Comments on Proposed Retail Forex Rules Sought

The Finanacial Industry Regulatory Authority (FINRA) requested comments on a proposed rule to limit the leverage available to retail investors trading in the off-exchange foreign currency (forex) markets.  The proposed rule would be applicable to FINRA member firms and would limit leverage in forex transactions to 1.5 to 1.  The proposed leverage limits are significantly lower than the leverage limits currently offered in the industry (which can reach up to 100 to 1 or higher).  The leverage limitation would not be applicable to eligible contract participants.  The FINRA proposal is the latest step in a series of regulatory tightening measures which have been instituted with the goal of protecting retail investors from the risks of the forex markets (for more information please see New Forex Registration Requirements).  Comments on the proposal are due February 20, 2009.  Continue reading →