International Trading


James Bibbings explains his thoughts in an interesting article about the changes the new CFTC regulation released a couple of days ago will introduce in the brokers industry while thousands of tourists walk around financial district in New York, taking photos close to the Wall Street Bull or Tiffany's building. "Are the Final Rules as devastating to the industry as the proposed rules, published by the CFTC in January of this year," Bibbings ask us, "were thought to be?"
Life continues definitely, but how the new rules will affect the Forex market after the October 18th date? And in this case, will be the traders able to operate with non-US brokers? Key questions over the desk.
Bart Mallon writes in his Forex Law Blog about the same topic while the Chicago Board of Trade and the CME continue with their operations after the rules. He considers as “ not probable” the possibility that US traders will be able to move their accounts overseas.
After US President Barack Obama signed the Dodd−Frank WS Reform, the CFTC was asked to propose rules to run this act. Now the regulator has released its guidelines: No more leverage above 50:1 in majors and 20:1 in minors; Any brokers, advisors, money Managers, retail traders must register with CFTC and they have to pass an exhaustive exam; It is possible that traders won't be able, by law, to operate with non-US firms.
Related to registrations, Bart Mallon, from Mallon P.C, says that "Forex managers would need to be registered by October 18, 2010." The effect of this rule is that "firms who provide investment advice with respect to retail forex will need to cease providing such advice unless the managers are registered with the NFA."
About Leverage, a key point, 50:1 is not low as 10:1 level proposed in January 2010, but it means a reduction from the 100:1 previous level. Remember that it is another cut from the original 400:1 which was in force before May 2009. "Leverage will have maximum boundaries of 50:1 on major currency pairs and 20:1 on exotic currency pairs," says James Bibbing, CEO at Turnkey Trading Partners. "These parameters will, however, be monitored by the CFTC, as well as NFA, and from time to time may be lower than these prescribed levels," points Bibbings.
According to InterbankFX, US traders will not be able to operate with overseas firms: "The new rules will impact thousands of U.S. customers with millions of dollars invested in overseas brokers," says Interbank in a press release. "Beginning October 18, 2010, overseas brokers will no longer be able to service U.S. customers. These rules ensure U.S. customers will receive the protections afforded by U.S. regulations." Mallon agrees with that, he considers with a “not probable” the possibility that US traders will be able to move their accounts overseas.
Too many challenges over the Forex market desk, US new regulations on financial markets have arrived finally to Forex, life continues, but with changes. The discussion is open, stay tuned!