CHF Crisis Causes NFA to Considering New Regs - "Nothing is off the table"

AsstModerator

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CHF Crisis Causes NFA to Considering New Regs
Nothing is off the table.


According to Bloomberg.com, the NFA is considering new regulations.

FXCM's need for a $300 million loan to keep itself afloat in the wake of the CHF crisis has gotten the NFA's attention. Because of this, the NFA is currently considering rules to further protect investors and brokers. Bloomberg quotes Karen Wuertz of the NFA as saying "We’re going to look at everything. Nothing is off the table."

For retail forex traders, this could easily result in a deep reduction of available leverage. In 2010, the CFTC proposed reducing leverage for forex trading all the way down to 10:1. Most brokers and retail investors complained this was too tight and would squeeze the life out of the forex industry in the USA. Eventually, the limit was set at 50:1.

What are we looking at now? 20:1? 10:1? 2:1? At this point, anything could happen. As the NFA says, Nothing is off the table.


If you find any new information about forex regulatory changes from the NFA or CFTC, please post updates in this thread.


Bloomberg story on NFA's consideration of new regulations

Article at the FPA about CFTC 10:1 leverage proposal
 

AsstModerator

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MBTrading just sent this to their clients...

Dear MB Trading FX Client,

In light of last week's surprise news announcement from the Swiss National Bank, the National Futures Association is imposing a temporary increase in margin requirement for the following currencies from 2% to a minimum margin deposit of:

Swiss franc (CHF) - 5% / 20:1
Swedish krona (SEK)- 3% / 33:1
Norwegian krone (NOK)- 3% / 20:1

These increases are effective after rollover on January 22, 2015 until further notice. Please be advised there are major news events upcoming (i.e. ECB Bank Rate Decision on 1/22 and the Greek Election on 1/25) that may significantly impact your account.

Any open positions based in the above currency pairs that fall below the minimum margin requirements will be subject to liquidation. In addition, MBTFX will not permit any opening positions in any SEK, NOK, and DKK currency based pairs.

Please review your account to ensure that you have enough available margin to support your open positions. You may deposit additional funds at MB Trading or close positions as needed.

If you have any questions or concerns, please feel free to contact us.

Best Regards,

MB Trading FX
 

Laurie Gold

Corporal
Messages
119
Just like in 2010, the NFA looks to hinder the retail trader as opposed to making it tougher on the brokers. really if Leverage was at 10:1 or even 2:1 what effect would that have on the brokers?
 

AsstModerator

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From FXCM...

There are two major upcoming news events which may cause significant volatility: the ECB Bank Rate Decision on Thursday (7:45AM EST) and the Greek Election on Sunday.

Due to these risk events the Smart Margin Feature will be disabled on Wednesday January 21st between 7:00PM ET and 9:00PM ET. Accounts will no longer be allowed to enter into temporary warning status. Accounts that fall below initial margin required for open positions will be liquidated.

In addition we will increase Margin Requirements on the USD/HKD and USD/CNH Currency Pairs on Friday January 23rd, 2015 after market close:

New Margin Requirements for USD/CNH and USD/HKD based of a 1k Lot

Currency Denomination Margin requirement
USD 100
GBP 75
EUR 100
CHF 125
NZD 175
AUD 140
JPY 13,000
CAD 130


Note that this increase in margin may be temporary depending upon market conditions.

Please review your account to ensure that you have enough available margin to support your open positions. You may deposit additional funds at myfxcm.com or close positions as needed.
 
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Compaq360

Recruit
Messages
2
Any reduction in margin should be discussed in tandem with SPIC insurance for retail accounts. Upping the margin only puts us more at risk; it doesn't save us. It saves the broker. When will they look out for us? I firmly believe they were looking looking for an excuse to push retail forex into traditional futures brokers, little by little, by reducing leverage so much that it only makes sense.
 

dkami

Sergeant
Messages
752
1 good thing has come out of this SNB move and that's to test your broker's price feeds during volatile times;)

I must say I am very happy with Axitrader's prices during this big move with a low on AUDCHF of 0.68488 while very,very disappointed in a new broker I was testing out (ICMarkets) that gave me my very first margin call with price dropping to 0.02178 on AUDCHF (NO 0.02178 IS NOT A MISPRINT)

Bloody big difference there!

