Retail Forex Dealers To CFTC: Rules Will Drive Business, capital and jobs out of us
In its aim to combat fraud in the Forex trading business, Commodity Futures Trading Commission (CFTC) proposed rules that are too restrictive and can completely prevent the growth of the Forex market.
Retail forex traders in the United States has expressed concern over the matter saying that the proposed decisions are just too restrictive and could bring growth in industry. The above proposals will also make the U.S. forex market is less accessible to smaller investors. If approved, the decisions also involve sending hundreds of jobs and millions of dollars in industries offshore.
U.S. negotiators also formed an alliance, Foreign Exchange Dealers Coalition (FXDC) to oppose the CFTC's proposals. In its website urges FXDC traders to act. "Tell the CFTC to say NO to negative regulation of the forex trading business, which would drive business, capital and jobs out of U.S.. "The FXDC also opposes the following proposed changes:
- Require all retail Forex industry players to register as a retail foreign currency dealers (RFEDs) with CFTC.
- Implement a $ 20,000,000 minimum net capital standard, with an additional volume-based minimum capital threshold.
- Require retail foreign exchange dealers to collect security deposits in a minimum amount to limit the leverage available for their retail customers for such transactions at 10 to 1
The FXDC also pointed out what would happen if 10 to 1 leverage rule proposed by the CFTC adopted:
- 90% of the hundreds of thousands of live accounts currently in the U.S. system is likely to go offshore.
- Thousands of high paying, white collar jobs which require a higher education, ranging from software developers to auditors with foreign exchange dealers will be eliminated, or moved out of the U.S..
- USA will cost even billions of dollars in trade revenue.
- Forex fraud would worsen, not better.
- Unregulated dealers from around the world will flourish as a result of 10 to 1 leverage rule. These unregulated forex dealers do not have to worry about capital adequacy, risk management models, marketing ethics, dealing with practice or even reverse return client funds.
The retail market forex market generates about $ 1 billion a year in the U.S. alone. It continues to grow 20% annually contributes to 3.200 billion dollars a day currency market. In January CFTC Chairman Gary Gensler said at the beginning of this year that the rules "are important steps in implementing the additional consumer protection. "
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