CALL TO ACTION: CFTC 10:1 - Share what you wrote here

[Stony]

Hi,
Yeah, I've already closed my US brokerage account and moved offshore to Switzerland. Currency trading should be left alone and free from government interference. By the way, my Swiss broker is GCI (GFX Group) - the Swiss are cool and very astute business people, they haven't attracted 25% of European commerce by being 'air heads'. Their rates and commissions are comparable to any US broker; leverage is 200:1. Best of all, no NFA interference: hedging is fine, and no FIFO rule. Perhaps the only downside for some is, you're required to open with a minimum of US$2K or Euro equivalent.
Mike E.

Hi mike_biz,

moving offshore is ok, but be careful about Switzerland! There is no regulation of forex brokers, which means that many scam brokers reside there. And GCI is rated scam by the FPA ! Didn´t you read the FPA brokers reviews? Look here:

GCI Trading Forex | GCI Financial | Gcitrading.com reviews and ratings by Forex Peace Army

Best choice for moving offshore for US citizens is probably UK.

 

[CHIJIOKE OFOR]

Proposed 10:1 leverage

CFTC should not even consider this proposed regulation due to its enormous consequences if it comes approved.

1. EXODUS OF BROKERS

There would be complete movement of brokers from the US offshore where they are free to adopt what ever level of leverage.

2. LOSS OF REVENUE AND JOBS

The government should consider loss of revenue and the number of jobs to be lost when the affected brokers move their business offshore.

3. EFFECT OF 10:1 LEVERAGE ON THE AVERAGE TRADER

Traders would not be in position to place more than three trades thereby taking away the pleasure in trading.

CFTC should reconsider this proposal with a view to trashing same. All decisions that does not conform to global best practices should not be considered as regulation.
I live in Nigeria and have a broker that is in the US - Fundadministration Boston.

This regulation should not see the light of day.


Bet regards,


CHIJIOKE OFOR

 

[spak3060]

Protest to the CFTC's proposal to limit forex leverage to 10:1

Title:the CFTC's proposal to limit forex leverage to 10:1
Saturday, January 30, 2010 8:21 PM
From: spak3060
To: "secretary@www.cftc.gov" <secretary@www.cftc.gov>
Hello Mr/Mrs,
When I heard about the CFTC's proposal to limit forex leverage to 10:1, I really worried, because my basic strategy has been based on the leverage 500:1. This strategy needs simultaneously to open many positions with a lot or half a lot for each of them. If the CFTC's proposal submits as a rule, I and other traders who use such these strategies need a huge investment to trade in forex, and it's impossible.
I protest, as a member of Forex Peace Army, to submit this proposal as a rule. I hope CFTC omits this proposal, as soon as possible.

Best Regards


Spak3060

 

[Jason Rogers]

The FXDC has issued another statement on fighting fraud in retail forex and the CFTC proposal's impact. Here it is:

Fighting Fraud in Retail Forex​

Over the past decade the Commodity Futures Trading Commission (CFTC) has found itself engaged in a seemingly endless battle with con-men, ponzi schemers and hapless fund managers operating in the retail forex arena. The difficulty for the CFTC lay in the fact that 90% of the people engaged in this criminal activity were not registered or licensed with any regulatory body and in many cases were simply common criminals who never actually engaged in any trading but simply misappropriated customer funds for their own use. The CFTC’s answer to fighting this problem has been to propose dramatic new regulations that would require anyone soliciting customers to trade retail forex get a license and be registered with the CFTC. This new licensing regime would go a long way towards ending the problem of forex fraud in the
United States.

However, all of this potential progress will be wiped away due to another CFTC proposed rule which would require customers post a 10% margin deposit in place of the current 1% margin rule recently adopted by the primary regulator of retail forex over the past ten years, the National Futures Association (NFA). Here is why the 10% margin rule will make forex fraud worse than it has ever been:

• The adoption of the 10% margin rule will make it impossible for U.S. based forex dealers to compete with competitors from the United Kingdom. UK dealers are regulated by the FSA, which has no leverage restrictions whatsoever. The U.S. retail forex industry simply won’t be able to compete and will be decimated, leaving no legitimate forex dealers left for customers to trade with. In this environment fraud will flourish.
  
  
• With no widely recognized brand names left in the United States it will become harder for the trading public to screen out the con-men. Last year the major forex dealers of this industry spent over $100 million building up their brand names precisely to separate themselves from the rabble. When a customer clicks on the website of a brand name in the retail forex industry they can quickly find links directing them to the CFTC or NFA do conduct a background check. But when the brand names disappear it will then fall upon forex traders themselves to sort through the rabble and this will be much more difficult and leave traders much more vulnerable since fraudsters are highly unlikely to give customers an option to do background checks with regulators.
  
