I donât see a leverage per trade size flying, but they could make things reasonable based on a few criteria. They can always break up their trades and use different accounts at different firms to avoid the limits. They have different levels of option trading ability depending on your experience and capital. If the regulators are trying to protect the little guy, then small accounts of inexperienced traders can have some seriously low leverage. Traders with plenty of capital and experience should be able to trade with reasonable leverage.
Remember though, the govts's purpose is to lower volatility extremes, NOT reward the trader just bcuz he/she has more size an experience!...its NOT about you, its about maintaining the health of the market in general...
FXCM talking about new rule: This is from a FXCM rep, and just an fyi I do not use FXCM, he just posted this on another forum from a question I had asked. I can give a basic statement from FXCM. A formal statement will most likely be released in the days ahead. FXCM is opposed to the 10:1 leverage proposal and is actively lobbying against it. The proposal definitely strikes a nerve for those both for and against the reduction in leverage. If you would like to voice your concern for or against the proposal you can contact the CFTC by sending an email to secretary@cftc.gov with âRegulation of Retail Forexâ in the subject line. Your message will be posted unchanged on the CFTC website. It is important that you do not list fake personal contact information otherwise the CFTC may think it is simply a broker voicing their opinion. That is how you can make a difference. The rules are being made by what regulators see as what is best for you. So they need to hear directly from you if you want them to know what you think. Then another post of me asking about moving accounts to the UK: That is a good point because many traders moved to FXCM UK due to past regulatory changes on hedging and FIFO. This will probably only cause more business to leave the US. We do not believe the FSA will make the types of changes to leverage which are currently being proposed by the CFTC because the FSA takes a different approach to regulating. The CFTC has a rules based system. If you meet requirements on the checklist you can open a forex brokerage. $20 million in minimum capital, check! customer identification program, check! etc. The FSA operates differently in terms of how they create their rules. They take a closer look at each broker not only at the minimum amount of capital the company has but at the amount of capital they have even exceeding the basic amounts. They also look at the experience of management in the financial industry, how long the company has been operating, how long the systems have been running and reliability, etc. all in order to gauge what a broker is allowed to do or even if they will license the broker. So the mindset is much different in terms of their regulatory approach.
This makes no sense. The fact that they explicitly regulate only retail fx - as opposed to professional status trading(llc) or ECPs - would imply that this legislation comes from a consumer protection standpoint. But same consumers can still happily punt away in futures with 150+:1 intraday (~45:1 o/n) and piss away all their savings if they want. Guessing its the CME-lobby trying to pimp their crappy emini and emicro fx-products though some creative legislation.
over 1:1000 that's where the sword start to cut fat and fast ! Aren't the market participants, who are assuming all the risks for themselves not the only one able to judge their relative level of confort with leverage ?
Everyone should write the cftc to the address in my previous post to put comments during this 60 day window.
Calm down everybody - they are just in the public comment phase of this. What we end up with (if anything) will be far different from this draconian proposal. Why it would not fly? Look at the above mentioned 6E trade - 4050 margin on 125k contract (USD dollar value ~180K) is about 44:1 leverage already, 89:1 intraday on standard day-trading leverage let alone all the $500 brokers out there. 10-1 will not fly, and even if they pushed it thru as a means to cripple the OTC trading of these products, there are other trading alternatives.
While the proposal is just in the comment phase, now is the opportunity to add your input if you want to voice your opinion for or against, and possibly have an impact on the end result.
Jason, Your firm has to partner up with competitor brokers and pony up some serious money to hire some lobbyists. Or else, the FX industry in the US will be dead