| WASHINGTON, July 11
WASHINGTON, July 11 The U.S. Securities and
Exchange Commission should stop dragging its feet and adopt
rules to protect mom-and-pop investors from risks arising from
trading in off-exchange foreign currency contracts, a top
official said Thursday.
Luis Aguilar, a Democratic SEC commissioner, said he was
frustrated at the SEC's decision to postpone until July 2016 the
rule-making on retail forex required by the 2010 Dodd-Frank Wall
Street reform law.
The SEC has yet to finish dozens of about 100 laws mandated
by the Dodd-Frank reform law three years after it went into
effect. The law will mark its third anniversary this month.
"It is simply not acceptable for the Commission to continue
to delay the fact-finding and decision-making process," Aguilar
said. "Though retail forex transactions may provide benefits,
they can pose great risks to investors."
Retail forex is a niche market that lets average investors
bet on the direction of currency price movements, but in recent
years it has also has been favored by fraudsters. Regulators are
also concerned about leverage risks.
The SEC's sister agency, the Commodity Futures Trading
Commission, adopted in 2010 retail forex rules for the firms it
regulates that include measures to cap leverage for major
But Dodd-Frank requires other regulators, including the SEC,
to impose similar rules on retail forex dealers that they
oversee and the SEC has yet to propose any rules. If no
regulatory regime is established for these transactions, retail
forex dealing would be prohibited.
In July 2011, the SEC adopted a temporary measure to prevent
a ban on retail forex from going into effect, and that reprieve
has been extended several times.
Aguilar said the SEC now expects the Financial Industry
Regulatory Authority, the self-regulator for the brokerage
industry, to take the lead on rule-making for retail forex.
"It is my expectation that the Commission and the SEC staff
will work in earnest to assess this market and either adopt new
rules that accomplish Congress' intent or allow the law to go
into effect," Aguilar said.