NFA Indicates Support of Higher Leverage for Retail Forex
By Bart Mallon, Esq.
(www.forexregistration.com)
At the NFA regulatory conference at the beginning of this month, the topic of the first session was the current regulatory and legislative changes which are currently taking place in the industry. Perhaps not surprisingly, the panel (which included NFA’s Dan Driscoll) completely avoided any discussion of the CFTC proposed forex regulations until prompted by two audience questions.
The first question was about the retail forex regulations in general. Mr. Driscol, the Exectuvie Vice President and Chief Operating Officer of the NFA, gave a fairly bland overview of the issue involved and noted that the CFTC had received thousands of comments from the public, most in opposition of the reduced leverage requirements. Mr. Driscol also discussed how the NFA is planning to deal with the significant increase in the applications by building out their computer systems.
As a follow-up question, I asked about the February 26, 2010 meeting between the NFA and the CFTC (see CFTC’s note to file). According to memo, CFTC Commission Jill Sommers met with Dan Roth of the NFA and they primarily discussed the proposal with respect to the significant reduction in leverage. Dan Driscoll of the NFA answered my question by noting that the NFA would not comment publicly about what was said in the meeting. However, he did note that the NFA would be submitting a comment letter on the proposed rules as well. Significantly, Mr. Driscoll went on to discuss the fact that the NFA itself recently reduced the leverage for those NFA Member Firms who are forex dealers. Those reductions were to 100:1 for the major currencies and 25:1 for all other currencies (for background, see NFA Forex Leverage Reduction Proposal).
While I do not purport to speak for Mr. Dirscoll, the import of his discussion seems to be that the NFA is going to provide a comment to the CFTC which provides some of the background and reasoning on how the NFA came to adopt the leverage requirements just a few months ago. The comment period ends soon so it will be interesting to see how the NFA decides to comment on the proposal.
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Other forex law blog articles include:
- Senator Hatch Comments on Retail Forex Proposal
- New Forex Regulations: Overview of Public Comments
- Foreign Exchange Dealers Coalition (FXDC) Evaluates New CFTC Rules on New Website
- Forex Industry Overwhelmingly Against Lower Leverage
- New Introducing Broker Coalition
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[...] indicated that it will be providing the CFTC with a comment letter addressing its thoughts (see NFA Indicates Support for Greater Leverage). Specifically the NFA indicated that they believe margin requirements should be based on the [...]