many from entering the most risky and volatile trading format prematurely.

Robert

Well, at least the country is free enough that everyone is entitled to their opinions...as moronic as they may be (case in point above).  Oh, and there's more to this than reducing leverage (10:1 was the original goal before some of us deluged the CFTC website with much-needed rational thought).  Overseas brokers are also a potential target:

"Regulators and Congress are often sensitive to chasing business (and fraud) abroad with new rules as well as taking business away from small businesses and handing it over to big banks. The CFTC also wants the U.S. to remain competitive for foreign traders, as foreign traders can continue to trade offshore without concern about registration in the U.S.

It seems these new rules will put a stop to Americans trading retail forex offshore to evade CFTC rules. That trend picked up the pace in recent years and it may need to be reversed quickly. But we aren't completely certain of this yet. We will study the new rules and see if offshore trading remains feasible for Americans under extraterritorial provisions of the Dodd-Frank Fin Reg bill. (We discussed how offshore trading might be a problem for Americans using offshore forex platforms on our recent blog and podcast.)

We base our initial thoughts on the first documents released by the CFTC (links below). In the CFTCs Q&A document, see the Who can offer off-exchange forex transactions to retail customers section. It states that Dodd-Frank Fin Reg changed the definition of allowable financial institutions to only U.S. financial institutions. The next section, What is the scope of the CFTCs jurisdiction, implies that unless the entity is regulated by the SEC or bank regulators again for U.S.-only financial institutions - the default catchall regulator is the CFTC. It makes sense that the CFTC would act in this manner, but again, we aren't certain of these rules yet. Nothing in these CFTC documents specifically exempts offshore forex platforms or brokers from these new rules, either. Stay tuned for further observations."



« Last Edit: September 01, 2010, 04:21:05 AM by jsp »

Offline aicohn

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Re: 50:1 is Here in the U.S.
« Reply #4 on: September 02, 2010, 02:25:42 AM »
Regulations are directed at the (foreign) brokers, not their clients.  So it's unclear how they would be enforced.  While it's true the UK and Australia may fear the long-arm of US power, cave in & close accounts held by US citizens, I strongly suspect Russia and Estonia would welcome small american forex traders with open arms.  So this idiotic and misguided rule may simply drive US citizens from regulated brokerages in UK or Australia to unregulated ones in the Ukraine.  Heck, I may even be among them, inasmuch as I hate this new rule and every US forex broker with which I've dealt so intensely. I would rather die than deal with the american version of alpari again.  Life is just too short to deal with blown out spreads and endless requotes over a period of minutes turning a 10 pip gain into a small loss.  The CFTC really protected me from that one, right??

This aspect of the law can not be intended to protect US citizens, because it won't.  Rather, it seems to be designed to protect US forex brokerages that simply can not compete on their own merits.

Anybody have any dealings with Admiral Capital (Russia)??
« Last Edit: September 02, 2010, 02:34:29 AM by aicohn »

Offline jsp

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Re: 50:1 is Here in the U.S.
« Reply #5 on: September 02, 2010, 03:14:40 AM »

This aspect of the law can not be intended to protect US citizens, because it won't.  Rather, it seems to be designed to protect US forex brokerages that simply can not compete on their own merits.


It may also be an attempt to lure us into currency futures.  The CFTC already has their hands deeply shoved into that world.

No thanks.  I like my 24/5 trading, my MT and many other things about spot FX...warts and all.  I played around with S&P 500 eminis about five years ago.  You want to talk about a market ruled by big boys, stop running and complex algo trading--that's it.  I'd rather deal with Clickbank/Plimus sellers, bad EAs and signal services, etc.  At least we police that world pretty well through these forums and review sites--no CFTC or other gov't agencies needed!
« Last Edit: September 02, 2010, 03:18:13 AM by jsp »

Offline aicohn

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Re: 50:1 is Here in the U.S.
« Reply #6 on: September 02, 2010, 09:47:18 AM »
I very much like the 200:1 leverage I've got & plan to keep it whether trading abroad is legal or illegal.  I'll trade in Russia or the Ukraine if I have to in order to avoid the Alpari-US's and IBFX's of this world, far apart from the issue of leverage.  They are gangsters & having the NFA or CFTC regulate them is like having Bugsy Segal regulate Meyer Lansky.  I could get 500:1 if I wanted, but see no need for such extremes.  I strongly suspect my trading is well within the 50:1, and really never even think about it. I have enough to think about when planning a trade.  With 200:1 I never have to.  There's enough liquidity in my account to cover what I'm doing several times over.  It's an irrelevancy.

Renouncing US citizenship is a pretty extreme step, but I've been considering it lately.  What starts with dictating what products we buy & with whom we do business ends with those border fences being used to keep us inside.

A.
« Last Edit: September 02, 2010, 09:59:15 AM by aicohn »

Offline AZJeff

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Re: 50:1 is Here in the U.S.
« Reply #7 on: September 08, 2010, 11:02:43 PM »
Hello everyone,

If you would like to do something about this check out the thread I started here
http://www.donnaforex.com/forum/index.php?topic=2609.0
There is only one way we can fight things for this and that is by sticking together as traders.

Regards,
Jeff



From Robert A. Green, CEO Traders Association (Note: he's been great at fighting leverage limits and helped keep us from 10:1--consider joining his new association [$50] to continue protecting us):


The CFTCs new rule calling for a 2% deposit on trading major forex currencies off-exchange (50:1) seems on par with what commercial banks like Citi FX Pro offer their retail forex trading customers now. So its a wise move by the CFTC to reduce leverage by two-times (100:1 industry standard to 50:1), rather than going way over board with its proposal of 10:1. Unlike most off-exchange retail forex dealers in the U.S., Citi FX is not regulated by the CFTC; its subject to bank regulation instead.

Thankfully, the CFTC responded to the pleas from the off-exchange retail forex trading industry saying the CFTCs proposed 10:1 leverage would put the industry at a huge competitive disadvantage to on-exchange currency futures trading (30:1), commercial bank forex trading (50:1) and offshore off-exchange retail forex trading (200:1). See http://online.wsj.com/article/BT-CO...730-715762.html

Regulators and Congress are often sensitive to chasing business abroad and taking business from small-business to hand it over to big banks.

The new deposit rule for non-major currencies is 5% (20:1) and this will probably lead to lots of retail traders asking about the opportunities to trade on foreign platforms.

We will study the new rules and see if offshore trading remains feasible for Americans under new provisions in Dodd-Frank Fin Reg. We discussed how it could be a problem for Americans using offshore platforms on our recent blog and podcast.

Robert A. Green, CEO Traders Association.


Offline alamoland

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Re: 50:1 is Here in the U.S.
« Reply #8 on: October 09, 2010, 04:43:33 PM »
OK. they've done it. I received an E-Mail from my broker (GO Markets in Australia) that they will be closing my account as of 10/18/10 due to the CFTC's new ruling. There is a memo of understanding between the CFTC and ASIC, the Aussie version CFTC. I don't know if I can survive with 1:50, but I guess I'll find out.. Uh let me see.. where do I live? USA or USSR?
Its time for these imbeciles to go. Oh by the way, if my account was more than $10,000,000 I wouldn't be affected..Grrrr...Does anyone know of a place that has no MOU with the CFTC?
If I haven't screwed it up in my anger, I have attached the letter.

 

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