On January 1, 2002, the Euro became the official currency of 12 European nations that agreed to remove their previous currencies from circulation prior to February 28, 2002. See Table 2.1.
The Euro was considered an immediate success and is now the second most frequently traded currency in FOREX markets behind the USD. Not coincidently the EURUSD is the most traded currency pair.
Since 2002, 10 more countries have adopted the Euro: Andorra, Cyprus, Malta, Monaco, Montenegro, San Marino, Slovakia, Slovenia, Spain, and Vatican City.
The CFTC and the NFA
The new kids on the FOREX block for U.S. traders are the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). Previously dedicated to regulating the commodity futures industry, these agencies are becoming quickly and deeply (many say too deeply) involved in regulating the retail FOREX business. In 2009 NFA Compliance Regulation 2-43 went into effect and has made a significant impact on retail FOREX. Table 2.2 depicts the major events in FOREX history and regulation.
TABLE 2.2 Timeline of Foreign Exchange
1913—U.S. Congress creates the Federal Reserve System.
1933—Congress passes the Securities Act of 1933 to counter the effects of the
Great Crash of 1929.
1934—The Securities Exchange Act of 1934 creates the beginnings of the Securities and Exchange Commission.
1936—The Commodity Exchange Act is enacted in direct response to manipulating grain and futures markets.
1944—The Bretton Woods Accord is established to help stabilize the global economy after World War II.
1971—The Smithsonian Agreement is established to allow for a greater fluctuation
band for currencies.
1972—The European Joint Float is established as the European community tries to move away from their dependency on the U.S. Dollar.
1972—The International Monetary Market is created as a division of the Chicago Mercantile Exchange.
1973—The Smithsonian Agreement and European Joint Float fail, signifying the official switch to a free-floating system.
1974—Congress creates the Commodity Futures Trading Commission to regulate the futures and options markets.
1978—The European Monetary System is introduced to again try to gain independence from the U.S. Dollar.
1978—The free-floating system is officially mandated by the International Monetary Fund.
1993—The European Monetary System fails to make way for a worldwide, freefloating
system.
1994—Online currency trading makes its debut.
2000—Commodity Modernization Act establishes new regulations for securities
derivatives, including currencies in futures or forwards form.
2002—The Euro becomes the official currency of 12 European nations on January 1.
2009—The CFTC and NFA implement NFA Compliance Rule 2-43.
2009—The NFA sets minimum margin requirements for retail FOREX.
Summary
Until the late 1960s the currency markets were extremely stable and very much a closed club. Things were about to change rapidly! Currency trading is probably the world’s second-oldest profession!
The Euro, introduced in 2002, is the official currency of 22 European countries: Andorra, Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Kosovo, Luxembourg, Malta, Monaco, Montenegro, the Netherlands, Portugal, San Marino, Slovakia, Slovenia, Spain, and Vatican City. Lithuania will convert in 2010 and Estonia is expected to convert in 2011. NFA Compliance Rule 2-43 has in many ways changed how the game is played at the retail level.
Some key dates and events—1973, 1978, 1994, 2002, 2009.
The Euro was considered an immediate success and is now the second most frequently traded currency in FOREX markets behind the USD. Not coincidently the EURUSD is the most traded currency pair.
Since 2002, 10 more countries have adopted the Euro: Andorra, Cyprus, Malta, Monaco, Montenegro, San Marino, Slovakia, Slovenia, Spain, and Vatican City.
The CFTC and the NFA
The new kids on the FOREX block for U.S. traders are the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). Previously dedicated to regulating the commodity futures industry, these agencies are becoming quickly and deeply (many say too deeply) involved in regulating the retail FOREX business. In 2009 NFA Compliance Regulation 2-43 went into effect and has made a significant impact on retail FOREX. Table 2.2 depicts the major events in FOREX history and regulation.
TABLE 2.2 Timeline of Foreign Exchange
1913—U.S. Congress creates the Federal Reserve System.
1933—Congress passes the Securities Act of 1933 to counter the effects of the
Great Crash of 1929.
1934—The Securities Exchange Act of 1934 creates the beginnings of the Securities and Exchange Commission.
1936—The Commodity Exchange Act is enacted in direct response to manipulating grain and futures markets.
1944—The Bretton Woods Accord is established to help stabilize the global economy after World War II.
1971—The Smithsonian Agreement is established to allow for a greater fluctuation
band for currencies.
1972—The European Joint Float is established as the European community tries to move away from their dependency on the U.S. Dollar.
1972—The International Monetary Market is created as a division of the Chicago Mercantile Exchange.
1973—The Smithsonian Agreement and European Joint Float fail, signifying the official switch to a free-floating system.
1974—Congress creates the Commodity Futures Trading Commission to regulate the futures and options markets.
1978—The European Monetary System is introduced to again try to gain independence from the U.S. Dollar.
1978—The free-floating system is officially mandated by the International Monetary Fund.
1993—The European Monetary System fails to make way for a worldwide, freefloating
system.
1994—Online currency trading makes its debut.
2000—Commodity Modernization Act establishes new regulations for securities
derivatives, including currencies in futures or forwards form.
2002—The Euro becomes the official currency of 12 European nations on January 1.
2009—The CFTC and NFA implement NFA Compliance Rule 2-43.
2009—The NFA sets minimum margin requirements for retail FOREX.
Summary
Until the late 1960s the currency markets were extremely stable and very much a closed club. Things were about to change rapidly! Currency trading is probably the world’s second-oldest profession!
The Euro, introduced in 2002, is the official currency of 22 European countries: Andorra, Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Kosovo, Luxembourg, Malta, Monaco, Montenegro, the Netherlands, Portugal, San Marino, Slovakia, Slovenia, Spain, and Vatican City. Lithuania will convert in 2010 and Estonia is expected to convert in 2011. NFA Compliance Rule 2-43 has in many ways changed how the game is played at the retail level.
Some key dates and events—1973, 1978, 1994, 2002, 2009.
