In the year 2010, ground-breaking legislation was passed by Congress that would curb transgressions that helped cause the 2008 financial crisis. Also in 2010, mid-term elections changed the balance of the U.S. Congress, giving Republicans a majority in the House with Democrats retaining a majority, barely, in the Senate. Thus the financial reform bill is targeted by the new House majority, who promises to rip it apart. (more…)
The Forex and Futures Expo in Las Vegas last week was not particularly well attended but those who were there were keenly interested in learning how the new rules for retail forex would affect their business. One forex broker put it pretty simply, “We’re scared shitless,” he said of some of the new rules.
The Commodity Futures Trading Commission’s forex proposal last January stirred up a hornet’s nest of opposition.
It seemed awfully odd that just a month or so after the National Futures Association (NFA) instituted new tougher standards for forex, that the CFTC would propose something so different. The NFA, after all, is the agency who has dealt on the front lines with the forex problem. There has been a lot more continuity in the leadership and the staff of the NFA in recent years than at the CFTC yet the CFTC proposed a leverage standard 10X more restrictive than the NFA rules that had just gone into affect.
The third quarter for currency traders looks to be another rocky one, according to Forex.com, which released its Third Quarter 2010 Markets Outlook today. A weak economy and troubles in the Eurozone are the usual suspects that will continue to hold the forex markets down. Analysts say the dollar will be the safe-haven currency as euro weakness will continue into 2011. The commodity currencies, the Australian dollar and Canadian dollar, should outperform, but are at risk if global recovery falls, according to the report. (more…)
The outcome of the Commodity Futures Trading Commission‘s recent 10:1 forex leverage proposal is still in limbo, and forex dealers and traders (including many Futures readers) are still busy hurling their wrath at the agency until the comment period closes on March 22. But in the meantime, GAIN Capital/Forex.com released their outlook for forex markets for the second quarter of 2010. And the forecast is a muddled, choppy one. (more…)
When the proposed rule release hit the airwaves back in January, the shock was deafening. This would be the Commodity Futures Trading Commission’s (CFTC) proposal: Regulation of Off-Exchange Retail Foreign Exchange Transactions. The industry was well aware new regulations were in the works, it just wasn’t so sure of the details. And as they say, the devil’s in the details.
Yesterday, we spoke with CFTC and Congress about how new regulation coming out of Washington would affect traders. We also sat down with former CFTC Chair Sharon Brown-Hruska, now a vice president in NERA’s securities and finance practice. Brown-Hruska says that while it’s justified for the CFTC to crack down on illegal forex operations, the agency’s current proposal to limit leverage in OTC forex to 10:1 “overshoots the mark.”
With regulatory reform in Washington THE issue affecting the futures industry right now, Futures magazine is in D.C. this week to talk with Congress and the CFTC about what’s ahead.
House Agriculture CommitteeChairman Collin Peterson (D-MN), whose Peterson-Frank Amendment to HR 4173, passed by the House in December, established a central clearing requirement for OTC derivatives, says, “the way our legislation is crafted right now, you will see a lot of [OTC products] standardized, 70%-80% of this stuff will be standardized.” He mentioned how the House Ag Committee is working with European regulators and that CFTC Chairman Gary Gensler is focused on coming out with harmonized international regulation.
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.
With the Western world moving to quantitative easing and a near 0% interest rate environment, experts agree that interest rate differentials are no longer the significant driver of forex markets as they were in the past.
Adam Boyton, G10 FX Strategist for Deutsche Bank, discussed this along with other factors driving forex markets on a conference call Tuesday afternoon.
Among Boyton’s observations was that equity markets have priced in too much of a recovery, despite pressure the dollar will remain the preeminent reserve currency for at least another five years and that interest rate differentials will no long be a primary driver of forex markets. “[The market] will look at interest rate differentials, but not as much as before,” Boyton said.
