U.S. forex traders have 270 extra days to trade with foreign banks
October 1, 2010
This week, we continued our series of podcasts on the new CFTC forex rules. We focus on how these new rules affect investment managers (CTA and CPO), introducing brokers (IB) and foreign banks.
Click here to listen to our Sept. 30, 2010 podcast (streaming mp3 file 78:00 length).
We answer a key question about whether a U.S. retail forex trader can trade on a non-RFED registered foreign platform after the Oct. 18 registration due date (90 days after Dodd-Frank Fin Reg enactment). Good news: The CFTC told us foreign financial institutions (banks) — who are not supposed to register as RFEDs with the CFTC but rather with bank regulators — are subject to the 360-day deadline in Dodd-Frank. That means U.S. retail forex traders can trade on non-registered foreign bank forex platforms until July 16, 2011.
Gaining an extra 270 days to trade on a non-registered foreign bank platform can help many retail forex traders who are not otherwise ready to begin trading under the new CFTC rules, which include 50:1 margin on majors, 20:1 margin on minors, the hedging rule and no FDIC, SPIC or segregation protection. Who knows: If Republicans take control of Congress in the November 2010 midterm elections, perhaps they will water down some excess in Dodd-Frank Fin Reg. Many forex traders think the CFTC's current posture for extraterritorial reach is a little excessive, and we agree.
For more details on the 360-day foreign bank deadline, see a blog update from the InvestmentLawGroup.com: Major Development: Foreign Banks Still Eligible Counterparties for Retail Forex Traders. They have been co-hosts on our series of podcasts covering these new CFTC forex trading rules.
Green also comments on efforts around the world to propose financial-transaction taxes and shares his latest thinking about whether or not the Bush tax cuts will be extended for the middle class only or for the upper class (job creators) too.
Green also discusses new arguments against repealing carried-interest tax breaks for investment managers. Prior efforts to repeal were successfully stopped by Republicans, yet the President and leaders in Congress are still pushing for this repeal. It could be part of a bill to extend Bush tax cuts too. Many executives of public and private companies receive a significant portion of their compensation in the form of stock options. In many cases, these executives benefit from lower long-term capital gains tax treatment from holding shares after exercising their options — part of which is earned ordinary income. Why single out investment managers and deny them this fair tax treatment, which represents the reality of their business arrangements?
Green shares his thinking on the continuing saga between Republicans and Democrats on ideology in connection with the budget, including tackling the third-rail of politics, social security. Green explains how the current system resembles a Ponzi scheme and private, conservatively invested accounts might be a better choice for younger people.
Posted 2 years, 10 months ago on October 1, 2010
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