  
• Adding to this vulnerability is a worrying trend of traders who are developing an “antiregulatory” attitude when it comes to forex regulation. Traders are going from valuing the consumer protection offered by regulators to being hostile towards regulation since they are starting to see regulation as something that smothers consumer choice in the name of nanny statism. This attitude will harden should the 10% margin rule pass thus turning the CFTC into the bad guys in the minds of many traders. Once again, in this environment fraud will flourish.
  
  
• Furthermore, a lot forex fraud involves boiler rooms that peddle so called “foreign currency options,” which require customers to make a deposit in order to purchase an over-priced premium. By increasing margin requirements these con-men can make even bolder requests of their customers and charge even more ridiculous amounts for premiums before they run off with a client’s funds.
  
  
• Perhaps most troubling of all is that unregulated dealers from around the world will be the biggest beneficiaries of the 10% margin rule. These unregulated forex dealers don’t have to worry about capital requirements, risk management models, marketing ethics, dealing practices or even returning a customer’s funds. These dealers will be out of the reach of the CFTC and they will thrive.
  
  
• At the end of the day, fraud will become impossible to police. Background checks are impossible to do for unregulated offshore forex dealers. Some of these con-men simply setup a website, put up a phony address in a foreign locale and claim to be a large and mainstream forex dealer when in reality there is just some lone hustler, sipping tea in a cramped apartment running the whole show. In the aftermath of the shutdown of the U.S. retail forex industry U.S. traders will be bombarded by offshore forex boiler rooms and many will be taken advantage of unnecessarily. There is no cop on the beat in the world of the unregulated, overseas retail forex dealer. Therefore, it makes no sense that CFTC would encourage people to open accounts at these offshore dealers instead of trading at a perfectly compliant and regulated domestic forex dealer.

A Healthy, Regulated Industry with a Cop on the Beat​

The key to solving forex fraud resides within the CFTC’s own proposed rules (absent the 10% margin rule). Over the last several years the NFA has aggressively tightened up its rules regulating retail forex by raising the minimum capital requirement to $20 million (which doesn’t include additional capital requirements on net positions), conducting more aggressive audits of firms (NFA registered forex dealers must submit monthly reports to CFTC and weekly reports to NFA), imposing tough marketing standards, and raising the bar in general for admission to the Association. As a result, the days of the small time forex dealer with just a few thousand dollars in capital opening a forex firm have long since ended. These tougher regulations have cleared out the worst elements in the dealer community, leaving only the unregulated forex referring broker community to be cleaned up next. These rules will do exactly that.

But by requiring customers post 10% margin and wiping out all forex dealers (who are not engaged in fraud and who want to see an industry where the only people employed in it are licensed and on the level) the trading public will be left with no one but the ponzi schemers to do business with inside the United States. The fact is the overwhelming majority of customers who trade in the retail forex industry are not victims of fraud. They are investors who enjoy trading currency online. They should not be punished for the sins of criminals. And they won’t be in a well-regulated domestic forex industry that works with the CFTC to report on those solicitors who are not going by the new letter of the law. But first there has to be a healthy industry to regulate in order to finally put an end to fraud. If the 10% margin rule is withdrawn
that’s precisely what we will have.

Statement taken from here http://blogs.fxstreet.com/francesc/files/2010/02/fighting-fraud-in-retail-forex.pdf

 

[Nathan Rothschilde]

Fences are meant to be Jumped

The regulators in their zeal to protect the public from each other think up rules to make policing the playground an easier take for themselves.
On one hand you can not complain that Uncle Sam is trying to protect his children. On the other it is stifling and inhibiting business enterprise and preventing some people from bettering themselves.

In a regimented society (China is a good model to examine) every one gets put in boxes (If you are old enough to remember Peter Paul and Mary you can sing along). In case you do not know who they are it is worth looking them up on Youtube to learn their lessons.

Regulations are certainly not in tune with entrepreneurial traders. But it is a fact that 90% of forex traders lose money. Excessive leverage definitely contributes to the speed of demise of the trader. So by limiting leverage the regulators are extending the trading lives of losers - the great majority of traders.

However if you are in the 10% of successful traders the regulators are taking bread off your table. There are a few approaches you can take. Initially you might just cop it sweet - say nothing and do nothing - and accept it.

