New Forex Regulations Due

The forex market is the world’s largest with about $3 trillion dollars being traded daily. The forex market is open 24 hours a day five days a week. The forex market is not centralized and has no exchange of its own in a central location. Compared to other markets the forex market is relatively unregulated by all that may change as early as this week. The Commodity Futures Trading Commission is expected to publish new rules regulating forex trading. The new rules are expected to affect mostly forex brokers and dealers by adding new registration requirements.

Capital Requirements For Brokers May be Raised

It is widely expected that sales people in the retail forex market will be required to register with the Commodity Futures Trading Commission. There is speculation that forex dealer’s capital requirements could be raised. Should this happen many expect forex brokers to consolidate. One of the most attractive features of the forex market is the ability to use leverage or margin. At the present time leverage of up to 400:1 is possible and the new rules could drastically lower the amount of leverage available to investors.

Reduced Leverage a Possibility

Many in the forex industry speculate that under the new regulations the maximum amount of leverage available could be reduced as low as 50:1 or possibly 25:1. This would mean big changes in an industry where the use of high leverage makes the forex market attractive to many traders. As has been pointed out by many currency trading experts leverage is a double edged sword. While high leverage can lead to large profits it can also lead to quick and irreversible losses. Once the new rules are published by the Commodity Futures Trading Commission it will probably take six to twelve months before they go into effect and revisions are possible. Brokers, traders and investors will be following the new requirements closely.