By now you probably heard that NFA and CFTC plan to implement new code which will effectively nueter the FX market in the US. Thank god our firm is offshore and so are our brokers, even so this draconian regulation bothers me so much I took the time to look it over and pick out the parts that really rubbed me the wrong way.

d. Regulation 1.46 – Application and closing out of offsetting long and short positions.
Like FCMs engaging in on-exchange futures and option transactions under the existing regulation, RFEDs and FCMs engaging in off-exchange retail forex transactions would be required to close out offsetting long and short positions in an off-exchange retail forex customer’s account. But unlike existing Regulation 1.46, the requirement on RFEDs and FCMs engaging in off-exchange retail forex transactions to close out offsetting positions would apply regardless of whether the off-exchange retail forex customer has instructed otherwise.54
54 NFA’s experience supports the conclusion that keeping open long and short positions in a retail forex
customer’s account removes the opportunity for the customer to profit on the transactions, increases the fees paid by the customer and invites abuse.
WOW I should show those boneheads at NFA some client statements!

Regulation 5.7 An amount of minimum net capital in addition to the minimum $20 million is proposed to the extent that an FCM or RFED has a total retail forex obligation in excess of $10,000,000. After that threshold, as proposed the FCM or RFED must have net capital of no less than $20,000,000 plus five
percent of the total retail forex obligation in excess of $10,000,000. This proposal is intended to address concerns that, although the capital level contained in the CRA is believed to be high at $20,000,000, at particularly high levels of retail customer obligations there should be commensurate increases in an entity’s minimum required net capital. The NFA has enacted a similar requirement applicable to all its forex dealer members except those that only provide “straight through processing.” The Commission’s proposal has no exceptions for FCMs engaging in off-exchange retail forex or for RFEDs.
If your broker does business the right way, passes trades on to banks and as a result doesn’t have $22,000,000 needed they are out of business

8. Proposed Regulation 5.9 – Security Deposits for Retail Forex Transactions.
Proposed Regulation 5.9(a) would require each RFED and each FCM that engages
in retail forex transactions, in advance of any such transaction, to collect from the retail forex customer a security deposit (in cash or in financial instruments that meet the requirements of Regulation 1.25) equal to ten percent of the notional value of the retail forex transaction, ten percent of the notional value of short retail forex options in addition to the premium received, or the full premium received for long options, as the case may be.
Here is the 10 to 1 leverage rule

19. Proposed Regulation 5.22 – Registered Futures Association Membership.
In addition to registering with the Commission, the CRA provides that RFEDs and persons who provide retail forex trading advice, operate retail forex pools or solicit retail forex customers or accounts must also become members of a registered futures association.
the NFA says MO MONEY MO MONEY we are not talking
about futures here!
14. Proposed Regulation 5.17 – Authorization to Trade.
Proposed Regulation 5.17 requires RFEDs, FCMs, IBs and their APs to have specific authorization by the customer before effecting a retail forex transaction. For the most part, proposed Regulation 5.17 follows existing Regulation 166.2 for on-exchange futures and commodity option transactions. The Commission believes that registrants acting as off-exchange retail forex counterparties should have to obtain authorization for each transaction like other registrants.
So much for managed accounts! Your trader must call you at 3 am to trade! Forget about using a remote controlled EA as well!

A. Regulatory Flexibility Act
The Regulatory Flexibility Act (“RFA”)97 requires that agencies, in proposing rules, consider the impact of those rules on small businesses. They go through each classification and claim due to required deposits or that the fees for registration are not going to hurt small businesses. Hmm, I guess they didn’t consider the businesses who couldn’t make the deposits or the 10 to 1 leverage or the lack of being able to manage accounts properly as hurting small business.

B. Paperwork Reduction Act They want to increase the amount of paperwork…  hundreds of thousands of hours of paperwork per year

To complain about any of these proposed rules or the others contained in the 193 page PDF ( mostly the proposed code)

DATES: Comments must be received on or before [insert date 60 days from publication in FR].
ADDRESSES: You may submit comments, identified by RIN 3038-AC61, by any of the following methods:
• Federal eRulemaking Portal: http://www.regulations.gov/search/index.jsp. Follow the instructions for submitting comments.
• E-mail: secretary@cftc.gov. Include “Regulation of Retail Forex” in the subject line of the message.
• Fax: (202) 418-5521.
• Mail: Send to David Stawick, Secretary, Commodity Futures Trading Commission, 1155 21st Street, N.W., Washington, DC 20581.
• Courier: Same as Mail above.
All comments received will be posted without change to http://www.cftc.gov, including any personal information provided.

Before the New Year ten lots in CFD futures are for free!

For all Broco Customers there is a New Year Special Offer for the period from December 15 till December 31. Broco will cover all fees for the first ten lots in CFD futures contracts! Thus you will get only the profit without any costs!

If you will close the trading in CFD futures for the summary volume of ten lots (or more) during the indicated period, then Broco will cover all fees for the first ten trades. It does not matter which CFD instruments will be traded, the only important thing is that the summary volume of specified trades would be minimum ten lots. And of course, mini- and micro-contracts trading will be recognized as well — if the summary volume of such contracts is ten full lots, you will get the fees covered!

The amount of fees compensation will be transferred to the Clients’ live trading accounts as cashable funds in the period from January 01 till January 05, 2010.

Earn the profit on CFD with Broco!

Please note, that it is a question of full lots, not the deals. If you will trade in more than ten lots, you will get the compensation of fees for the first ten of them.

We would like to remind you that the New Year special offers and pleasant surprises from Broco are still taking place! On December 11 a special offer has started, under which every Broco Customer is going to receive a gift deposit to the trading account: you will receive the bonus at the amount of 10% of the difference between the amount that your are depositing and the amount that your withdrawing. This special offer is valid until December 31.

Close to the New Year — only the comfortable trading and no cost!

Well with actions of the last few days by the Fed it’s no wonder the dollar is falling. According to Bloomberg.com the Fed’s total outlays are now over $7 trillion during the crisis they created. The same day we took to the streets and demonstrated against  the Fed, the same day Kennedy was shot, Obama appoints the New York Fed head who has been the paymaster through all this to Treasury Secretary. This week more Fed spending was annoucnced and the dollar sank. With this massive infusion of liquidity at taxpayers expense no doubt the stock of the US the dollar will crash. If the US government was a corporation (it actually is btw) it’s stock would be pink sheeted. Since they have government fiat and the weapons to back it up it still lives. If it was truly the intention of the powers to be to create an Amero, they have certianly set the table properly.

Sell the dollar. If the fed and the treasury is just trying to talk the dollar up and it sure looks like they are then the market will call their bluff.  Aside from bargain hunting there is no reason to buy the dollar and since it has already rallied of it’s March lows it is not much of a bargain. Especially now that Iran is pushing for an OPEC petrol dollar or to start accepting gold instead. I like USD/JPY short with strong resistance having already been failed at 108.60 and plenty of room between here and 105.77 which I see as the next major support level. Today’s pathetic second test of the 108.60 level didn’t even make it to the figure before quickly reversing. Forex traders are not dumb, they know the dollar is worth less than 108 yen.

Let’s just wait and see what the G8 has to say after this weekend. Some of the dollar buying this week is based on an expectation of intervention to keep the dollar afloat. Perhaps the intervention has already occurred and it was of the verbal kind. The Japanese have proved in the past that this can be very effective, especially as the market has grown so fast the physical intervention is basically a drop in the bucket these days. We could see more strong dollar rhetoric coming out of the meeting which could help USD/JPY breach resistance levels at 108.60 but I don’t expect to see any real intervention occurring. More than likely Iran selling oil in euros and yen will be debated. There is no question that the U.S. is very bitter about it and that the Europeans are happy about it since they don’t have to by the dollar to buy oil all the time.

With the Fed today claiming that they would stabilize the dollar and the market reacting as planned it makes it a good time to short the dollar. AUD/USD seems likely to shoot up a good 50 pips when their GDP is released tonight as long as it comes in as forecast or better than predicted. $.95 is a tough nut to crack for the pair and I don’t think Bernake’s rhetoric will be enough to crack it tonight. It would take a pretty bad number to do that. So my advice is to get in and put stops in at $.9495 just in case and expect to see about 50 pips by morning.

Hope you all booked some nice profits on either USD/JPY short or GBP/JPY short today. I still see potential for these two pairs to fall further tomorrow, especially if the Dow breaks it’s support in Europe of the US tomorrow. The US trade balance at 8:30 is likely to be huge and give traders another reason to short the dollar in general but against the yen in particular. GBP/JPY could easily fall another 300 pips from here by Friday afternoon, although Friday’s are known for being the day when people exit positions and trades fizzle out so use trailing stops and watch out for reversals.

USD/JPY short is a good trade right now and I am in it currently. GBP/JPY is also a good short the way the numbers came out today from the UK.