Forex Brokers to be Exempt of Dodd-Frank Rules?


Perhaps forex brokers will get some good news soon, maybe in April. The Dodd-Frank act consists of many limitations, that not every broker will be able to handle. But forex brokers could be exempt from these rules.

Discussions continue in Washington DC regarding the implementation of the Dodd-Frank legislation. The CFTC has to provide complementary rules regarding the legislation, regarding the foreign exchange markets.

The Wall Street Journal reports:

The $4 trillion-a-day spot market for currency trading, which is a cash-settlement market, doesn’t come within the law’s purview. The commission is deciding how to apply the new rules to foreign-exchange derivatives.

There is only one forex broker represented in these discussions: FXAll, which caters institutional clients rather than retail traders. Their CEO, Philip Weisberg warned that if rules would be too harsh, the industry could find itself in London.

As this legislation is extremely complicated, the implications of the law aren’t clear to almost anyone. Will US forex traders be limited to trading solely with US forex brokers? Some US brokers “repatriated” their clients from their offshore subsidiaries.

But as far as I know, severe enforcement to disable forex traders from trading overseas wasn’t seen. One rumor was that offshore forex brokers, including those that undergo serious regulation as in Britain, Switzerland and Australia, would get the same credit card classification as gambling (7995).

As far as I know, this never happened. It now seems that the CFTC will have a lighter hand on forex brokers. Leverage in American trading accounts is already limited to 50:1 since October 18th 2010. This major change already weighs on the industry, and I believe that the CFTC should wait before putting on new burdens.

Update: See important comments below by Michael Greenberg.

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 a 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.


  1. There might be some confusion here. CFTC already implemented what it had regarding retail forex brokers – hence the new RFED status and repatriation of accounts back home. This is NOT going to change.
    Perhaps what they mean is some new requirements such as positions limitations, and almost for sure will not apply to spot fx.

  2. Thanks for your comment. There is a lot of confusion indeed. FXAll doesn’t deal solely with derivatives, does it?

  3. fxall is a platform, not a broker. i suppose the exemption would deal with assets traded on it whether it is spot or derivatives.