The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

CFTC: Fun on the farm

Normally, I wouldn’t be that concerned about things agricultural, but the latest US Farm Bill, passed recently by the US senate, also includes the Commodity Futures and Trading Commission Reauthorisation Act. The CFTC effectively regulates retail FX in the US.

President Bush vetoed the Bill on Wednesday night, but that apparently will cause no more than a short-term delay. According to Drew Niv, chief executive of FXCM, the Bill will lead to the creation of retail FX dealer category, recognising that the OTC is a proper market and not just a pool where sharks swim. It will also close the Zelener loophole that limited the CFTC’s jurisdiction by limiting the regulator to futures, not spot.

The new Bill will also clamp down on what introducing brokers are allowed to do and claim. Perhaps the most significant change is the increase in the adjusted net capital that firms will have to post to do business. Over the next year this will be increased in $5 million increments from its current level to $20 million, turning the US from what was once one of the easiest places to set up a trading platform to one of the hardest, in terms of cost. No other jurisdiction presently requires such a high capital requirement.

Once passed, the legislation will undoubtedly help the CFTC and the National Futures Authority achieve their aim of forcing poorly capitalised companies out of the market.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree