Trading News

This is NOT the Death of US Retail Forex Trading!

I came across a post on the BabyPips forum this morning. It was written a couple of days ago, but somehow I missed it the first time around. It had the inflammatory title “The end for Retail Forex in the United States?” The posts references a CNBC article and an SEC ruling about the subject of the SEC putting through a rule (as required by Dodd-Frank) to extend existing retail forex trading regulations for another year so new rules could be properly written. Had the SEC not made this move, retail foreign exchange trading by SEC regulated firms would have been rendered illegal.

Please note here that this only applies to SEC regulated firms. That means securities brokers and deals. These are the likes of Schwab, Ameritrade, etc. This does not include the vast majority of US retail forex brokers, as they fall under CFTC regulatory purview (see New CFTC Rules for Retail Forex Trading).

The CNBC article portrays the SEC chief has being uneasy about retail forex, but it doesn’t sound like he’s racing to crank up the regulation. There is a concern in the securities industry about the impact new rules might have on traders and investors who transact in foreign stocks and bonds and look to hedge their currency exposure.

So, the bottom line here is that while the final SEC rules may determine future developments related to retail foreign exchange trading where the securities brokers are concerned, as some do operate in the space and others have talked about expanding into doing so, it is not something which is going to impact the vast majority of existing US forex traders in any meaningful way.