Felix Shipkevich
Felix Shipkevich

Regulatory Roundup

January 13, 2010, is a date that many of us in the world of Forex regulation will not soon forget. On that day, the United States Commodity Futures Trading Commission (“CFTC”), after almost two years of deliberation, proposed a set of regulations that created a tsunami of outcry in the retail foreign exchange market. These long-awaited rules were a product of the 2008 Farm Bill that intended to require registration of US introducing brokers, commodity trading advisors and commodity pool operators. Instead, these 192 pages of densely-worded legislation created an international uproar due to the CFTC’s efforts to curtail leverage limits to historic lows.

First Published: e-Forex Magazine 39 / Retail e-FX Provider / April, 2010

The purpose of the Farm Bill, and the ultimately the purpose of these rules, was to provide adequate customer protection in what has been unfortunately called “a loosely regulated market.” Like children waiting for their birthday gifts, registered US foreign exchange brokers have been impatiently waiting for these rules to legitimizing the industry by imposing registration requirements on introducing brokers, CTAs and CPOs.  Their impatience, however, was dubiously rewarded with a set of proposed regulations that, if enacted, would ultimately drive most of these Forex brokers and their clients abroad. In an economy already facing with historically high unemployment, the set of proposed rules was intended to bring legitimacy, reputation and growth to an industry that was already damaged due to the lack of regulation and legal loopholes that allowed fraud to flourish in the first decade of this millennium.Clarification of CFTC jurisdiction Let’s step back and remind ourselves why these...continued

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