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Dodd-Frank Had It Right(Inverse Sarcasm Paradox?)

Discussion in 'General Forex Talk' started by Anomilus, Sep 28, 2016.

  1. Anomilus

    Anomilus Private, 1st Class

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    I don't know where I was getting at with the inverse sarcasm paradox comment, but wait for it...

    Dodd-Frank had it right. Against all sanity, I really do mean that. The really horrible part about it, is that the only real thing they messed up were the ridiculous measures aimed at retail trading. Meaning the small guy max leverage reductions to 50:1 and increased margin requirements.

    Even with the obvious validity of my last statement, I must sound absolutely crazy by now. But truly, if you think that bill is bad for you as a trader, you're crazy. With the amount of threads dedicated to scams and scam brokers, the restrictions of US traders to trade within the big 50 were spot on, with all you scam victims in mind. The only part of this bill that stinks is the sections aimed at retail trade. After all, this was legislation brought on by the near collapse of financial markets, due to negligent oversight of leverage used by institutional banking.

    We all hate this bill and I think it has gotten an unfair shake despite the annoyances it brings for the little guy. If we all actually never tried to get around this as US traders and instead would have obeyed it, the scam section of this forum would definitely be a bit thin on volume compared to what it is now.

    I was joking. Dodd-Frank is a sum total of s*** legislation, a dash of "too little, too late", and a pinch of f*** the little guy. I stand by that. However, dreaming that Dodd-Frank will one day be repealed is pure fantasy. There is too much political capital behind it, and it would never gain the bipartisan support that is essential to have it removed.

    We've been going about it the wrong way. It's just an opinion but I think this is what we as US traders should focus on having amended if we aim to really get back to trading as normal, like the good ole days. The leverage and increased margin should have never been stipulated to apply to retail. Retail could never in its' wildest dream pose a threat to any financial market, of any kind. The risk is only to the trader, not the system. If I could trade even 200:1 max, with relevant/reasonable margin requirements, I would gladly, and willingly too; trade within the big 50 with a CFTC/NFA regulated broker. This is plain to anyone caught up in this web of lies. Pools of brokers that not even the most intelligent person exercising all diligence and caution could possibly detect coming and going out of business. It's become a senseless chore to find a few who work, and then flush themselves down the toilet. To the dismay of many reading, some even do it by design. Ugh.

    I think that this forum, and a few others like it have the membership it could take to focus on amending the retail sections of Dodd-Frank. There are also representatives of many reputable, US regulated brokers here who also should be advocating, along with us. Especially since many of those brokers have direct relationships with the regulatory bodies. If their aim is to keep us from being defrauded of investments and provide a 'safe' environment for market participants, it is also in your interests and the regulators to help remedy this problem.

    I'm just a petty member. I am tired of the run around and uncertainty. I seriously think it would be easier and more practical to just move to some other country rather than scour the web and reviews endlessly only to remain unsure and insecure about what broker I am going to be forced to take a chance with to get around these senseless requirements.

    Any addition, subtraction, on the topic of possibly amending Dodd-Frank would be great. I hope after a decent conversation, the upper echelon of this forum (FPA), and the US broker representatives in this forum would sign petitions to the respective US brokers they are present in this forum to represent in order to get a wide range of support from customers and the industry leading brokers here in the US to support this amendment for retail trading.

    If I am living in fantasy land with this idea, I don't mind being told that, but I firmly believe in not telling ourselves no. We should try, the brokers should try, the forums that are trying relentlessly to help protect us from bad brokers and phantom brokerages should try.

    Thanks.
     
  2. Pharaoh

    Pharaoh Colonel

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    If a coalition of the largest US brokers could be formed, I think it might be possible to work up a way to promote some revisions of the retail trading part of the act. Potential targets include:

    1. Bringing leverage up to a reasonable level. Perhaps 100:1 on majors and 50:1 on everything else. Do some traders want more? Yes, but there's no way the US is going to allow 1000:1, so an achievable target must be selected.

    2. Ending the FIFO rule. Maybe I want that old long term trade to stay right where it is while I open and close short term trades.

    3. Ending the no-hedging rule. Perhaps couple this to account holders being presented an educational video about how hedging has it's uses, but simply opening 2 pairs in the opposite directions and then closing them guarantees losses due to spread and swap if the trades are open during rollover. Account holders would need to see this CFTC approved video and pass a CFTC approved quiz in order to have hedging enabled on their accounts.

