PFGBEST Press Release on New Forex Regulations
Forex Broker Supports CFTC But Not on Leverage Reduction
Last week forex broker BFGBEST was the first group to issue a press release on the leverage reduction component of the CFTC’s proposed retail forex regulations. The following press release, reprinted in its entirety, can be found here.
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FOR IMMEDIATE RELEASE
PFGBEST MEDIA ADVISORY
CHICAGO, January 15, 2010
RE: CFTC Seeks Public Comment on Proposed Regulations Regarding Retail FOREX Transactions
PFGBEST supports the CFTC’s proposed rules regarding Retail Forex Transactions but hopes that leverage will remain the same to avoid unintended negative consequences of job losses to foreign competitors.
PFGBEST is pleased to offer strong support of the CFTC as it has provided clear guidance and a comprehensive scheme of regulatory requirements to govern retail foreign exchange trading in the United States.
Once again the CFTC has provided clear regulatory guidance that in the past has made it the premier regulator of the derivatives industry.
In particular, the CFTC has fixed the regulatory capital requirement to $20 million plus 5% of liabilities that exceed $10 million, reinforcing its serious intent to protect customer interests.
PFGBEST will provide comments to the proposed rules to assist in making forex regulations similar to other derivative rules that have provided market integrity and customer protection in the futures industry.
One key component of the proposed rules that PFGBEST will comment about concerns a likely unintended negative consequence. A leverage structure change in retail forex margining from 100 to 1 to 10 to 1 will force a great majority of forex business to be done offshore and thousands of U.S. jobs would be lost in the derivatives industry to European and other foreign competitors. Worse, U.S. forex customers would not be protected by the CFTC. PFGBEST feels that U.S. forex customers deserve the best protection available.
It was clearly not the intent of the Congress to destroy the U.S. retail forex industry when the CFTC was given the authority to create rules for retail foreign exchange. Congress made it clear that the industry was to be policed, not abolished. The 100 to 1 leverage structure was changed from 400 to 1 earlier this year when the NFA submitted rules which the CFTC approved. This governance created clear guidance and market protection while keeping the United States competitive with the offshore competitors even though it was a higher requirement.
Contact:
Patricia Campbell
Peregrine Financial Group, Inc. (PFGBEST)
(312) 775-3411
pcampbell@pfgbest.com.
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Other related forex law articles include:
Bart Mallon, Esq. of runs the Hedge Fund Law Blog and provides forex registration service through Mallon P.C. Mr. Mallon also runs the Forex Law Blog. He can be reached directly at 415-868-5345.
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