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Last week, in the wake of the recent kicking that Cable has taken, the NFA lowered the max leverage on GBP pairs, issuing a directive to all licencsed FX brokers in the US that the must cut leverage and raise margin requirements on all GBP currency pairs.

What? 

The new minimum margin for both new and existing positions is 5% , meaning a maximum leverage of around 20x. Those new rules came into effect at 5pm Central Time on November 7, affecting trades and planned trades across the globe. Insufficient margin? Too bad, says the NFA.

Why?

The NFA said that the decision was wholly down to Brexit, which is quite likely to lead to increased volatility and risk in trades with GBP, including inevitable price spikes which many brokers may choose to use to their advantage.

However, this only affects NFA licensed brokers – so FXCM, Oanda, and any of the GAIN Capital Firms such as Forex.com. The FCA has not, as yet, made similar changes.

In other news, Australia finally got with the program last week when the Australian government announced that it’s going to change the rules to what retail FX brokers can and cannot do with client money – i.e, finally, you can no longer use client money for things such as working capital!! Way to go Australia, only about five years behind the rest of the world.

 

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Matt Vann

Matt has been trading for over a decade, trading with various forms of Futures, Spread Betting and occassionally, CFDs. He'll trade limited markets including Indices, Currencies and selected Commodities such as Silver and Natural Gas.

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