NFA Talks with CFTC about Proposed Forex Leverage Reduction
President of NFA Dan Roth and CFTC Commissioner Jill Sommers Discuss Leverage Proposal
On Friday, Dan Roth, the president and CEO of the National Futures Association met with CFTC Commissioner Jill Sommers regarding the proposed forex regulations. According to the text of the CFTC comment file regarding the meeting, the discussion primarily centered around the reduction in leverage from 100:1 to 10:1 which has created a backlash from the retail spot forex industry.
Many groups within the industry suspect that the CFTC was trying to force retail investors into the currency futures markets, but industry comments have revealed that if leverage is reduced in such a manner, U.S. retail traders are likely to move to overseas brokers who will offer greater leverage. This meeting may be a sign that the regulators are taking the comments of the industry to heart. We will keep reporting on this issue.
The full text of the comment file is reprinted below and can also be found here.
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MEMORANDUM
TO: Comment File
FROM: Commissioner Jill Sommers
DATE: February 26, 2010
SUBJECT: Proposal to Regulate Off-Exchange Retail Foreign Exchange Transactions and Intermediaries
On February 25, 2010, Commissioner Sommers met with Dan Roth of the National Futures Association. The Commission’s proposed rulemaking regarding the regulation of retail foreign exchange transactions and intermediaries was discussed, primarily with respect to the proposal to restrict leverage in customer accounts to a 10-to-1 limit. Marcia Blase and Andrew Morton of commissioner Sommers’ staff were also present at the meeting.
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Other forex law blog articles include:
- 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
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