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CFTC New Margin Requirement Rules


The CFTC's much debated new rule to increase margin requirements (decrease leverage) that registered FCMs are allowed to offer their clients is going into effect on October 18, 2010. Maximum leverage will now be 50:1 on majors and 20:1 on minors. For most traders, this is not going to affect their trading a whole lot, but there are instances where some traders who do make use of high leverage that are outraged and will be moving their accounts to offshore brokerages, mostly in the UK. The bigger question that arises is of course whether the CFTC is overstepping its boundaries by dictating to traders what is and what isn't an acceptable level of risk. Considering the fact that FINRA regulated brokers may soon be subject to a 67% margin requirement (1.5% leverage !!!), there is also the question of double standards arising in the industry.

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