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How will the proposed lowering of leverage to 10-to-1 by the CFTC affect US forex brokers?
On CFTC's website, http://www.cftc.gov/newsroom/generalpressreleases/ 2010/pr5772-10.html, it states: "Leverage in retail forex customer accounts would be subject to a 10-to-1 limitation.
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- thegreeks
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- 1 year ago
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US forex brokers will have a hard time to retain their customer who moving their account to oversea brokers. |
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Majority of US retail forex accounts can be expected to move offshore. It will hurt the forex brokers business and will have a devastating effect on the US retail forex industry . |
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This rule will drive a lot of US local brokers to move or start up a satellite office offshore. Bad for Brokers' business |
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Well, let's look at it from the traders' point of view first. This proposed rule would definitely limit the risk of forex traders. On the one hand, it would protect traders (particularly newbies) from over-leveraging, thus allowing them to minimize their possible losses. On the other hand, it would restrain some traders from maximizing their potential for profit. This would probably make US brokers less appealing to some traders, especially those who do know how to manage their risk properly. As for those who want lower leverage, well non-US brokers also offer those. That would make non-US brokers seem more "flexible" in accommodating different traders' various trading styles. |
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