New CFTC margin limit proposal in US 10:1

[PipCop]

Here is a copy of the letter I sent to them.

Dear CFTC,

I am writing in response to the proposed 10:1 leverage proposal being considered for US Forex markets.

I am totally against this proposal, and I am sure most (if not all) other individual traders are also opposed to this.

With the recent devastating change to 100:1 leverage , I have already moved my trading accounts overseas, and they will remain there. I recommend all my customers and friends open accounts with offshore brokers.

While I understand you are trying to prevent uneducated traders from losing money, you are in essence treating us ALL like fools.

I have been trading with Forex since 2006. In my first year of trading, I quadrupled my account balance, and then promptly lost it all. But I learned from that. Over time I have become a more sophisticated trader and now am able to trade in an automated fashion with a nearly 100% success rate , with returns of over 40% in December of 2009 alone. (My 401k achieved barely that over the entire 2009 year.) Why should you protect me from that? How are you helping me help myself? You are impeding on my ability to financially plan for my future yet offer no alternative to help me.

I do not need your “help” or “protection”.

While your goals may be to protect traders, yours is either a self-centered plan which will enrich you or your colleagues in some way (most likely in my opinion), or it is a VERY ignorant and poorly constructed attempt to do so. I myself can think of other ways to protect new traders, but your proposals are not among them. If you are concerned about new traders losing money, you could easily create a proposal that would require new traders to limit the amount of capital they could start with, such as $1000 for the first year of investing. Only if they traded actively and also saw at least a 5% return on their investment, then allow them to add additional funds.

Perhaps you can see it another way – what would happen if we, the US citizens who trade Forex, were to point our finger towards you and say you can now only spent 1/10th of your budget, you can only make 1/10th as much on your investments … would that help you? Presumably not, as I am sure you are fine self-managing your day to day affairs, as am I – and I believe most other Forex traders as well.

Kind regards,


James Fullerton

I await its appearance on their web site.

[pipdetector]

Originally Posted by PipCop

Just an FYI - comments sent by traders like me & you are being posted on the CFTC's website. It does not look pretty, either!

http://www.cftc.gov/lawandregulation...10/10-001.html

I had a look at the website and I am deeply shocked. There are ONLY about 100 registered comments since mid January... Of course, they mostly oppose the proposed leverage , but I think such number of comments will hardly have any inpact.

[maddox01a]

Originally Posted by geekguy

=-=-=-=-=- Comments from another message board -=-=-=-
Dear Lawrence,
Asaf also commented on "required to house $1000 in the margin in order to trade 1 single mini"
"Everyone is focused on the 10:1 leverage and are missing the big change:

"Subject to certain exceptions (e.g., for certain regulated financial intermediaries not under the Commission ’s jurisdiction as established in the CRA), the Proposal would require persons offering to be or acting as counterparties to retail forex transactions but not primarily or substantially engaged in the exchange traded futures business, to register as retail foreign exchange dealers (“RFEDs”) with the CFTC. Registered futures commission merchants (“FCMs”) that are “primarily or substantially” (as defined in the Proposal) engaged in the activities set forth in the Act’s definition of an FCM would be permitted to engage in retail forex transactions without also registering as RFEDs."

This means that if a foreign broker wants to offer trading services to US customer he needs to be registered by the CFTC which means it needs to comply to the rest of the restrictions - so if you were thinking - "I will just open an account with a Foreign broker ..." Think again because these brokers will not accept US customers after this bill has passed.

-- Asaf."
Click here to see more.
Happy trading,
The Currensee Team
-=-=-=-- End comments from another message board -=-=-=-=

This is an insane world

Just took a look at Alpari UK's live account creation page and they clearly say the US private citizens can't oen accoutn with them.

The CFTC B.S. is a clear attempt at shutting down US citizens from retail Forex trading and I believe the investment banks are clearly behind this. So not only did we bail them out but they asked that the Gov shut door on ppl going to Forex trading.

Guess I better brush up on 'God Save the Queen' because if this thing becomes law... my family and I will strongly consider leaving the US.

[pipdetector]

It seems that FXDD saw the writ on the wall quite a while ago, because they notified about approval for European operations in December last year. So my FXDD trading will be done via FXDD Malta from now on. No FIFO , 200:1 margin (I can start using GT-Shadow again).

Looks that they are fighting hard for survival.

I am not sure if I am entirely happy that it's going to be Malta...

[pipsbuster]

As you might know, the US CFTC (Commodities and Futures Trading Commission ) has put out a proposal of introducing the maximal leverage of 1:10 instead of the current 1:100. If this proposal ever goes into effect, it will mean a serious harm to retail Forex overall and any Forex-related business in particular (just imagine what it's like trading a live account with a 1:10 leverage ). The change will concern absolutely all US-regulated brokers, not just the NFA members. Comments on the proposal are currently being accepted from the general public until March 22, 2010 at secretary@cftc.gov with "Regulation of Retail Forex" in the email's subject line. Retail traders are campaigning massively against the measure, with over 6,000 comments having been submitted to CFTC to date (heck, even a known Forex magnate Michael Greenberg sent one). Below is the message I sent to CFTC on this matter and I urge everyone here to join me in this effort (you may copy the text of my message and put your name in the end if you wish):


Dear Sirs,

I would like to hereby express my deep concern with the intentions of CFTC to limit the maximal leverage for retail Forex brokers from the current 1:100 to 1:10. In my opinion, the following scenario is likely in that event:

1. The maximal leverage reguirement will be increased for all US-regulated brokers from the current 1:100 to 1:10. This will clearly demonstrate a complete dismissal of a regular Forex trader's interests if they happen to be conflicting with the interests of the "big wallets" - banks and non-retail futures brokers. We do not wish to be "protected" till we go broke just to make them even richer.

