Act Against the CFTC 1:10 Leverage Proposal

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The absurd proposal by the CFTC to limit leverage in forex to 1:10 is causing anger. Here’s how you act to stop it!

The CFTC is beginning to regulate American forex trading. In their initial proposal, there’s an idea to limit leverage to 1:10. High leverage is one of the key characteristics of forex trading. If this proposal is implemented, it will practically kill the American forex industry, as traders will move their business elsewhere.

So, here’s what you can do. I’m quoting the information from a fresh blog post from FXStreet’s CEO, Fransesc Riverola. Thanks Fransesc!

If you disagree with the CFTC proposal to restrict leverage across the board to 10 to 1 leverage, you may submit your comments to

[email protected].

Include “Regulation of Retail Forex” in the subject line of the message and the identification number RIN 3038-AC61 in the body of the message.

Also, with the identification number RIN 3038-AC61, you can submit your comments by any of the
following methods:

  • Fax: (202) 418-5521.
  • Mail: Send to David Stawick, Secretary, Commodity Futures Trading Commission, 1155, 21st Street, N.W., Washington, DC 20581.
  • Courier: Same as Mail above.

All comments received will be posted without change to http://www.cftc.gov, including any personal information provided.

Good luck to us all. Like this story? Vote for it on Forex Factory.

More:

  • In a poll that I ran in March, the most popular leverage is 1:100.
  • In the UK, the max leverage is 1:200.
  • A nice analysis by Michael Greenberg on the subject.
  • The FXDC (Foreign Exchange Dealers Coalition has also petitioned against this move.
Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

52 Comments

  1. I’m not sure it will have much of an effect seems like the decision has already been made. Not any different than the net capital changes or the anti-hedging rule.

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  3. Jason Rogers on

    There was hardly any public comment/response made to the hedging and FIFO requirements proposals. If enough comments are submitted, it could have an impact.

  4. Absurd…Yes, it is absurd. So, what is the real objective of the cftc? 25%? 50%? Why do you throw out an absurd number if it is not your real target?

    I have already had to double my account size as a result of the nfa’s recent action. I cannot afford to do that again–the numbers are getting too high. I am adequately capitalized at 100:1, but the capital necessary at 10:1, 25:1 or even 50:1 will put me out of business.

    Imagine that if your current account is $50,000, decreasing leverage to 10:1 will require your account to be $500,000. Even if leverage is lowered to only 50:1, your account will have to be increased to $100,000. I do not want to sell my house and tie up all of my assets in forex in order to trade here.

  5. Its an high time when the US Traders should unite and raise there voices against such absurd proposals.We cannot let them render the US retail forex industry completely uncompetitive.

  6. Dorian West on

    You can go OS. Cyprus, Malta, Singapore, some English islands, some Caribbean islands, some continental European countries, maybe Australia and so on.

  7. Pingback: CFTC proposal limiting U.S. retail FX leverage to 10:1 | innerfx.com

  8. Regulation of retail forex RIN 3038-AC61

    Why does NFA, and CFTC want to kill Forex bisness which president Clinton made possible in US?

    Before forex trading was considered the big boys game now that President Clinton removed the barriers some poeple were offended.Why all these rules which no body need? These bodies should know that individuals are responsible for their own decision in trading.

    Their intention is now very clear to bring back forex to the big boys,which they say initially that they are only protecting the retail traders from brokers, but as things are now this is no more protection but preventing retail traders.

  9. @DivisiaFX, I hope that a big response can still affect the decision.
    @db I believe that most traders will move to UK brokers.
    @Jason, I cross my fingers as well.
    @pipnu2me Thanks for the example. I believe that many traders feel that way.
    @Forex I hope there’s enough noise to stop it.
    @Dorian I think that such countries will sure benefit from this regulation.
    @Harold Regulation is good, but this step is just too far.

    Thank you all for your comments. Please spread the word.

