CFTC rules increase credit risk
Proposed rules to limit leverage on margin FX trading accounts at retail forex brokers will have the unintended consequence of increasing counterparty risk, according to Josh Levy, managing director at Tactical Asset Management.
Speaking on the implications of new regulations on currency markets at the FX Week USA congress, Levy expressed concerns over a proposal by the Commodity Futures Trading Commission (CFTC) to restrict leverage on these accounts to 10:1 from 100:1. He noted margin foreign exchange trading is a large and growing percentage of the forex market and, despite the focus of the regulators, is not limited to retail traders.
“As a high-frequency trading firm, the data dictates where we trade, whichever
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