How did the U.S. foreign exchange margin deleverage that year

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After the global f forexcashbackcalculatorancial crisis triggered by the U.S. subprime mortgage crisis, financial institutions in Europe and the United States suffered huge losses and face the threat of bankruptcy, the U.S. financial institutions are particularly serious forced the U.S. government to introduce various policies to limit the financial industry overuse of high cashback forex, excessive balance sheet expansion is the main reason for the crisis so deleveraging became the core content of the response to the financial crisis deleveraging  nbsp; deleveraging because in the past decades, the world in a sustained low interest rate environment, financial regulatory laxity has given rise to a large number of financial derivatives and created an era of high leverage excess liquidity pushed up the prices of various assets around the world, resulting in asset bubbles have now been burst, Europe and the United States have been put into the process of deleveraging to the era of high leverage financial institutions Leverage refers to the ratio of total assets to equity capital leading to this excessive leverage has its formation mechanism: First, due to capital adequacy requirements limit the size of bank assets leading to banks through asset securitization to transfer some high-risk assets off-balance sheet, forming high leverage Second, through leveraging operations hold a large number of stocks, bonds and complex credit products investment banks, hedge funds, money Eastforexcashback funds, bonds Insurance companies, structured investment vehicles and other non-bank financial institutions hide part of the leverage Again, the removal of leverage limits led to high leverage in investment banks Finally, the most fundamental cause was excessive financial innovation and derivative investment deleveraging status After the outbreak of the financial crisis, as the most fundamental cause of high leverage was excessive financial innovation and derivative investment, deleveraging The deleveraging started with the deleveraging of financial products, mainly the deleveraging of a large number of derivative structured financial products can be said that the deleveraging of financial products has ended so far after the deleveraging of financial institutions and the deleveraging of investors, this is ongoing this has led to a large number of hedge funds out of the market, in the future there may be more risky investors left to find new ways to invest In the process of deleveraging, countries require financial institutions to reduce leverage, countries financial institutions have to sell assets, equity financing, by the government to help divest non-performing assets or by the government to directly inject capital to tide over the difficulties The United States cashbackforexbtc East forex cashback margin trading market Foreign exchange margin trading, also known as contract spot foreign exchange trading, gold trading, virtual trading, refers to the use of foreign exchange brokerage investors The foreign exchange margin trading market is the largest financial market in the world, which is traded 24 hours a day and is rapidly expanding, attracting a large number of fund management companies and hedge funds and other institutions in the U.S. foreign exchange margin trading foreign exchange brokers usually Provide 400 times the leverage for foreign exchange trading U.S. New York foreign exchange trading center trading hours in the daily foreign exchange trading closing stage, plus the worlds largest stock market and bond market belong to the same area, the interaction between the market to influence the market, so the U.S. New York foreign exchange trading market on the foreign exchange market the next days trend is very big New York foreign exchange trading center has been the second after the British London foreign exchange trading market After the second foreign exchange market, and is always trying to catch up with London deleveraging in the U.S. foreign exchange market Since November 30, 2009 (EST) effective immediately, the NFA will implement amendments to adjust the leverage ratio of U.S. foreign exchange dealers The amendment will restrict the trading of major currency pairs adjusted to 100:1 leverage, other currency pairs adjusted to 25:1 leverage NFA is the U.S. futures industry association, the United States through the industry association of its foreign exchange dealer leverage ratio down so as to achieve in the U.S. foreign exchange market for foreign exchange investors to deleverage the specific impact is, assuming that an investor to operate 100,000 U.S. dollars a lot of foreign exchange transactions, the original ratio of 400:1 leverage only need to pay $250, after the implementation of the amendment the The investor must pay $1000 margin The impact of deleveraging on the U.S. foreign exchange market The American Futures Industry Association by adjusting the leverage ratio downward its main purpose to limit the excessive use of leverage traders, reduce the high leverage of speculative trading behavior its approach to the U.S. foreign exchange market has advantages and disadvantages The U.S. foreign exchange brokers to the foreign exchange market after the leverage Favorable factors As the global financial crisis began in the United States of Americas subprime mortgage crisis, and the root cause of the subprime mortgage crisis is excessive financial innovation and derivatives and the interaction of high leverage led to excess liquidity in the crisis before the expansion of the global foreign exchange market size has been very impressive, after the crisis due to the global asset shrinkage, excess liquidity no better investment varieties, the foreign exchange market is more in Within a short period of time the daily volume has multiplied the foreign exchange market has become the best battlefield for speculators, the daily volatility has increased significantly, from mid-2008 to mid-2009 the average daily amplitude of the euro against the dollar reached more than 200 points, while in 1998 to 2008 although with the growth of foreign exchange trading scale period of the average daily amplitude is also growing but to 2008 the average daily amplitude also The financial crisis is not unrelated to such a large increase in liquidity to the foreign exchange market to increase the risk of transactions, but also very unfavorable to the recovery of the real economy, so reduce the leverage ratio is to increase the cost of speculators, thereby reducing their profit margins because the main institutions involved in foreign exchange speculation are hedge funds and some high-risk funds, their original financing The cost is higher in the case of a significant shrinkage in profit margins will be withdrawn from the market with these institutions out of the market, the second half of 2009 a slight decline, with the global economy to recover some speculative funds to slowly flow to the real economy to further ensure the stabilization of the global economy U.S. foreign exchange brokers to leverage the limitations of the foreign exchange market Although the U.S. foreign exchange brokers to leverage After the foreign exchange market daily trading volume is a slight decline, but a large number of speculative funds are still trading in the foreign exchange market did not withdraw, the reason for this is that the foreign exchange market is a 24-hour trading global OTC market, registered in the United States brokers have long been registered in London, England and Sydney, Australia trading center members, in the United States Futures Industry Association before the official implementation of amendments to the major brokers have long let their customers to their accounts in the U.S. company accounts transferred to Australia or the United Kingdom, thus avoiding the restrictions of the U.S. trade associations can still carry out hedging and high leverage trading Summary The deleveraging process entered the stage of financial institutions and investors, measures are increasingly specific U.S. Futures Industry Association for foreign exchange dealers to implement the new amendments to reduce speculative behavior in the U.S. New York foreign exchange market, reducing the trading Risk, conducive to the effective allocation of resources but because other foreign exchange markets did not implement the corresponding reduction in leverage policy makes the U.S. New York foreign exchange market in competition with the London foreign exchange market in the worlds largest foreign exchange market in the process of scale more disadvantageous

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