I started the year off championing the fight against the narrow-minded bureaucrats of the CFTC (Commodity Trading Futures Commission) who included a proposal to limit spot forex leverage to a ridiculous 10:1 for all U.S. based retail forex trading in an otherwise good intentioned proposal to regulate the growing forex industry in the U.S. The result of such over-regulation was an overwhelmingly negative one in which the CFTC received over 6,000 letters, emails, and faxes disapproving such a proposal. This was the most feedback the CFTC received for anything… ever! And it would appear that the outcry from U.S. traders and brokers has had the effect of silencing any real follow through of enacting the proposal from the CFTC. Problem handled right?

Well… while everyone was distracted wondering about the “new CFTC ruling,” it turns out we were all getting torpedoed, NOT by the CFTC ruling directly, but by Christopher Dood and Barney Frank, indirectly.

With the recent passage of the Dodd-Frank Wall Street Reform Act, many traders will be very upset to know that Section 742(c) of the Act states as follows:

“…A person [which includes companies] shall not offer to, or enter into with, a person that is not an eligible contract participant, any agreement, contract, or transaction in foreign currency [emphasis added] except pursuant to a rule or regulation of a Federal regulatory agency allowing the agreement, contract, or transaction under such terms and conditions as the Federal regulatory agency shall prescribe…”

In other words, this provision gave the CFTC control over the final decisions pertaining to U.S. Retail forex trading. Given the fact that the NFA and CFTC are controlled by competing intrests with the forex world as explained in my other article The CFTC Proposes 10:1 Leverage and This Will End U.S. Retail Forex, it is no wonder that the whole move was to prevent the growth and spread of the retail forex world within the United States. And to that effect they have SUCCEEDED!

CFCT Makes Final Ruling on Leverage

Well it came sooner rather than later, but the final decision has been made as to how the new U.S. Retail forex market will be regulated by the CFTC and current government legislation. Final Decision: 50:1 for all major currencies, and 20:1 for the rest. As I’ve stated in both my articles, this will be the end of U.S. retail forex. You will want to stay on top of this as it plays out, but this is a defining blow to retail forex.

To put it plainly, this is one example of a much bigger trend in the push for widening the gap between the middle class and the upper class in America, the richest nation on the planet. So what happens here can certainly be expected to also at least get encouraged to happen in any other country that is on “good terms” with us.

These people know nothing about trading, yet they make laws that regulate it. They can’t even get the math straight, failing to realize that an increase in cost basis per trade at 100:1 leverage, can net the same gain or loss as a specific decrease in cost basis at 50:1. Yet, they call themselves “protecting the consumer.” This is no protection of the consumer. This is all about moving the Futures Markets back into vogue. They were losing dollars/revenue to the OTC FX market and whether individual Retail Traders win or lost all their money entirely, means absolutely nothing to either Dodd or Frank. It was the FCM Lobbyists who did this in America.

And to relate it back to forex, let me ask readers a question. How many other self-taught professions can offer you the same potential and freedom that forex can offer? How close do you think forex is to actually reaching the masses of people that could potentially take benefit from this market’s existence? The answer scares the CFTC and NFA so much, that you get what we have here.

For a ongoing analysis of the effects of the final ruling, please visit: FXstreet.com How the Dodd?Frank WS Reform act will affect the Forex Market?