Official Forex leverage change to 10:1? - Aussie Stock Forums

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  1. #1

    Default Official Forex leverage change to 10:1?

    Hey Guys,

    I recieved an email just now regarding the possible change of forex leverage to 10:1. I am not sure how much truth ther eis to this but it seems legit. Just wondering if anyone else has heard the same and what their thoughts are on the matter?

    email recieved from: truthaboutforex@aweber.com


    "On January 13th, the CFTC (the regulatory body of the Futures market in the US) proposed new rules to help fight retail Forex trading fraud.

    In this lengthy document are various new suggestions for rules and regulations regarding how Forex companies should conduct their business. They should have a certain amount of liquid funds handy to be able to actually pay up if clients decide to withdraw their money or maintain a certain percentage of their liabilities handy.

    But the suggestion that got the entire Forex world in an uproar is the suggestion that leverage to firms and individuals in the retail currency trading world (that's YOU) will be limited to 10:1 at the most. This means that you will need to have a lot more money in your broker's account to be able to trade large sums of money.

    This will change the way traders work with US brokers as a lot of brokers offer up to a 400:1 leverage and it seems that the 100:1 leverage is very popular among traders.

    Naturally, US brokers are frightened of this as it gives their foreign competitors an "unfair" advantage. This is something I agree with, this rule may cause a lot of traders to work with foreign brokers, something which is easy to do in today's ultra-connected world.

    As these rules have not been approved yet, there is an effort by brokers and traders alike to influence the final outcome. However, I feel that the leverage will be limited, perhaps not at 10:1 but there will be some limitation.

    I'm not too worried about these new rules and I think you shouldn't be too. For one thing, I don't mind a low leverage. To me the main thing is never allow yourself to suffer huge losses. Working with a 50:1 or a 100:1 leverage raises the risk you're facing and I thing that's foolish.

    I believe that a 5:1 or a 10:1 leverage should be the highest you go anyway. I just don't want the risk. Therefore, if you're a trader I don't think you have anything to worry about. However, brokers may lose a lot of their customers once these rules get approved.

    John Drummond

  2. #2
    Rotaredom wayneL's Avatar
    Join Date
    Jul 2004

    Default Re: Official Forex leverage change to 10:1?

    I have a one word response.


    #### those forex bucketshops.

  3. #3

    Default Re: Official Forex leverage change to 10:1?

    Hi aramz,

    This is particularly applicable to all US brokers and traders.

    The threat is very real!

    There is alot of talk and I believe the CFTC has released a 190+ page proposal on it. This comes right on the heals of the recent FIFO and anti-hedging rules which came into effect last year (US).

    Plenty of concern/debate, google is your friend.
    Fxstreet was where I first heard of it.


  4. #4

    Default Re: Official Forex leverage change to 10:1?

    Working with a 50:1 or a 100:1 leverage raises the risk you're facing and I thing that's foolish.
    1. It only raises the risk if YOU'RE foolish.

    2. Never happen - this is forex, and people will just move to non-US brokers. Might as well call it the Ban US Forex Brokers Bill. Yeah, that'll get through.

    /assuming it's even true - not bothered to research before stamping my "not goint to happen" mark on it.

  5. #5

    Default Re: Official Forex leverage change to 10:1?


    Just from an Australian broker's point of view - this potential restriction on leverage (and the recent changes to trading FX) only apply to those brokers in the US regulated by the NFA and CFTC.

    As an ASIC regulated broker, these restictions do not apply to us.

  6. #6

    Default Re: Official Forex leverage change to 10:1?

    FSA will not change anything

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