Forex Leverage Cftc
Forex Common Sense Reform
These simple changes could be on its way to make the foreign exchange market acceptable within the financial services community without disrupting the entire U.S. Retail industry currency.
Another important step that can be taken by regulators is the standardization of prices and currency trade rules. If this can be achieved, that will require all riders to play with the same rules as regards the implementation and reporting. Broker prices and the execution is something that could be audited and is already happening with most of financial markets.
It goes without saying that the industry needs of law enforcement Forex but must be targeted and solve the above problems in terms of being under-capitalized brokers and presentation of false financial statements. Under the current U.S. standards, customer deposits are considered as an investment (not a deposit), while a corresponding journal entry is made to the lists of these Customer deposits on the liabilities. U.S. regulators should order that customer deposits are held in a separate account minimizing the possibility or temptation, misappropriation of client funds. It could also require insurance to protect customer funds, due to the default broker.
With all the recent discussions on the proposal from the CFTC to limit retail Forex Leverage to 10:1, it seems that Congress is taking a closer look at the reasoning behind the proposed legislation. The overwhelming responses from both brokers and retail traders have been decidedly negative. Regulators outside the U.S. will to allow brokers to offer more than 100:1 effectively hitting U.S. standards out of alignment with the rest of the world. The CFTC said that his intention with proposal is to protect retailers. Protect them from what? It seems that this rule would actually retailers at risk of losing more money as it will be required to deposit more than ten times more money to keep the same business strategy. Most Forex Brokers already have automated clearance levels in place that protects an account of the loss of a lot of money or go negative. A possible solution to consider is to extend the knowledge of the client ("KYC") the standards in order to establish a range that may be deposited on the basis of information such as income, net worth, trading experience and and other relevant factors.
About the Author
www.divisafx.com Divisa Capital LP (“DCFX”) is an investment house that provides spot foreign exchange trading services to a diversified client base that ranges from financial institutions through to private individuals.
Pt 4 John Jagerson on “Leverage in the FX Options Market”