by Francesc Riverola

Hi everyone

Yesterday I was surfing around and I found a few pieces of information that I did not like at all as I think they are unfair with the retail Forex industry that we all form a part of.

As you all know, the CFTC is trying to tighten regulations in the US in order to fight against fraud in the retail Forex Market. This is a very important initiative and I support it 100%, but the proposal of cutting leverage to 10:1 goes far beyond what I consider the appropriate way to fight fraud and enter into a very dangerous field of hidden interest and “who stole my cake?” stories if you know what I mean.

I’m very concerned that if regulators do not take the appropriated decisions – decisions that should be coordinated worldwide or at least pushed by top global regulators -, they could really turn Forex into a gambling business rather than an attractive asset class for investors to be incorporated into their investment portfolios.

Why am I saying all this?

1. I just found this Press Release from an Asian Broker

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08.03.2010/03:50:05 InstaForex increases the maximal leverage up to 1:1000
International online Forex broker InstaForex is glad to inform all clients about a record raise of maximal trading leverage. InstaForex Company has always strived for being the leader at Forex market in all its directions. So at present day, we are one of the first companies which provide our numerous clients with maximal trading leverage1:1000.
Since the 8th of May 2010 traders of InstaForex Company with deposits less than $1000 can set the leverage 1:1000, which undoubtedly will open new opportunities of work on international currency Forex market.
Besides, leverage from 1:500 was automatically raised to 1:600 at all other trading accounts which is one of the highest leverage ever! Starting from the 8th of March 2010 all new and already existing trading accounts with InstaForex will use leverage 1:600 for the most efficient trading at Forex market.
Trade and earn together with InstaForex!
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A leverage of 1:10 dramatically reduces the appeal of trading Forex, but 1:1000 is nonsense!… to me, this is not Forex.

2. An article from Joe Weisenthal, deputy editor at The Business Insider with the title:

12 Reasons Your Currency Trading Account Is About To Be Banned leaves an image of a Forex industry specifically going after poker players.
News like the 1:1000 leverage above just reinforces that unbiased view about the retail Forex industry.

3. The very same author James Weisenthal echoes about what Google describes as an error with the appearance of a Citi Forex Ad under keyword “casino bonanza online”
I do not know if it was an error or not, but this does not help the industry at all.

As always, your comments are very welcome.

Francesc