US Seeks to Curtail Off Exchange Highly Leveraged Trading in...

06-18-2011 • JessesCrossRoadsCafe.blogspot.com/

As part of the reform of derivatives, Dodd-Frank is seeking to prohibit Over the Counter (meaning non-exchange) trading of commodities at leverage of greater than 10:1. The off exchange traders, particularly those trading in currencies, had expanded their markets into various commodities, offering non-product backed paper trading at very high rates of leverage. The Congress and CFTC started taking a dim view of this sort of activity, and has begun to enact tentative prohibition of it as of July 15. This does not curtail any on-exchange trading, such as the CME, or any ETFs, or any other product with a leverage of less than 10:1 or actually involving substantial physical backing or intended delivery of product within 28 days. I have not quite gotten the time to assess the impact if any this might have on retail trading in forex itself. I have included a few forex related documents below. I have relatives visiting this weekend to celebrate my wife's recovery from her recent illness. This is my reading of the situation, subject to additional information. I am trying to obtain the contracts detail to understand customer rights, if any, in obtaining delivery of spot commodities from fellows like Forex.com. There *could* be something to this if there is in fact a means to obtain delivery in some reasonable way. But otherwise it looks like a crackdown on speculation on non-currency products and push to move them to exchanges for all but the 'exempt few' who manipulate markets.