However instead of being a coach roach you might rise up and complain. What do you think your chances are of being able to change the regulators minds - or of them permitting exceptions to their rule - and giving you an exemption card or ticket to the high rollers room?

Most forex traders are a bit more worldly wise than the average person. You might even know already that there are casinos in Macau. Struth the whole country/ city/ island (it is just a few street blocks of land, principally comprised of casinos, more casinos and more ... you guessed it ... CASINOS.)

Is there any restriction at present on US citizens which prevents them from going to Macau and gambling? Not to my knowledge. Similarly with visiting Hong Kong, Europe or Belize. What if instead of gambling at the casinos you preferred to gamble at forex while in such places? Any rules against you doing that?

Well strangely there is! The offshore forex broker in most instances might not open accounts for US citizens/ residents. However these FX dealing firms are very commercial and will readily open trading accounts for Offshore Companies. When I say Offshore I mean companies registered anywhere in the world except in the USA.

Okay you hear the alarm bells ringing - so you might as well scurry on home and hide under the bed. But if you are allowed to stay up late and watch Adult Movies on TV you might also realize that we live in a Wide Wide World - where the USA and Uncle Sam do not rule everything. Yes there is US legislation about money laundering and tax evasion. I do not intend to debate the merits of such laws. But it is legitimate for US corporations to have foreign subsidiaries and to do business in many countries around the globe.

It is up to you to decide if you wish to be aligned with a foreign corporation able to facilitate forex trading at 400:1 leverage or if you prefer to settle for the meagre 10:1. Now do not start thinking about the costs of set up and operating expenses and complain about that. If your trading capital is small then you are still a learner. So stay in the pre-school and settle for the lower leverage until you have gained experience and built your trading capital.

Once you have sufficient trading capital to warrant the expenditures needed to set up a real foreign trading company you can do that easily. Depending on how that is structured there may even be tax advantages. However I am not advocating that you try to defraud Uncle Sam - but it may be worth your while getting professional legal advice on structuring to minimize the amount of draw down you might face each year from Uncle Sam.

If you are out of short pants there are commercial avenues for the well capitalized to take that can give Forex traders the leverage they deserve. Until you get to that stage and provided you are intelligent about it then do as they say Down Under - "shut your gob!"

 

[purplepatchforex]

Has anyone seen anything Official on this at all? I'm pretty sure it's an urban myth.

 

[PipStar]

[*]Adding to this vulnerability is a worrying trend of traders who are developing an “antiregulatory” attitude when it comes to forex regulation. Traders are going from valuing the consumer protection offered by regulators to being hostile towards regulation since they are starting to see regulation as something that smothers consumer choice in the name of nanny statism. This attitude will harden should the 10% margin rule pass thus turning the CFTC into the bad guys in the minds of many traders. Once again, in this environment fraud will flourish.

Here's what we get with regulation: FIFO, no hedging the most stupid rule ever and now 10-1 leverage. Why should we support regulators when they are working against us? May be we should let the CFTC trade our accounts too.

 

[thriving]

CFTC's proposal to limit Forex leverage to 10:1. RIN 3038-AC61

Attention: Mr. David Stawick, Secretary Commodity Futures Trading Commision
1155 21st Street, N.W.,
Washington, DC 20581

Dear Sir,

Hello, My name is Ted Kravos.
My father and I are from Canton, Ohio and we are retail Forex traders and we are very concerned about the CFTC's proposal to limit Forex leverage to 10:1. RIN 3038-AC61

We strongly oppose the proposed 10:1 restriction of leverage sizes for retail Forex traders in the United States because it will cost thousands of jobs and will cause us to move our money outside of this country.

One of the primary reasons that traders lose money is because they are largely uneducated and do not practice trading in a demo account before trading real money.

Novice Forex Traders need to READ the very large print RISK DISCLOSURE STATEMENT that every United States Broker makes us sign on their registration forms before trading real money and opening an account.

IT IS NOT FAIR for all traders to be penalized in the Forex because some people complain of losing their money. People lose money because they don’t educate themselves about the risks involved with trading large amounts of money at one time. The simple way to stop this is they should not trade money they cannot afford to lose.

It’s their own fault for NOT reading the risk disclosure and NOT getting properly educated before investing their money. Trading is serious business and brokers should be shut down if they are not educating their clients properly about risk.

The brokers need to provide more educational materials on examples of how people can lose their money and that any trader should NEVER RISK MORE THAN 3% OF THEIR TRADING CAPITAL on a single trade. This rule alone will prevent great loss of money.

