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 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 .
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.