2. US-based retail Forex brokers will sure be unwilling to lose their business completely. They've already got burned with the recent self-imposed regulations of the NFA (which is not even a government agency, although many traders are made to believe it is) and now clearly realize the 1:10 leverage will be the last nail into their coffin. These retail brokers will therefore start moving their businesses to other countries and servicing US customers from there, successful examples of which already exist: Dukascopy in Switzerland (which has recently introduced MT4 in addition to their custom platform), ATCBrokers and FXCM in the UK, FXDD in Malta, FXPro in Cyprus etc.

3. The US government in response will do everything possible to prevent US traders from enjoying the benefits of being serviced in other countries by making overseas transactions to personal bank accounts even more controlled and restricted.

4. Those traders who make a living from their trading will then have no other choice but to set up offshore companies for themselves through the Internet (contrary to a popular belief, this doesn't cost much - one can get an offshore company with an overseas bank account for as low as $1,500).

5. As all (or most) trading accounts will be on the companies' names, the US government may heavily lose on the income tax they collect from US Forex traders. Thus, trying to harm the average Joe trader and make the banks and futures brokers richer at his expense, the government is harming themselves in the end.

Since recently, America (which I really love) has been turning from a land of opportunities to a land of restrictions. Very sad to see this, indeed.

Yours sincerely,
...

[PipCop]

I read an article in Futures magazine the other day and it appears that (a) over 90% of traders oppose this and (b) most brokers vehemently oppose this and (c) the whole idea was set forth by agencies outside of the USA. I don't think it's going anywhere, but I am glad we all took action.

[Ken Long]

Guys, Just reading through these letters, and there are some really great ones here, James and PipBuster especially. I have no idea what the CFTC will decide, but it dosent look good. Just the idea that they're proposing this shows their intent.

This wont really have as much of an effect on us as traders as it will on the smaller US brokerages. We all have the ability to switch our accounts at any time, and most of the large brokers have already made the neccessary arrangements.

? Do you really think this was proposed to protect the inexperienced Forex trader? Or to control the brokerage industry, and squeeze out the small brokers?

They know we can move to offshore brokers, and already are. I propose that this has little to do with us, and is all about control of the industry and elimination of the little brokers. Just a little more of the usual US Christian Conservative Controls. They still think they own and run this country, and can control the peoples minds and actions.

Further, I suspect they dont really want us making money in this manner. They would really like to limit the entire trading business to a select few of the high end money managers and investment banks they're pals with (GS), and keep the rest of the population "barefoot and broke" so to speak, working for employers, providing services and products that they value, and can profit from.

[dennerle]

so guys, when will the verdict be out?

[jsp]

Originally Posted by Ken Long

Guys, Just reading through these letters, and there are some really great ones here, James and PipBuster especially. I have no idea what the CFTC will decide, but it dosent look good. Just the idea that they're proposing this shows their intent.

This wont really have as much of an effect on us as traders as it will on the smaller US brokerages. We all have the ability to switch our accounts at any time, and most of the large brokers have already made the neccessary arrangements.

? Do you really think this was proposed to protect the inexperienced Forex trader? Or to control the brokerage industry, and squeeze out the small brokers?

They know we can move to offshore brokers, and already are. I propose that this has little to do with us, and is all about control of the industry and elimination of the little brokers. Just a little more of the usual US Christian Conservative Controls. They still think they own and run this country, and can control the peoples minds and actions.

Further, I suspect they dont really want us making money in this manner. They would really like to limit the entire trading business to a select few of the high end money managers and investment banks they're pals with (GS), and keep the rest of the population "barefoot and broke" so to speak, working for employers, providing services and products that they value, and can profit from.

Why don't you leave the politics out of this? But since you brought it up, the truth is that it's all part of the Federal power grab that's taken place over the last two years. It's no coincidence that the White House is quietly legistlating new capital/currency controls as well. Even the so-called "health" bill attacks investors with a new targeted tax. It has nothing to do your imagined suspects. It stems from the same lust for power and wealth redistribution schemes as tax-on-trade (i.e., Cap-in-Trade), the most recent bill, the takeover of auto companies/banks, etc.

Rest assured no one wants small, independent traders to amass enough wealth to challenge the collectivists and overturn their greedy, draconian, tax/spend/regulate-centered legislation. They'd rather leave these markets to those who finance them (Soros).

[Ken Long]

Originally Posted by maddox01a

Just took a look at Alpari UK's live account creation page and they clearly say the US private citizens can't oen accoutn with them.

The CFTC B.S. is a clear attempt at shutting down US citizens from retail Forex trading and I believe the investment banks are clearly behind this. So not only did we bail them out but they asked that the Gov shut door on ppl going to Forex trading.

Guess I better brush up on 'God Save the Queen' because if this thing becomes law... my family and I will strongly consider leaving the US.

I checked a few of the offshore Forex brokers and none of them seemed to be taking US accounts anymore, AlpariUK, FxPro, FXCBS.
FXCM has there entire MT4 platform operating off their UK branch, and its still available, probably because the main accounts are being held in the US and only serviced through the UK. If the proposal goes through as mentioned and these accounts get blocked as well it will become really difficult, at least for the small accounts and the highly leveraged day trading.

? To gain access to an offshore broker would we need to establish an offshore company as mentioned, or just an offshore bank account? From what I read an offshore bank account is pretty easy to get, you just have to be there in person to open it.


As far as the politics (jsp), it seems this entire situation is politics. Your "truths" are no closer to the truth than any other opinion. I certainly didnt state my ideas as the "truth", only suspicions and questions, of which I'm sure we all have plenty.

After all, whats a forum for?