It’s been a few months since the proposed CFTC Forex regulation sent shockwaves through the US trading community. The proposed leverage limit of 10:1 raised concerns that US brokers would not be able to offer retail trading services due to this low leverage as it would have placed them at a severe competitive disadvantage to foreign brokers.
It seems that the uproar and protest have been effective as the final new set of regulations has been published and it’s not as strict as was first suggested. Here are some of the proposed new rules, as I see them. You’re welcome to read the formal regulations yourself:
- The new leverage limits are as follows: 50:1 maximum leverage on major currency pairs. 20:1 maximum leverage on exotic pairs. This may be a far cry from the 200:1 that foreign brokers offer but in all honesty, most private traders should limit themselves to 50:1 and lower so this is not really a rule that should affect the wise trader.
- All companies who offer retain forex trading services must be registered with the proper government agency and there are strict rules about how much money they need to have in their balances to be able to actually cover the trades that they’re taking.
- For US traders, this may spell the end of offshore retail Forex trading. This point is still not crystal clear and further information may be coming in the next few weeks to clarify this. However, US traders should make sure that they’re trading through registered and regulated brokers to avoid any problems.
That’s it. The new rules take affect on October 18th. Get ready.