  10. Make no mistake about it. It is absurd and utterly retarded. If they make another retarded rule on top of their previous retarded anti-hedge rule, I am moving to Forex.com UK division. FXDD now has UK office as well. Move to a well established UK firm!!! This will force all US based companies to open a UK division. Are only retards working at NFA and CFTC? Clearly that’s the case. Utter morons and useless retards hell bent on ruining the forex business as we all know it. F’ing retarded! Simple, get ready to move to a UK firm!!!!!!!

  11. Johnny, also FXCM offers a UK subsidiary to allow hedging. Despite this workaround, I think that many American traders will just give up…

  12. US based firms will unite and bitch to them now. Anti-hedge was really no big deal. But when you implement 1:10 rule, most people won’t be able to participate in the forex market. In fact, unless you have a substantial balance, you will have to drastically increase risk in order to make the same amount that you were able to do before. So, their goal is to make forex so risk aversive to turn away most people who have less than $100,000 to deposit? I am sure this will force 90% of current retail customers to close their accounts. I am sure it may even force US based firms to actually close US offices and just move entirely to UK since FSA seem to have some common sense. It was much better when brokers gave traders the option of their chosen leverage. You cannot regulate risk. What is their retarded thinking? Are they trying to help consumers or are they trying to thwart their earnings? Are they trying to ruin US based forex firms? Are they trying to rewrite history? Or are they just f’ing dumb as hell?

  13. Yes I have too but as someone already stated, I also suspect that it will do little good. The prudent thing for all of us to do is to NOW get ready to close our US based forex accounts and look elsewhere… preferably UK based subsidiary or a UK firm before this 1:10 all of a sudden kicks in when you least expect it. You just keep doing business as usual trades and you hear NFA will enforce this at certain date, it may be too late. I suspect that if 1:10 kicked in tonight, we would all get a Margin Call. Right? Of course I am right. Time is now to get ready to close your US based forex accounts while you still have plenty of time to get your trades in order. I already opened an account at Forex.com UK. No matter what happens in US, smart thing to do is just move out altogether and do your trades elsewhere. I am sure UK and FSA will thank the morons at NFA and CTFC for increased business in UK.

  14. There was alot of disbelief anything would be done with the NFA stuff. Plus it wasn’t really known until it was practically to late.

    Just because you are a foreign trader does not negate you from this equation. There are a good number of foreign traders with accounts with U.S. brokers. Probably not as many since before the NFA rule making.

    No where in the CFTC request for comments does it stipulate that the traders need to be a U.S. residient.

    EVERYONE should get involved in this. The more support we get the better our chances. Don’t take the attitude “the writing is already on the wall.”

    You never know who it is posting these comments of despair. Your motive should an always be to protect your turf. We must all stand together on this.

    Spread the word as much as possible. Make certain that you get all FX traders foreign and domestic to issue statements against 10:1 leverage proposal.

    The influence of the U.S. is far reaching, what is happening here may some day reach you. If we stand united as one we can not fail.

  15. Exactly. This is not to target certain nationalities with US accounts in US firms. This is targeting every single US based firms and every single account holders of those firms. Simply these firms will open up UK subsidiaries to accomodate those closing their accounts. It is that simple. Pity NFA and CFTC are too dimwitted to see that they are ruining the business of US based firms and crapping on the very nature of the forex model. I think they are total retards.

  16. I have sent mine and posted on multiple boards as well.

    I have thought of possible more comments and will likely redraft another letter soon.

    We have 56 days left lets stay positive and think up constructive ways to get this silly rule defeated.

  17. Writing to NFA and CFTC is one thing but hoping that they will see the light while still holding onto your US based account is foolish. Smart thing to do is at least open up an account with UK firms or UK subsidiaries of FXDD, Forex.com, and FXCM and then be ready to move when the NFA sets the date for 1:10 to kick in. Be smart here guys. Don’t just hope that the regulatory body will see the light. They didn’t care about anti-hedge noise made against them either. Ya, write to them… but don’t hope that they won’t do it either. Be smart and open an account in UK based firm now and be ready to move when the NFA sets the date.

