CMS FX reduces leverage from 1:400 to 1:100 and 1:25 on a very short notice (due May 15th)

The timing seems a bit odd, given that the NFA's Anti Hedging requirements are due on May 15th as well however they don't seem to mention anything about leverage. Also the short notice given implies that somebody noticed a very important issue at the last moment, I wonder what that was?

Perhaps VT Trader (CMS's platform I covered last week) is not easily configurable to comply with Anti Hedging requirements with 1:400 leverage.

Below is the statement as was issued by CMS FX to its clients today.

MAY 12, 2009

Dear Trader,

On May 15th at 3:00 Eastern Time, CMS Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term will no longer be providing 400:1 leverage on forex accounts. We will be requiring 1% margin on the notional value of clients' positions on the major currency pairs† and 4% on the minor currency pairs.

This change, however, will be implemented on our demo platform for all practice accounts on Tuesday, May 12, 2009. As a result, it is possible that any open positions lacking sufficient margin may be affected when we update the demo Trading Platform Trading Platform In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real Read this Term.

We apologize for any inconvenience and are making this change in order to provide you with an experience most similar to having a live trading account with CMS Forex.

Please contact us with any questions or to discuss your specific situation in detail.

Regards,

The CMS Forex Team

†Major pairs include all currency pairs offered by CMS Forex except USD/HKD, USD/SGD, USD/ZAR, ZAR/JPY, ZAR/JPY, and USD/MXN.

Leverage may increase both gains and losses.