Over Regulation

[BigPiping]

Let’s take the example of the United States Retail Foreign Exchange Dealer (RFED) regulated by the NFA and CFTC they have a minimum regulatory capital requirement of $20,000,000.00 now this money is relatively safe and still belongs to the RFED so its cost is the value of money over time, inflation is typically 3% per year so I will use that figure as the annual loss of the regulatory capital however it would be very easy to argue that the real cost is 6% or more.

$600,000.00 Cost of regulatory capital
$350,000.00 Chief Compliance officer
$200,000.00 Compliance person to review promotional materials
$150,000.00 Compliance person to enforce policies procedures and liaise with regulators
$300,000.00 outside legal counsel
$150,000.00 Auditors
$75,000.00 Third party verification software (TPV)
$125,000.00 Full time tech person to implement the TPV and required regulatory reports
$50,000.00 Annual review of Bank Secrecy Act, AML, PATRIOT Act and other required programs

That’s an extremely conservative $2,000,000.00 per year, before fees, cost burden imposed by over regulation, and the really crazy thing is not one of the costs above actually produce any value they are simply a drain on productivity, a drain on the FX market and a drain on society as a whole.

Regulation should be imposed by educating the investors/public at large not by usurping value from enlightened and driven individuals.

[ForexMagnates]

350k chief compliance officer?

[Johny]

That’s an extremely conservative $2,000,000.00 per year, before fees, cost burden imposed by over regulation, and the really crazy thing is not one of the costs above actually produce any value they are simply a drain on productivity, a drain on the FX market and a drain on society as a whole.

Interesting calculation. And I don't like it. It actually first time I see any statistic about broker.

[BigPiping]

Originally Posted by ForexMagnates

350k chief compliance officer?

CCO and other compliance persons are gross annual salary + 1/3 to cover the costs of additional real estate, travel expense, employment tax, computers, phones and office supplies.