Forex dealers are not taking the latest rogue regulatory action – CFTC’s proposal to limit leverage in OTC forex - lying down. Last week, the Forex Dealers Coalition (FXDC), a group of the nine largest firms in the industry, sent a letter to the CFTC saying its proposal to limit leverage to 10-1 would “be a crippling blow to the industry and drive it offshore.” The CFTC kicked off its 60-day comment period last week, after which it will make its decision on the proposal. You can get more information and send a letter to the CFTC through FXDC’s Web site, www.fxdc.org.  How will the proposal affect your trading? Leave your comments below.

Back in March we wrote about the report “Sold Out: How Wall Street and Washington Betrayed America,” published by Essential Information and the Consumer Education Foundation. The report stated that $5 billion in political influence purchasing in Washington over the past decade had led to our current economic collapse.

 The report was anything but shocking as the influence of big money on public policy is no secret. Many depression era reforms were struck down in the past decade, which allowed among other things the merger of commercial and investment banking and an increase in the amount of leverage financial institutions could utilize.

Continue reading ‘Say that again, you must be joking’ »

There was a rosy picture painted for the U.S. dollar, earnings and the economy at large at Dow Jones Indexes‘ 2010 Global Economic Outlook today. Analysts predicted a rebound in global economic activity.  Kevin Logan, an independent global economist, said by the middle of this year, estimates for global GDP growth in 2010 are likely to be double what they were in the middle of 2009.  Analysts said that the dollar would start out the year weak, with a recovery sometime in mid-2010.

Continue reading ‘Recovery in 2010?’ »

The credit crisis and various financial scandals of recent years have changed the landscape for U.S. regulators. In was strong regulation and out was warm and fuzzy talk of public/private cooperation. In also was supposed to be interagency cooperation.

While one of the five key objectives of the Obama Administration’s audacious regulatory overhaul proposal was to Establish comprehensive supervision of financial markets and it set as a goal harmonizing regulatory regimes to prevent regulatory arbitrage and gaps in coverage, that hasn’t necessarily been followed through on.

Case in point is the Financial Industry Regulatory Authority’s (Finra) proposed Rule 2380. In its original form the rule would have limited the leverage broker/dealers could offer their customer in forex trading to 1.5-1. That is the customer would have to put up about $67,000 for a standard $100,000 forex position.

Continue reading ‘When Regulators go rogue’ »

CFTC Chairman Gary Gensler kicked off the new year by outlining his goals for regulatory reform in a speech before the Council on Foreign Relations today. In it, Gensler blamed over the counter (OTC) derivatives for much of the financial crisis of 2008. “I believe that over the counter derivatives were at the heart of the crisis. We have all witnessed firsthand the effects that unregulated derivatives had across the entire economy,” he said. Continue reading ‘Demonizing derivatives’ »