Hundreds of brokerage offices, Forex businesses, Forex seminar trading companies, Forex trading book companies and the large trade shows in New York and Las Vegas will go out of business or move to other countries.

Customers here will move their funds with other internet brokerage offices located overseas to continue with the current 500:1, 400:1. 200:1 leverage.

United States forex traders cannot make money and trade with this low leverage of 10:1 PLUS the 10 times higher capital requirement. It’s ridiculous!

People may change the way they invest their money and try more riskier ways to make money. Real Estate and the Stock Market is not the answer in this economy.

We lost a lot of money in Stock Option Trading and know that trading Forex is much less risky.

It seems as though someone there thinks that retail forex trading is so dangerous as to precipitate some type of financial crisis. We know that’s not going to happen.

We need to focus on more important problems in our financial system.

We need to CREATE JOBS in this economy and KEEP THE JOBS HERE in the United States. We don’t need to jeopardize more jobs by this new proposal.

People in this economy do not have the kind of money to trade with 10:1 leverage AND may decide to invest their money into more riskier avenues of trading.

If leverage changes to 10:1, there will be TOTAL DESPERATION AND TRADERS WILL SCRAMBLE to overseas brokers that allow the leverage the traders are used to having now in the United States. Don’t change anything. Leave everything alone!

More United States traders will get scammed on the internet by unlicensed and unethical brokers that don’t really have an office to be called a broker.

The U.S. government has a right to collect taxes on our earnings in the Forex! KEEP THE MONEY IN THIS COUNTRY AND COLLECT TAXES ON IT. Traders will move funds out of this country with 10:1 leverage ruling.

We think it would be better to work with the Forex Peace Army to educate the public about scam forex web sites and brokers that are scammers. The Forex regulators should give more Forex traders reference to the Forex Peace Army website on the broker registration forms to help people to become more knowledgeable about unethical brokers and scam web sites. Their website is Free Forex Trading Community With Forex Signals And Broker Reviews.

Forex Peace Army is the best thing out there to educate the public about Forex and to let people know about the real Forex educational materials and free web site trading help. It’s a totally unbiased web site for the Forex Traders to protect them from losing money.

The Micro Accounts with the United States Forex Brokers are good for the middle class traders because it reduces the amount of money they can lose in the Forex Trading. People can start with little money and learn how to trade. It gives the chance for people with small incomes the ability to learn how to properly invest their money in the Forex. A person cannot lose a lot of money with a micro or mini account.
We think It would be good that brokers recommend trading in a small micro or mini account before investing in a standard account. This would avoid great loss of large sums of money by the novice trader. Traders need to be informed properly of this option.

If the leverage is changed to 10:1, it would eliminate these smaller micro accounts that most United States Brokers offer since they would go out of business and lose millions of dollars and lose all their clients to brokers overseas. People would have to trade greater sums of money to make any money at all which is more risky for people.

The United States government will lose millions of dollars in tax revenue generated from traders moving their money to overseas brokers and people will lose their jobs.

We, the American People DO NOT want to see the financial industry in this country lose more jobs.

This proposal of 10:1 leverage would jeopardize many lives and many trading educational seminar companies will also go out of business.

All this proposed legislation really won't matter too much because if it passes. All the brokers in the U.S. will go out of business and what good will that do? The brokers DO NOT want this proposed 10:1 leverage.

Governments should control banks and the stock market manipulators...not Forex traders.

It wasn't retail Forex traders that took down the economy the last few years, was it?

Please reconsider and DO NOT PASS the 10:1 leverage! 10:1 is NOT the answer!
PLEASE DO NOT LET THEM PASS IT! It will make the economy worse!

Thank you,

Sincerely,

 

[tungsten2k]

My message:

From: Dave Johnson <dave@EMAIL_WITHHELD.com>
Date: February 18, 2010 6:48:07 PM PST
To: secretary@www.cftc.gov
Subject: Regulation of Retail Forex - RIN 3038-AC61 - freedom is our right

Dear Secretary,

It has come to my attention that the CFTC is considering proposed regulation that will make marked changes to the current regulatory requirements of Foreign Exchange trading.

I absolutely praise and welcome the added requirements for all Futures Commodity Merchants, Retail Foreign Exchange Dealers, Introducing Brokers, Commodity Trading Advisors, Commodity Pool Operators, and Associated Persons to be registered, if not with CFTC, then the SEC, or other such trusted regulatory power. Doing so protects brokers and gives them the freedom to offer fair, quality services to potential customers, without having to compete with unscrupulous brokers that can currently claim to offer services that are impossible for a legitimate broker to offer. This also protects U.S. citizens from fraudulent services of these unscrupulous dealers, giving them the freedom to invest with confidence, knowing that their broker is registered with the CFTC.

