FXstreet.com (Barcelona) - The Commodity Futures Trading Commission's new rule proposal to limit the leverage to 10:1 level has set off an alarms inside the Forex and Futures industry.
The brokers coalition believes the fact that many customers will leave United States to go to other countries with different leverage limits and therefore will make Forex fraud worse due to the lack of regulated dealers.
The problem of Forex fraud will get worse absent legitimate dealers offering retail forex. Says the Foreign Exchange Dealers Coalition (FXDC) in their statement, retail forex fraud is not something that is caused by the actions of retail forex dealers; rather it is caused by unlicensed con-men who masquerade as forex experts promising silly and unjustifiable returns before disappearing with customer funds.
FX Solutions, GFT, Oanda, IBFX, Gain Capital, FXCM, FXDD, PFG Best and CMS Forex are moving together in this issue in order to avoid this rule proposal. (See the FXDC statement)
Unregulated dealers from around the world will also benefit. Comments Francesc Riverola, CEO at FXstreet.com, in addition, thousands of jobs lost when unemployment is at 10%, consumers more vulnerable to fraud, and the United States tosses away one of the most promising export industries.
The 10 to 1 leverage will not be attractive for traders. It is difficult to meet the margin requirements with such low leverage if a person wants to trade even standard lots. Affirms Tatsuya Kawanishi, FXstreet.com's Junior Analyst. Retail brokers will face difficult situations. well, it is like the game of cat and mouse. Brokers and traders will seek, eventually, an avenue of escape.
The brokers will move their bases overseas where regulatory bodies permit higher leverage, Kawanishi concludes, The traders will follow them.