  18. Next move? Making it illegal for UK firms to accept funds and account openings from US citizens. These retards are too full of themselves to see the errors of their retarded inbred ways, they will simply do more and more hindering crap to back up their initial retard positions. The smart thing for NFA and CFTC to do now is the say that they are morons and have made a big mistake and bring back hedging and institute 1:100 and 1:200 for permanent landmark of US forex trading. But I know they are retards; they’ll die before making such proclamations. If they institute 1:10, it is over for retail customers in US. Only the big boys and the wealthy will be able to trade as before. And every single US based firms will open up UK based subsidiaries and become certified with FSA. UK and FSA will than the morons at NFA and CFTC. Don’t just assume our US regulatory bodies will do the smart prudent thing. They are too dumb and pigheaded to do so.

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  20. It will KILL the US forex firms; not merely hurt it. And it will force US firms to open up UK and EU subsidiaries if not just completely shut down US offices altogether. And if they stay, they will have to raise the minimum opening balance requirement of all new accounts. You simply won’t be able to make any decent trades or make decent income if you have less than $100,000 balance. Gone will be being able to make decent income with just a $2,000 balance. You simply won’t be able to do crap unless you have a huge balance unless you are now willing to risk much much more with your balance. Clearly, NFA and CFTC are NOT THINKING WHATSOEVER!!!!!!!!!!!!!! I am just incensed at their retardedness. It does not bother me… I am all ready to move to a UK firm when these retarded moronic useless rejects set the date for 1:10 to kick in. Get ready for US firms to start crumbling down. Regular Joes opening up accounts grew the forex business, not the wealthy traders who existed before the regular Joes arrived with their $500 deposits. What the hell are they thinking anyway? It is beyond absurd. It is just downright retarded. Again, I don’t care. I already have my UK account funded and am fully ready to transfer fully out of my US based firm.

  21. Its not that hard to see that nothing can or will stop any of “their” many and varied well laid plans…I dont live in the USA thankfully, but obviously, gone are the days where “democracy” was at least a genuine direction, (or was it?) and the public who pay their fat salaries were part of the considered issue.
    Seems that “they” are doing ANYTHING to kill off the great USA, and sink the good people – I wonder why?

  22. Don’t get into a false sense of security with this writing campaign. FX dealer coalition has put together a great letter as well. If they ignore that and goes ahead with their stupid 1:10 idea, what makes you think we can make any dent on their plans? It won’t. FXDD has Malta division, Forex.com has UK division, FXCM has UK division and there are plenty of decent UK and EU firms. Open one and get it funded now and wrap up your floating trades now.

  23. Our sad little over-reactive government has a predictable tendency to punish the entire industry for the greed and ills of the selected few and a few failed companies. I find that still amazing. When do we get to effectively punish our politicians? Eh? We need term limits for some of these morons in politics as well especially our Congress/Senate.

  24. I keep reading the same tired retarded comments from the morons, or perhaps from cronies from NFA/CFTC, but that view is this “a good trader does not need high leverage to make money”. Only a retard would say such a moronic thing. The truest axiom of 1:10 is this, and this only: ONLY THE WEALTHY CAN MAKE MONEY WITH 1:10 LEVERAGE. Shut the hell up with nonsense useless commentaries!!! I am sick of reading it from bunch of morons on various forums.

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  26. Of course it is not “over” for US based forex firms. They already make enough money and always have before regular Janes were able to deposit $500 and start trading on 1:200 or 1:100 leveraged accounts. They can still make good money on the wealth depositors. This is not the point. The point is for NFA and CFTC to drive out the regular Janes and Joes from with less than $2000 to trade with out of the forex arena. And it will drastically severely reduce US forex firms’ revenues because regular traders with balance of less than $5,000 will no longer be able to trade and make any decent income. This is the point. If you do not have a substantial balance, you will make just pittance on your trades with the high margin requirement that will come with 1:10 leverage. For example, margin requirement on EUR/USD will be $10,000 on 1:10 leverage. NFA forced the riddance of mini accounts and forced standard 1:100 on US traders. And now they want to force 1:10 on US traders? This will kick out over 95% of current retail customers. They will all get a margin call over night as soon as 1:10 kicks in unless they deposit double or three times their current balance just to cover their newly required margin. More likely is that they would have to deposit at least 10 times their current balance to just avoid a margin call. This is to protect the retain customers? You are right. This is absurd… absurdly insane. If they want to ruin the US forex business model… congratulations. The nut regulators finally did it. What’s next? 1:1 leverage? I cannot stand the insanity and the stupidity of our useless shortsighted regulators. Absolutely pathetic.

