What has been rumored and widely anticipated is finally happening. The NFA keeps imposing one restrictive requirement after another and US brokers are forced to open up shops elsewhere. It has been widely speculated that US retail forex clients will start shifting theire funds abroad, but there has been no official confimation. Yet.
Reading the interview (http://www.onlineforextrading.com/blog/national-futures-association-0192009/) with the National Futures Association Director of Communications and Education, Larry Dyekman, one thing stands out, I’m quoting:
Question: How have recent NFA changes impacted retail forex trading?
Answer: “We receive data on a weekly basis from our Forex Dealer Members regarding the amount of customer funds they currently hold. Since our latest rules went into effect on August 1, we have seen a minimal (4%) decline in customer funds at our 17 Forex Dealer Members.”
Filling the Gap Between Brokers, LPs, and ClientsGo to article >>
A 4% “minimal” decline in funds?? That’s tens of millions of dollars!
It’s great to see an NFA exec finally admit that the result of their inept requirements are that 4% (on average) of US retail Forex traders have shifted their money elsewhere (offshore). So some funds must have moved to Europe and Asia and who knows where else? Is that the result the NFA had expected to achieve? I know they didn’t expect to achieve anything. They just introduced requirements which at first glance made sense. That’s it. They didn’t really think of the outcome one bit. Now we see that decision meant – US money moving to offshore brokers, some of them are much less safe than the others.
Let me make a prediction for the future: I expect 50% of US retail Forex money to leave the States within 3-4 years. Quote me on this one.
NFA, it seems to me, is simply forcing the retail Forex out of the US. Why? I don’t really know, but there are several educated guesses I can make.