A summary of the rules, that impact Forex traders:
50:1 leverage, no cross netting (meaning, if you are long EUR/USD and long USD/CHF, it eats into margin calculation twice, even though you're nearly flat in the USD)
No hedging (cannot BUY and SELL same pair in the same account)
FIFO (First in, First out - this means you must EXIT each position in the same order in which you ENTERED, per pair).
A summary of the rules, as they impacted Forex brokers who offer access to the Forex markets:
Increased and more strict netcap rules, meaning that in reality, you need $50 Million or more in free cash sitting in an account, with no liabilities (wait a minute - sounds like a public company should be in violation?? ahem)
Increased fees to NFA, both in fixed fees and per trade transaction fees for use of FORTRESS system (which were happily passed on to the client)
More regulatory costs and complexities, meaning that a large investment was needed in dealing with new rules, not only in money but increased operational complexity
A summary of the impact this had on traders:
Mostly, traders stopped trading Forex, as these rules made it even harder to make money in an already difficult market
Traders went overseas. Those who could afford, established residency or corporations in foreign countries, in order to continue trading Forex at reasonable venues (which, in parallel, were developing new cutting edge market making technologies) in the UK, Australia, and others.
A summary of the impact this had on brokers:
Forex brokers mostly closed their US operations. Some closed completely, selling their operations to the remaining players. Others, decided to go overseas (and remain living in USA).
The remaining brokers, colluded in solidifying their monopoly on the US Forex market
But, the new Forex rules did not accomplish what they supposedly set out to do:
The hedging rule doesn't prevent CTA accounting fraud, and it doesn't save the customer money, if anything it increases costs to the customer, as those who really want to hedge are forced to go overseas or open 2 accounts and building a system to accomplish the same thing
PFG, MF Global were regulated firms. PFG, had an aggressive compliance department that insisted on following rules above and beyond requirements. Their compliance would check partner websites for potentially offensive content. They supplied (see image below) 60 page Disclosure Documents as templates to CTAs, with over the top boilerplate and legalese: