The deadline for comments on the proposals of the US Commodity Futures Trading Commission about retail foreign exchange passed last Monday. However a date for a decision on the proposals has not yet been announced.
The proposal to cap leverage at 10:1 is only one of the suggested new regulations that also include stricter rules for the capitalization of the platforms, or Forex Dealer Members.
Predictably, there was a flurry of press releases from interested parties. Oanda’s positioning statement “The CFTC has received almost 10,000 submissions to date, almost uniformly opposed to the 10:1 proposal.”
The CFTC’s unstated purpose in the proposals is to protect investors, particularly from fraud. Scarcely a week goes by without CFTC proceedings being announced against an FX fund (which is never any such thing of course – just a grab-it-and-run scam masquerading as an FX fund). It has been said that more stringent capital requirements will go some way to preventing such abuses. This is largely nonsense of course – most of the scams have no registration with the National Futures Association or the CFTC to begin with – but the raising of the capitalization bar is not the proposal being most fiercely opposed.