[forex scholar]

Cue up the Michael Myers Halloween Theme…

I have just finished reading the Farm Bill language and it is clear that the Congress is not giving the industry much time to adapt to the incredible changes they are forcing upon retail forex dealers and introducing brokers.

The full language is now available at the House of Representatives website:
http://agriculture.house.gov/inside/FarmBill.html

Title XIII (page 548) is the part of the bill that references the forex industry. Note the following language as it pertains to adjusted net capital requirements for forex dealers:
http://agriculture.house.gov/inside/Legislation/110/FB/Conf/CRlang.pdf

“(ii) The dollar amount that applies for purposes of this clause is-
“(I) $10,000,000, beginning 120 days after the date of the enactment of this clause;
“(II) $15,000,000, beginning 240 days after such date of enactment; and
“(III) $20,000,000, beginning 360 days after such date of enactment.

Assuming the bill passes by the end of June, that would give U.S. retail forex dealers until Halloween to increase their capital to $10 million. Then they would have until February 2009 to increase it to $15 million and then June of 2009 to reach the full $20 million. Halloween would also be the registration date for Introducing Brokers.

The bill also creates a separate registration category for Forex Dealers and gives the CFTC tremendous leeway in crafting rules governing this new financial services category. There is no telling what the CFTC might come up with (tough new Margin Requirements? Customer Funds Segregation? New Dealing Practice Rules?)

All in all the industry is in for a massive overhaul in the next 12 months. There are sure to be a lot of tricks and treats ahead. Stay Tuned.