Regulator Boosts Requirements on Forex Trades

NFA to Temporarily Require Additional Cash in Currency Trades Involving the Japanese Yen and Australian Dollar

WASHINGTON—Regulators took additional steps Friday to address steep losses suffered by traders and brokers in the wake of last week’s unexpected surge in the Swiss franc, moving to temporarily restrict the amount of borrowing, or leverage, used by foreign-currency traders.
The National Futures Association, the agency responsible for policing the futures industry, said it would temporarily require investors to put down additional cash when they enter into currency trades involving the Japanese yen and the Australian dollar. The move will require investors to post a “minimum security deposit” of 3% of their overall bets, up from 2%. NFA attributed the increase to “continued volatility” in the foreign currency markets.
The move comes eight days after foreign-exchange brokers like FXCM Inc. were hit hard after the Swiss National Bank moved to stop reining in the value of the franc against the euro. FXCM needed a $300 million loan to cover losses stemming from the move. Earlier this week, NFA began requiring investors to post margin of 5% of their overall bet, up from 2%.
Read more Click here / www.trade4x.net