With the comment period for the Commodity Futures Trading Commission’s (CFTC) regulatory proposals regarding retail forex transactions including reducing leverage to 10-1 on Forex Dealer Members (FDMs) of the National Futures Association (NFA) FDM Oanda reiterated its opposition to the 10-1 recommendation.
In its position statement Oanda states that maximizing leverage to 10-1 puts retail forex customers at a competitive disadvantage is set at an arbitrary level, sets up an anti-competitive environment and offers better solutions.
One of those solutions is segregation. "Forex traders would benefit from regulation that allows FDMs to provide customers with segregated accounts—something that futures commission merchants (FCMs) already benefit from," the letter states. It goes on, "If the NFA’s FDMs were allowed to provide segregated accounts that keep customer funds separate from a dealer’s operating capital, in the event of dealer bankruptcy customers would be considered secured creditors and receive priority in bankruptcy proceedings."
Oanda CEO Michael Stumm says that although it would be easy for customers to move accounts to non U.S. affiliates—75% of Oanda customers do not reside in the United States — customers like the regulatory regime of the NFA and would prefer to keep it.
Stumm adds that he agrees with the rest of the proposal including requiring introducing brokers to register with the CFTC.