  27. Pingback: Francesc’s Weblog » Andrei Pehar Accusses Futures Brokers To Be Behind CFTC 10:1 Leverage Proposal

  28. ” I think it is the responsibility of every trader to understand the concept of leverage before starting to live trade. For many retail traders who have worked arduously to acquire the skills of forex trading, leverage gives them the possibility to access and profit from the forex market. It would be a terrible injustice to impose this new CFTC rule as this would kill the hard work and passion of these traders.”

    Amit from Mauritius.

  29. As stated, it is rather foolish to just hope that NFA/CFTC will come to their senses. That is truly foolish. Far smarter thing to do is get ready to close your floating trades and get ready to close and move out. That is the only prudent thing to do not sit around and hope that they will come to their senses. Now, that truly is gambling.

  30. I’ll take it even further… I think it is everyone’s responsibility to fully understand the very nature of trading and demo trade for at least 6 months with the amount that you will actually deposit and live trade with before even opening a live account. Demo trading with a $500,000 when you won’t even have $1,000 to actually deposit is also some level of delusional idiocy. Fact is, idiots lose money in forex… and these same idiots run to NFA and CFTC to bitch and complain about brokers. You cannot as regulators babysit, ninnysit, and regulate risk which is the very inherent nature of trading itself. If you attempt to regulate that very nature, you kill it for what it is. You kill the initial beauty of it. And fact is, failures need to allowed to fail. Something our government clearly has no damn concept of. FAILURES NEED TO FAIL!!!

  31. Because of this, I already moved my account to UK. I should have done it when they implemented the FIFO and 100:1. I did not see this 10:1 coming, but it is definitely a BIG RED FLAG.

  32. I think this is the beginning of the end. They are trying to shutdown forex industry alltogether,as we know it today.Doesn’t matter if its US or England or Singapur or Australia, it will happen worldwide…Forex will disappear in a few years,because they are implementing one world currency…

  33. As a forex trader I never exceed 10:1 leverage, to me anything over that is financial suicide. But those who want to take more of a risk should be able to.

  34. Still more confusion. Leverage is not synonymous with risk. You can more than safely trade without even a shred of a risk of a margin call using 1:100 leverage just as anyone can blow up their account using 1:10 leverage. How is it that everywhere there still is massive confusion with LEVERAGE vs RISK??? Leverage has nothing to do with actual risk per trade or even overall risk.

  35. Instruct Me on

    @Jason
    The NFA FIFO rule had someone voice my opinion and even more articulately than I. The NFA claimed that the pros outweighed the cons.

    The questions I have are:
    Do our opinions matter?
    Does quantity of the same opinion matter?

    DivisaFX doubts. But I intend to write the secretary.

  36. The proposal is absurd. No question about it. Hopefully CFTC will have enough common sense to cancel it.

  37. We’ve created a website where you can discuss this issue with others. Come along and join!

  38. Pingback: Futures Brokers behind CFTC 10:1 Leverage Proposal « Expert Opinion

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  41. People are mailing them irrespective of what you think is being posted here or not. More post on here? I think not. CFTC and NFA are clearly being flooded and now with the coalition formed by the brokers and dealers. But it is of no use. CFTC clearly have made up their mind and are leaning towards this new leverage requirement. They will always do what they propose out of sheer piggish retardedness. You can write them to death… it will do zero good. Just get ready to move to a UK firm.

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  47. You can go OS. Cyprus, Malta, Singapore, some English islands, some Caribbean islands, some continental European countries, maybe Australia and so on.