Francesc Riverola,
Hi everyone
X IBFX Clint sent me a great article on the new CFTC bill at euromoney
He also said: "Francesc would love to see a story from you, if you decide to blog a story please remember to get all sides NFA, CFTC, current off-exchange retail FX brokers and on-exchange futures FX brokers’ point of view as any unbiased reports should."
Well, I´m going to try:
What Euromoney’s article says goes very much in line with what I´ve been saying here in posts about this issue - look for NFA cathegory in this blog (right column).
NFA: NFA did a very bad job ruling the retail FX business when it started in the early nineties. They let too many scammers unbehave for too long.
Now, upset by this situation, they are passing from a very lax regulation to a too restrictive one.
Goal: to take out of business small and troublemaking companies.
Finally, the NFA is trying to move the business to themselves. I don’t know if it’s because of their own thinking or because they receive pressure from incumbents (on-exchange futures FX brokers).
CFTC: As far as I know CFTC is in the same boat as NFA since CFTC outsourced jurisdiction of the off-exchange business to the NFA. That´s my personal feeling but I´m lacking of sufficient data here so I could be wrong.
On-exchange brokers: They are prepared to jump into a very big, growing and profitable market they were not able to get by themselves. They are expecting that regulators will do the job for them as they lost their part of the cake - that could have been entirely theirs if they had reacted when they should.
Off-exchange brokers: Well, they are fighting to keep what they have built for the last decade. They are competitive, their business is growing - remember that mergers and acquisitions has started not because of the market maturity but because of regulators - so they want to keep staying on the top of the business.
They know that playing with the same cards, they are much more competitive than on-exchange brokers. They have the battle won, and now they don’t want to lose the war.
That´s my opinion
Francesc
NFA’s 20 million restriction is crazy. It’s definitely not fair to the honest (well, at least in relation to other brokers) brokers who have been organically growing in the last decade. If anything, these strict regulations will move many brokers offshore and will create virtual oligopoly in the US.
So, I think NFA’s new restrictions will only benefit the big, on exchange brokers (who I suspect have paid NFA) and not the retail customers, who these restrictions claim to “protect”
Hi Dude
I agree. I´m affraid too restrictive regulation will put the business in the on-exchange brokers and this will hit the retail business as they are by far less competitive than off-exchange brokers, the current dominators of the retail market.
We will see
Thanks for your great contribution
Francesc
Yes it very well may mean the end of the bucket shop brokers as we known them and yes even the big boys bucket shop are scared shitless, they wouldn’t go public if they weren’t. How ironic their relying on the very same segment who’ve they plundered from for years to voice them out of this mess , they know if they get the masses ( that’s if you naive enough to go agree with them ) thinking it’s bad for traders they may have a chance to squash this new bill.
Now just think a big of the consequences here , if they do squash this and keep the caps at 5m and the regulations at arms length do you think they will start playing fair , NOT!! In fact they would be able to use the fact that this law was squished to do what ever they please so in essence if you do fight for them you will be fighting for your own demise.
Francesc can you get the NFA / CFTC stands on this as you did in your archived article here http://www.fxstreet.com/fundamental/analysis-reports/the-brokers-re-evolution-the-ceos-reply/2007-10-23.html
Dear X IBFX Clint
I contacted you by e-mail after reading your comment from Feb 19th.
I´ve not hear from you since so I´m not sure if you received it
Please, get in touch with me
Francesc