Comment Text:
i0-001
COMMENT
CL-01033
From:
Sent:
To:
Cc:
Subject:
Chip Scardo
Wednesday, January 20, 2010 4:32 PM
secretary
Stawick, David ; Smith, Thomas J.
; Bauer, Jennifer ; Penner, William
; Cummings, Christopher W.
; Sanchez, Peter
Regulation of Retail Forex
As a non-affiliated US-based Retail FX trader, please note for the record that I am STRONGLY OPPOSED to the 10-1
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,
¯ 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.
¯ 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.
¯ would eliminate one of the greatest benefits of trading Forex ¯ My ability to efficiently deploy my own trading capital in the
way that I choose.
Lower FX vols require far greater leverage
FX volatilities are generally substantially lower than in the Equities or Futures market. Therefore, significantly more leverage
is required simply to capture equivalent trading opportunities.
Nanny not needed
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.
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.
