Hi everyone
Recently I had a nice talk with a top executive of the U.S. Retail Forex Industry. We were talking about the impact that the latest ruling is having on the Forex business.
Under his view, 4 new rules have vast potential to change things in the United States:
1. NFA rule on limiting leverage to 100 to 1 will be enacted very soon
2. NFA rule that mandates that customers receive price improvements on limit orders. It potentially has very wide implications for all firms as it may mean best execution standards. If the NFA reads a typical order in FX which is “hitting a price” as a limit order as well it will mean best execution applies to all orders and that will be very problematic for market makers.
Time isn’t certain on this, but its this year.
3. NFA rule mandating that if firms re-quote negatively they must re-quote positively continuing the theme above of giving customers the absolute best price available at the time. Same time line as above.
4. CFTC is months away from passing IB registration requirements. Although this is one year over due they did just get their new chairman so now he will need to “prove” himself as a tough policeman in the financial arena. The new rules will mandate that all IBs and money managers for US clients have to register with CFTC/NFA.
The specifics of what exact capital requirements and fees will be is unsure but its likely to mirror the futures industry’s.
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