    Another thing I would LOVE to see (which US broker will have mixed feelings on) would be a method to allow foreign regulated brokers to meet certain guidelines to be able to accept US clients and conversely, the countries which are part of this deal would offer US brokers reasonable standards to meet to offer accounts to their citizens. Naturally, this would require reports on deposits, withdrawals, profits, and losses to the tax authorities of both countries when a trader holds an account in another country.
     
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  3. Anomilus

    Anomilus Private, 1st Class

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    Thank you for expressing initial support and thoughts on this Pharaoh. I agree on every point. Leverage 100:1 is doable and is a compromise. That is my single greatest issue with all. 50:1 makes starting with a mini account laughable, really. It's not that limiting down to 50:1 is the big deal. It's the way it is applied to margin. By using increasing the margin cost to enforce the leverge, it makes trading anything of notable size nearly impossible.

    For example when I last traded my fxcm micro acct let's say I start with $500. The margin on USD/JPY was $20 USD per microlot. So trading a small position of just 0.10 takes just $200/of used margin. I am not sure if it is a viable idea to move back to previous margin prices, and just limit max used margin to %50.

    That way if I get a position on and it moves in my direction , I am able to add to the position or execute other trade setups with the increased free margin. The inverse would achieve the same result as well. If position 1 is open position 2 cannot open until the trader has reached %200 usable free margin is available or earned. Not sure if I am getting that across right but the more I read over the %200 options looms better to me as a trader. Assuming we get to use margin costs pre-Dodd-Frank. It need not be tremendously low but 200:1 margin costs would work and an aggressive trader like myself can compound positions and potential earnings. That's my style but less aggressive traders could stay within the confines of their normal trading routine regarding risk and margin/leverage usage. This is better as a side note but forgive me it does cloud the overall point of my response to your post.

    It would be cool if we could do a public poll on each of the 4 points you mentioned. Once we hve turnout and results, FPA could invite the reps of the US brokers here to vote on these amendments either individually or as a total and see if the companies can support it as well. As direct subjects of the CFTC and NFA, the brokers are probably in the closest relationship with these authorities to lobby for the changes. We can come back to compliance and also be afforded the protections of these regulators and become clients of the brokers who openly and publicly support these changes. I would certainly start funding my dormant US accounts I know that.

    Forgive the grammar and autocorrect mistakes my phone hates me and I am not able to make edits to my post from this device.
     
  4. Pharaoh

    Pharaoh Colonel

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    Intriguing idea. It might be worth trying to get a broker or two lined up first. Finding someone in Congress with a strong record of being against excessive regulation would also be a good idea.
     
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  5. Anomilus

    Anomilus Private, 1st Class

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    I am not aware of a specific congressman in the House. But I can imagine Senator Rand Paul and I know someone running for President who is definitely anti regulation lol. I can start doing some research on a Rep in the House. If you are willing to communicate with any brokers that would be good. Your thoughts come across much more clear and concisely than my own. If so I will hold up my end of the bargain. I'll start right away.
     
  6. Pharaoh

    Pharaoh Colonel

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    Too bad we can't talk everyone into voting independent in November. That's the kind of surprise not seen in a very long time.

    If Senator Paul can compromise a little - support relaxing regulation instead of erasing it, I think there could be a good chance of finding a House member to help out and even of passage. It's just going to end up being a small item tacked onto some larger bill. For the most part, no one in Congress knows much about retail forex, so it it's tied into some non-controversial legislation, there could be a good chance for this to work.
     
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  7. Anomilus

    Anomilus Private, 1st Class

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    Yes this is a good starting point. We probably need to demonstrate the ability of these changes to bring back US traders back into the mainland broker fold. I will begin to compile a list of reps and senators that at least on the surface oppose over regulation and perhaps any who have a basic understanding of financial markets and create a mailing list for any literature that can be created by our efforts. Broker support is probably the more serious key to any of this being seeing the light of day with any legislators or regulatory authorities.
     
  8. Anomilus

    Anomilus Private, 1st Class

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    Rep. Jeb Hensarling (R., Texas), the chairman of the House Financial Services Committee, has introduced new legislation called theFinancial CHOICE Act that would repeal and replace the Dodd-Frank Act


    I imagine this gentleman would have at least an ear open to amending the bill in a way which is more favorable to retail US traders. He wants to repeal the entire thing. Should Trump become our next president, I think this man represents our greatest chance to get our concerns heard.
     
  9. Pharaoh

    Pharaoh Colonel

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    Total repeal would be nice. :)

    It may come down to how much backing he can get. I'd personally be very happy with a carefully thought out reduction of the worst restrictions that Dodd-Frank brought us.
     
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  10. Anomilus

    Anomilus Private, 1st Class

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: dodd-frank, cftc

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