Only been with ICMarkets for 2weeks and already withdrawing my funds -30%, even after adjustments ICMarkets gave me shocking prices on closed trades:mad:

If you are planing on opening an account with ICMarkets remember this, ICMarkets give you a margin call during volatile times then readjust the trades after @ terrible prices just to save there own necks;)
ICScammers AUDCHF.jpg
 

karwil

Recruit
Messages
9
Thanks for that advice but i have a problem with Axitrader. When i wanted to sign up with them they sent me some documents to peruse and agree to and in these docs they specifically said that they are market makers and that they take the opposite side to every trade we take.
Surely it is generally agreed by forex traders everywhere that these kind of brokers are not a good idea?
Any comments?
Many thanks!
 

dkami

Sergeant
Messages
752
Thanks for that advice but i have a problem with Axitrader. When i wanted to sign up with them they sent me some documents to peruse and agree to and in these docs they specifically said that they are market makers and that they take the opposite side to every trade we take.
Surely it is generally agreed by forex traders everywhere that these kind of brokers are not a good idea?
Any comments?
Many thanks!
My only comment to you is provide your proof for everyone to see,talk is cheep and I ain't buying!

Post these documents that AxiTrader sent you that "specifically said that they are market makers and that they take the opposite side to every trade we take"

If you can't or wont not only your post above will be classed as full of sh*t but ever post you post on FPA will be classed as full of sh*t and this wont be the last post of yours I will be quoting;)

P.S. My post above was not meant to be a recommendation from me for anyone to open an account with AxiTrader,but just to give the FACT'S that I was very happy with AxiTraders price feed during that volatile time with no big wicks or erroneous prices;)

O and I must add I don't care who takes the other side of my trade, if I profit they loose:D but it really sucks when you get a margin call when you shouldn't have because of ICMarkets erroneous prices:mad:

If you are planing on opening an account with ICMarkets remember this, ICMarkets give you a margin call during volatile times then readjust the trades after @ terrible prices just to save there own necks;)
 

Pharaoh

Colonel
Messages
19,831
The first thing the NFA and CFTC should be doing is requiring all brokers to use segregated accounts for client funds. That alone would provide more consumer protection than all possible restrictions on trading combined.
 

gpcode

Recruit
Messages
5
I have a proposal- why not let US residents sign a waiver and allow us to trade retail-level ForEx with foreign brokerages since the trend here seems to be to regulate this to the point where the client is being exposed to new risks, such as FIFO restrictions that prevent closing open orders of the same currency pair out of First-In / First-Out sequence, or the prohibition of offsetting (or 'hedging' as it is commonly referred to by some ForEx clients)- which I've been able to manage my account successfully in a multitude of ways including preserving margin and stabilizing my account until volatility recedes...

Now leverage is being blamed yet the overwhelming majority of foreign brokers, including ones that use above 1:50, have survived due to segregated accounts, sensible reserves, stop-out levels and intelligent protections. Yes they are increasing their margin requirements temporarily as the SNB dust settles and NFA will now require under section 12 until further notice, but we'll see how this plays out and if any entity engaged in damaging behavior, it is the Swiss National Bank itself- why not impose restrictions on this behavior instead?..

Higher leverage may be available to the retail-level client at the low end where it is needed the most but I remember that this ratio would typically scale down as the account balance reached higher thresholds. Increasing the margin requirement as some are proposing again would also require putting more, not less, capital at risk for the same return- is this protecting the client?

The US restrictions including those mentioned above imposed since the Dodd-Frank act have been causing one brokerage after another as well as foreign clients unwilling to trade under them to leave the US market, and seem unlikely to return here until this changes. My accounts here were blown out like they would be anywhere else, so I don't buy any argument that the price for accepting these restrictions is somehow a worthwhile price to pay. It is my money, and I don't think I should have to move outside the US to trade in a way that I have proven to my family and myself to succeed at.
 
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