Finra: The End Of Fx Leverage!

Discussion in 'Forex' started by short&naked, Jan 29, 2009.


    Regulatory Notice 09-06

    FINRA Requests Comment on Proposed Rule to Establish a Leverage Limitation for Retail Forex; Comment Period Expires: February 20, 2009

    Executive Summary

    FINRA is requesting comment on a proposed rule prohibiting any member firm from permitting a customer to: (1) initiate any forex position with a leverage ratio of greater than 1.5 to 1; and (2) withdraw money from an open forex position that would cause the leverage ratio for such position to be greater than 1.5 to 1.

    The text of proposed FINRA Rule 2380 (Leverage Limitation for Retail Forex) is set forth in Attachment A.

    Questions concerning this Notice should be directed to:

    Gary Goldsholle, Vice President and Associate General Counsel, Office of General Counsel (OGC), at (202) 728-8104; or
    Matthew E. Vitek, Counsel, OGC, at (202) 728-8156.
  2. achilles28


    Seems these douche bags only want banks to wield 100 to 1 leverage.
  3. cstfx


    Won't fly. It would just move it off-shore. Plus, how can they justify such low margins when the futures equivalent is leveraged at rates higher than 1.5:1?

    Looks like they are angling (haggling?) for a 20:1 level similar to most futures contracts.
  4. OVVO


    Looks like they just want to marginally move volume over to the cme contracts. Comical.
  5. achilles28


    CME, futures equivalent, whatever. Its bullshit.

    If it goes down, I'll leave the Country. Trade from Hong Kong or offshore Prime Brokerage.
  6. If you read the full notice it talks about some retail FX is going from the FCM channels where it is now and is also being offered by broker dealers, and it says broker dealers are precluded from CFTC RULES and should be under Finra. So it says any BROKER-DEALER who offers FX should be under 1'5-1. So the FCMs are fine which most arent B/D'S Its the B/D'S that offer fx that will be under this rule. So fx is same as long as the retail outlet you use is an FCM which is comparable to cme futures, but they want to make any B/D comparable to Securities margin at 2-1
  7. FINRA encourages all interested parties to comment on the proposal.

    Comments must be received by February 20, 2009.

    Email comments to


  8. This has to do with high leverage bringing instability to the forex market and causing hedge funds and retail traders to misprice certain currencies. Soros spoke about this back in the 80s. (think jpy carry trades)

    It has abolutely nothing to do with protecting the investor. They had more than a decade to put limits on leverage.

    High levels of leverage are in part what makes forex so trendy, so if you like to follow trends...