What is the Dodd-Frank Act?
The Dodd-Frank Act is a Wall Street reform act signed by sitting US President Barack Obama in 2010, passing changes in the financial regulatory environment into federal law. These changes affected all federal financial regulatory agencies and trickled all the way down through the entire US financial services industry including United States forex brokers.
The legislation was enacted following the GFC with the aim of preventing another significant financial crisis. The idea was that by creating a new financial regulatory process, no repeat of past mistakes could be made by enforcing rules and promoting transparency in the name of consumer protection.
What is the Dodd-Frank Act’s Effect on US Forex Traders?
The Dodd-Frank Act placed restrictions on any retail forex broker that either marketed to traders in the US, or had US forex traders on their book. This means that forex traders in the US can now only trade with forex brokers based in the US and are regulated by the Commodity Futures Trading Commission (CFTC). Unfortunately for US forex traders, this has seen US regulated forex brokers cut down to just the three firms in FXCM, GAIN Capital and OANDA. Something that is obviously not good for competition or choice.
It’s not only a lack of choice between un-innovative forex brokers affecting forex traders in the United States, but also the fact that the new CFTC rules govern the amount of leverage that a forex broker can offer to clients on their trading accounts. While many brokers in other trusted regulations around the world such as in the UK or Australia allow 500:1 leverage, the maximum leverage for US forex brokers is capped at 50:1 with no exceptions.
Will Donald Trump Abolish the Dodd-Frank Act?
One of Donald Trump’s campaign promises was that if he was elected the next President of the United States of America, he would look to dismantle the Dodd-Frank Act and then replace it with his own set of policies designed to create jobs and encourage economic growth.
“The Dodd-Frank economy does not work for working people. Bureaucratic red tape and Washington mandates are not the answer. The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”
Now of course in a political campaign, vague promises like this are acceptable, but now that Donald Trump has been elected president the question becomes will he actually act on his promise to abolish the Dodd-Frank Act or not? This is something that is too early to answer, but a whole raft of overseas regulated brokers will be licking their lips in anticipation of an influx of new business from forex traders in the United States who are fed up with the restricted trading conditions and sub-par forex brokers they are forced to conduct their trading through.
For now there has been no mention of forex brokers in Donald Trump’s presidency but it’s only a matter of time before he will be forced to address the issue on the back of his campaign promise.
Which United States Forex Broker to Choose
As you’ve read above, forex traders in the United States don’t have a lot of choice when it comes to trading forex their own way with full leverage available on their account.
While still regulated, some regulatory bodies have decided to defy the CFTC’s rules and still accept forex traders from the United States. One such forex broker being our best United States forex broker award winner, FX Choice.
Make sure you use one of the buttons below to sign up to an account with our award winning United States Forex Broker and avoid any problems that you might possibly face with using another forex broker.
It’s Only Legal for US Traders to Trade with Certain Forex Brokers
Forex traders in the US should choose the winner of our best US forex broker award and trade with United States forex broker, FX Choice.