Since 2005, the Securities Exchange Commission (SEC) along with Commodities and Futures Trading Commission (CFTC) and Dodd Frank Act has been increasing regulation on financial trading. The various securities trading bodies have launched several regulations towards regulating the overall activity in the financial markets.

 Such rules include the regulation of high speed trading, as well as, managed accounts, which are becoming popular. Currently the foreign exchange market accounts for more than $5 trillion worth of trades per day and $3.2 trillion of that figure goes through managed Forex accounts.

Managed accounts are an ideal way of making profits especially if you are a beginner in the Forex Trading market or in cases where individuals cannot find the time to do the business by themselves.

With the right rules in place, managed accounts could become more popular than what the current numbers suggest. Nonetheless, the financial markets have undergone some significant transformation over the years, as the various regulatory bodies continue to lay down new rules and framework for operating parties.

From the launch of the SEC, rule 612 sometimes referred to as the sub-pennying rule in 2005, to the day that Wall Street Journal published this report, which suggested an uncertain future of high frequency trading regulation, it is right to say that things look a bit better than a few years ago.

 In June this year, the SEC released a report saying that it is starting to scrutinize the activity in High Frequency Trading Platforms. However, according to the report on Wall Street Journal, technology may be outpacing SEC’s ability after the discovery of uneven data distribution from the regulatory body.

According to the report, academic researchers found that the SEC’s platform for releasing company filings inadvertently gave some paying investors and newswires the data up to more than a minute before releasing it to the rest of the market. However, it is expected that the SEC would try to solve this issue expeditiously as it tries to catch up with the private sector.

In general, increased regulation is expected to make the playing field flatter with regard to High Frequency Trading.

This makes the general market for managed accounts a better alternative for those who do not find success when trading on their own.  Investors are able to trade on a variety of instruments including SPDR Gold ETF (GLD), the SPDR S&P 500 ETF (SPY), a currency pair or the NASDAQ100 ETF (QQQ), freely and more profitably without necessarily having a direct involvement on what to buy and what to sell.

Now, with managed Forex accounts, traders (clients) can choose an individual account or a pooled account. There are various benefits and drawback on each. For an individual managed Forex account, the trader’s money resides with a registered broker, preferably a futures commission merchant (FCM) in the U.S.

In the case of a pooled account, the money resides in a separate entity, for instance a fund or partnership.

The good thing with an individual managed Forex account is that a trader is able to monitor his account thereby increasing transparency.

In addition, a third type of managed Forex accounts is gaining popularity rapidly, the (percent allocation management module) PAMM.

This is a technical solution provided to clients, which allows them to have their accounts managed by a trader appointed by them based on a limited trading power of attorney. It allows the trader on one trading platform to manage simultaneously unlimited quantity of managed accounts.

Therefore, in this case, it appears as though the individual managed Forex account would be a wise bet, especially considering that the existing regulation still has loopholes that are subject to exploitation.

Conclusion

The bottom line is that without proper regulation and framework for conducting business, start-up enterprises would feel unsecure and probably threatened by the big guns. This also applies in Forex Trading as big brokers continue to dictate the market.

However, not all traders can afford the fees charged by big brokers and hence the need to find solution in the small and upcoming brokers.

With this in mind, it is clear that the future of Managed Forex Accounts Market continues to look bright as more players come in.