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Ilian Yotov is a longtime FX Strategist, known among industry peers as the creator of The Quarters Theory, a revolutionary methodology applied to the price behavior of currency exchange rates. His FX market analysis, outlook and forecasts are sought by popular financial publications worldwide... More
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  • The CFTC Rule and Its Implications for U.S. Retail Forex Traders 1 comment
    Aug 31, 2010 6:26 PM | about stocks: SPY, DIA, QQQ, EEA, GBB, GOLD, JYN, UDN, USD

    Aug. 31, 2010 (Allthingsforex.com) - Effective October 18, 2010, the final rules of the U.S. Commodity Futures Trading Commission (CFTC) regarding off-exchange retail foreign currency transactions will be the law of the land when it comes to Forex trading in the United States.

    The main goal of the new regulation is to protect retail U.S. investors from what, according to the CFTC Chairman Gary Gensler, is “the largest area of retail fraud that the CFTC oversees: retail foreign exchange”.  

    The CFTC rule establishes a new category of registrant- Retail Foreign Exchange Dealers (RFEDs). All counterparties offering retail foreign currency contracts will be required to be registered either as Retail Foreign Exchange Dealers (RFEDs) or as Futures Commission Merchants (FCMs).
     

    Tapping into what has been a largely unregulated area, the CFTC regulation will now require “persons who solicit orders, exercise discretionary trading authority or operate pools with respect to retail Forex to register, either as introducing brokers, commodity trading advisors, commodity pool operators (as appropriate) or as associated persons of such entities”. This means that such persons will need to pass exams such as Series 3 and Series 34.
     

    With the new CFTC rule, retail Forex traders will see leverage reduction of 50:1 for the majors and 20:1 for exotic currency pairs. The required minimum security margin deposits will be 2% for positions taken in the major currencies and 5% for all others. The CFTC and National Futures Association (NFA) will have the ability to review these levels and make adjustments, if deemed necessary.
     

    For more information and to see the official CFTC press release, please visit: http://www.cftc.gov/PressRoom/PressReleases/pr5883-10.html.



    Disclosure: No Positions

    Disclosure: No Positions
    Themes: forex futures Stocks: SPY, DIA, QQQ, EEA, GBB, GOLD, JYN, UDN, USD
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  • marjiemiller
    , contributor
    Comment (1) | Send Message
     
    Hi, thanks for your informative article.

     

    I've heard rumors that it will be illegal to trade forex gold in the US. Do you know if this is true? Something about no OTC gold allowed, only COMEX gold.
    29 Sep 2010, 11:30 PM Reply Like
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