Share:

Forex Trading & CFTC RULE RIN 3038-AC61

Over Regulation Needs To Stop

FOREX TRADERS UNITE!



There is a new CFTC Rule in the works. It is a very bad call to the retail Forex Trader & market alike. You can view it here:



http://www.cftc.gov/newsroom/generalpressreleases/2010/pr5772-10.html



There is a Blog by a member of BABYPIPS.com & the following is a copy paste from that. Please read carefully:



"

The new rules will require all RFEDs (Retail Foreign Exchange Dealers) and FCMs (Futures Commodity Merchants) in the US to register. Also, "Persons who solicit orders, exercise discretionary trading authority and operate pools with respect to retail forex would also be required to register, either as introducing brokers, commodity trading advisors, commodity pool operators, or as associated persons of such entities."

Basically, this means that in the US, all forex brokerages, forex account managers, investment pools trading forex, IBs to registered brokers, have to be registered. I think this is a great thing. It will help potential traders or investors weed out the potential scammers out there by giving them a chance to check out their registration number before giving them their hard earned money.

The next big change is that a minimum net capital requirement of at least $20 million, plus 5% of any amount of retail customer liabilities that exceed $10 million.

Brokers who cannot meet or find the funds to meet this requirement will probably have to move offshore. If you are trading with one of these brokers, it's up to you if you want your money to move offshore with them or transfer your funds to a broker who can meet that criteria. Again, it's up to you where you put your money, but I would seriously consider asking how this will affect your ability to trade and the safety of your funds during transfer.

To find out which camp you're in, please visit the CFTC's most recent financial data page for Futures Commission Merchants or contact your broker and ask them about the proposed changes.

Finally, the new rule change causing a ruckus across the forex industry is to set maximum leverage to 10:1 for retail forex traders in the US...

Ok, I'm feeling a bit torn about this because I'm all about traders not over leveraging their positions, but I'm also about giving those traders who know how to control and manage risk the choice and ability to increase their position size if a trade goes their way.

Also, if this rule does go into effect, it may hold back those new traders who have developed a profitable system and the discipline to manage risk, but have low starting capital, from getting their feet wet.

In my opinion, this is a case of "over regulation," and that "education" for traders is a better solution so that the few who don't know what they're doing with leverage doesn't ruin it for the rest of us who do. The United States of America is the land of the free, where each forex trader should be able to make their own educated decisions about their money and take responsibility for their own actions, right