On August 30, 2010 CFTC has released its Final Rules Regarding Retail Forex Transactions.
(You’ll be also able to read the full Release below).
Concerning the leverage rules, quote:
“Leverage in retail forex customer accounts will be subject to a security deposit requirement to be set by the National Futures Association within limits provided by the Commission”.
According to NFA instead of 10:1 leverage cut in the proposed earlier rules, the new 50:1 leverage will be implemented and become effective October 18th, 2010.
This leverage cut affects all retail clients in US, for whom Forex leverage will be limited to 50:1 on major currencies, and 20:1 on minors.
Also, from October 18th 2010 as the the Dodd-Frank Wall Street Reform and Consumer Protection Act come into force, only United States financial institutions will be permitted to act as counter-parties to off-exchange retail Forex transactions for US residents and citizens.
Following these regulations non-US brokers won’t be able to accept US citizens any more. For traders who are not American citizens, but currently live in US, to open an account they’ll need to provide an ID and address proof from their country of citizenship. As well as all transfers to/from live Forex accounts have to be made from non-US banks.
New rules like this is all a part of regulating the Forex market in order to ensure fair and ethical business between parties. It makes trading less one-sided, and forces risk management to be put in the forefront of clients minds to help protect them. We would always recommend that you choose a broker that is certified by a regulatory body.