Comment Text:
i0-001
COMMENT
CL-01016
From:
Sent:
To:
Cc:
Subject:
[email protected]
Wednesday, January 20, 2010 3:39 PM
secretary
Stawick, David ; Smith, Thomas J.
; Bauer, Jennifer ; Penner,
William ; Cummings, Christopher W.
; Sanchez, Peter
PROTEST LETTER to CFTC re 10-1 LEVERAGE LIMITATION RE -
RETAIL FOREX REGULATION
SEND TO:
[email protected]
-
CC:
[email protected]
[email protected]
[email protected]
wpen [email protected]
[email protected]
psa n c h ez@c ft c .g ov
Re: STRONGLY OBJECT TO 10-1 LEVERAGE LIMIT IN REGULATION OF RETAIL FOREX PROPOSAL
RIN 3038-AC61
Attn : David Stawick0 Secretary and
ALL
CFTC policymakers re: RIN 3038-AC61
As a non-affiliated US-based Retail FX trader, please note for the record that l am
STRONGLY
OPPOSED
to the 10-I leverage limit as proposed in RIN
3038-AC61 relating to the Regulation
of Retail Forex.
Counter-productive effects
This senseless limit would in NO way protect, aid or benefit me but rather would
greatly
harm me
since this restriction, if passed,
1. would require that I submit substantially more margin-funds into non-protected, non-
FDIC insured, non-SIPC eligible accounts, actually exposing me to
increased
risk
in
the event of bankruptcy of my Forex Broker.
2. would NOT divert my business into regulated-Futures trading (as the CFTC is probably
hoping), but rather would cause me to seek an unreliable,
higher-risk
offshore FX
broker to trade through, whose practices might be questionable.i0-001
COMMENT
CL-01016
would HARM & DIMINISH my ability to diversify & protect my entire investment
portfolio. If I need to use more margin-funds for Forex, I will have LESS money to
allocate to other instruments (stocks, bonds, commodities (gold, oil) cash, Real Estate,
etc..), I will be
LESS well-diversified
and therefore I will have
even more
risk.
Social Utility
I do not want the CFTC to treat me like a child and dictate how I should trade. While 100-1
leverage is available to me - should I choose it - I am never forced to use it.
Automobile speed limitations are socially beneficial because they may reduce or prevent
property damage & physical harm to the driver, passengers and many others all around.
THIS
pointless limitation, however, addresses only a victimless, non-existent, self-inflicted
phantom risk.
Slippery-Slope Absurdity
If client loss-prevention is your aim, then consistency dictates that you also ban trend-
following trading strategies since a strong argument can be made that this will prevent
more customer losses than your 1 0-1 leverage-limitation proposal. Is the absurdity of your
proposal obvious yet?
Lower FX vols
require
far greater leverage
FX volatilities are generally substantially lower than in the Equities or Futures market.
Therefore, substantially more leverage is required simply to capture equivalent trading
opportunities.
Ever since Congress empowered you to policy-make in Forex, it's as though you've
been given a huge sledgehammer with no idea how to use it so you're just banging
on anything & everything in sight... To the man with a hammer, everything looks like
a nail.
The bottom line is that OTC Retail Forex trading is NOT Futures trading.
Please do not try to
treat it as such!
PLEASE IMMEDIATELY STRIKE YOUR PROPOSED 10-1 LEVERAGE LIMITATIONS.
proposal RIN 3038-AC61 become an expensive lesson in unintended
consequences ....
Don't let
Thank you.
Vere Timothy Khan
Consumer and Retail FX trader
Florida
