I tweeted the news about CFTC is seeking public comment on proposed reduction of leverage to 10-to-1. In other words, 10:1 leverage would be the maximum amount allowed for all Forex traders in the U.S.
Since then, I have received few emails from retail brokers about their comments to this proposal. So far, Oanda, MB trading, Interbank FX are opposing the proposal (No surprise though, given the fact that their U.S operations will be affected directly by this proposal). I did not hear from FXCM, however, the customer service officer was advising me to do account transfer to U.K or Australia if I do not wish to be affected by the new proposed regulation.
Here are brokers’ responses:
We stand behind the belief that you should be given the freedom and right to choose the amount of leverage that is appropriate for your individual desired risk, and that this basic principle of ‘choice’ is in jeopardy by the proposed CFTC regulations.
If you feel strongly about the proposal, we encourage you to help determine the outcome of these proposed regulations. You can help make an impact by sending comments directly to the CFTC at: firstname.lastname@example.org.
MB trading FX (Information received via email, not available on MB trading website now)
MB Trading recognizes the importance of regulation that strengthens industry oversight. We agree with policing and regulating the industry, as was Congress’ intent when empowering the CFTC to create additional rules. However, we don’t agree with policies that might clearly disadvantage firms in the United States which in turn disadvantage you, the client. We encourage you to voice your individual opinion directly to the CFTC. The Public Comment Period is open for 60 days from the date of publication, which was January 13, 2010.
Oanda (via Oanda forum)
in this particular case we strongly believe that limiting leverage to 10:1 is highly restrictive and discriminatory against retail clients because it limits their trading choices. The proposed limit is not in the best interest of the trading public and additionally discriminates against forex dealers operating out of the United States, further limiting choice.
Hence, OANDA strongly opposes this new rule, and we believe it works against the open, accessible forex marketplace we have been trying to create. We will work hard to vigorously oppose the proposed leverage limit, and we are working together with other forex firms, such as FXCM and Gain Capital, to oppose this new rule.
I wonder after this proposal, what will be the next trick that CFTC will play? In short, it is messy. To save the trouble, I will leave my account outside U.S. Here is my another tweet about this.