Change in Margin Requirements - New CFTC Regulation effective from 18th of October 20

[LivinFX]

Just a heads-up to fellow FX Traders (email I got from forex dot com):

Effective Monday, October 18, 2010 a new CFTC regulation will go into effect that limits the maximum leverage in the retail forex markets to 50:1. The new margin requirement is 2% (50:1 leverage) for the major currencies and 5% for all other currencies (20:1 leverage). Metals will be offered at 100:1

Here examples of margin requirements for 50:1 leverage:

Pair PIP Value, Margin requirements, Bid Value, Lot size, Leverage
EUR/USD 1.00, 278.56, 1.3928, 10000, 50:1
USD/JPY 1.22, 200.00, 81.8, 10000, 50:1

At forex dot com, this kicks in tonight already:

Please keep in mind that that the leverage on your account will be changing Friday, October 8, 2010 at 3:00 pm ET to comply with the NFA compliance rule.

So, please check your margins today guys!

[Enivid]

I'm wondering what will happen with the accounts that use their full margin on 1:100. Margin call?

[LivinFX]

Originally Posted by Enivid

I'm wondering what will happen with the accounts that use their full margin on 1:100. Margin call?

Yes, there have been a series of notifications sent out the past month ...

Here's what they recommend you to do:

WHAT YOU CAN DO
We strongly encourage you to evaluate your account to ensure your open positions will be
adequately margined once the higher margin requirement takes effect. You can check the
impact this change will have by accessing the Pip and Margin Calculator from all trading platforms.

You can also reduce the size of your open positions to free additional margin.

Or you may increase your account balance. Add funds to your account.

The last suggestion is a smasher, isn't it :-)