I also welcome the precedence that comes with merely enacting such requirements, in that they would place these types of Foreign Exchange dealings squarely under jurisdiction of the CFTC, and with that, the power of the CFTC to pursue those involved in fraudulent dealings on behalf of U.S. investors. This also serves to protect the freedom of U.S. citizens and their freedom to invest with confidence with registered brokers, knowing that they are being held to strict regulations against fraud.

However, I am opposed to the proposed regulations that would impose extreme capitol requirement ($20 Million USD) on FCMs and RFEDs, as I feel this would remove competition for all but the largest entities. This artificially-large capitol requirement will remove the freedom of small U.S. entrepreneurs to complete and further depersonalize investment banking. This rule serves only the interest of existing large brokerage businesses and goes against the basic ideals our country is founded on. While some minimal capitol requirement is necessary, the $20 million minimum limit serves only the interest of large existing establishments and precludes any U.S. citizen from opening a boutique or more personalized legitimate investment services business.

My largest dismay however is with the proposed maximum leverage levels for U.S. Retail Foreign Exchange market. As a U.S. investor, I know that investment requires regulation, and a modicum of investor protection. However, shackling Foreign Exchange investors by limiting the maximum leverage to 10:1 does not protect investors. Limiting leverage to 10:1 will systematically hamstring US Retail Foreign Exchange investors to the point where only the richest of U.S. citizens will be able to invest. This will systematically remove from Middle Class U.S. citizens the freedom of their pursuit of liberty, and reserves that right solely for the already-rich Upper Class U.S. citizens. Secondly, without any way of investing their relatively small capitol in the U.S. Retail Foreign Exchange market, Middle Class U.S. citizens will be forced to look outside the U.S. to invest. In doing so, the freedoms offered them by the aforementioned proposed regulations will be moot. This will also move an unknown, but considerable amount of of Retail Foreign Exchange business outside the U.S., which will reduce GNP accordingly, not to mention the loss of capitol by U.S. citizens due to considerable fraud in the unregulated Retail Foreign Exchange as it exists today outside of the U.S.

I desperately urge you to reconsider this almost criminal regulatory move that protects only the richest U.S. investors, and forsakes the rest of us.

Sincerely,

Dave Johnson
Middle Class U.S. Foreign Exchange Investor
Daly City, California

CC: Fiona Ma - California State Assembly Member, 12th Assembly District
CC: Leland Yee, PHD - California State Senator, Senate District 08
CC: Jackie Speier - United States Congressional Representative, 12th Congressional District of California
CC: Diane Fienstein - United States Senator, California
CC: Barbara Boxer - United States Senator, California

 

[Nathan Rothschilde]

Small Fry Cry while Big Dogs Prowl

It is somewhat amusing to see the furore of the tiny people crying about reducing Forex leverage. The regulators know that 90% of small traders lose all their money. And some even more! If you are a small trader then you should not be complaining that uncle Sam is trying to make your money last longer.
If you are fortunate enough to be in the 10% of winners then instead of complaining about the Government protecting the majority of people why not spend your time and some of your winnings to go around the regulations. You can set up an offshore company and trade immune from the US regulators - and also pick up some tax benefits too.

I smiled in reading one comment whose argument against the new regulations was the loss of jobs and tax revenue to US Govt. when Forex firms exit USA. Forex is fully automated these days - so just how much employment does it contribute to the US economy? And really do the large firms really pay tax on their international currency businesses? For decades large forex traders have shifted profits offshore and made losses onshore.

Small traders have little reason to complain about the leverage reduction unless they are big gamblers. In which case why not try Las Vegas instead of the forex roulette? Not being much of a gambler I believe the roulette odds are about 35 to 1. So the leverage is far greater than the new forex rules. Beats me in fact how the 500 to 1 leverage was allowed for so long with the high percentage of losers trying to win at forex.

Dont get mistaken that I am pro govt. I am pro the people. And from what I have seen in the world of forex the majority of traders are losers. Do we have any losing forex traders complaining about the reduction in leverage? So if there were a vote on the changes I presume it might go somewhere in the vicinity of 90 for and 10% against the change.

Does anyone else how some numbers on the vote across the population instead of just the small elite band of profitable traders?