The NFA (and those lobbying it) clearly looking to kill the Retail FX sector in the US.
LeapRate Exclusive -- LeapRate has learned that the NFA (the self-regulatory body of the U.S. futures industry) has sent a Request-for-Comments letter to various industry members regarding its plan to ban the use of credit cards or "alternative funding mechanisms" such as PayPal to fund retail customer accounts.
If implemented, the main industry hurt will be Retail FX. Retail FX firms see a majority of their customer deposits arrive via credit cards (and other electronic, near-instant payment solutions such as PayPal). The ability to fund this way, in an almost-instantaneous manner, also gives retail traders comfort that if things go wrong they can very quickly top up the equity in their existing accounts, and avoid having positions (or accounts) closed.
The NFA's Compliance and Risk Committee will discuss the proposed ban at its next planned meeting in mid February.
The NFA's continuing witch hunt against the FX sector -- such as their recent last-minute about-face on the calculation of equity capital which caused unnecessary worry among clients of well-capitalized firms -- is, in our view, very damaging to the very retail clients the NFA is supposed to be protecting. The NFA has forcibly reduced the amount of choice U.S. retail traders have, and thereby reduced competition in the sector. With the NFA now telling retail traders how they can and cannot use their credit cards and PayPal accounts, we are also approaching a near Nanny-State approach to "protecting" consumers, which usually backfires.
For the text of the full NFA Request-for-Comments letter click here.