Comment Text:
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COMMENT
CL-01474
From:
Sent:
To:
Subject:
Armin Rohde
Thursday, January 21, 2010 1:48 AM
secretary
Regulation of Retail Forex
To the secretary of the CFTC
ID # R1N 3083-AC61
Regarding the proposed changes to the retail forex industry, I can see that that your intentions are good
and you do really want to help protect the public from unscrupulous retail forex operators but your
execution is flawed.
There should be more accountability from the retail companies because for awhile the forex industry as
a whole was like the wild west where basically anyone with enough money could hang up their shingle
and provide a platform for consumers to trade the forex, with some even providing 400:1 leverage which
sounds like a fast way to make money but is really a trap for the unwary, and obviously ludicrous but if
an adult wants to trade at those levels you have absolutely no right to tell them otherwise. If an adult
person wants to go to hell in a hand basket, then that is their choice. There are, and always will be,
fools. If they want to destroy themselves you have absolutely no right to stand in their way. Good
riddance to them.
Also, I can see that perhaps a significant proportion of these forex retailers were at one time criminal
enterprises engaged in nothing more than money laundering on a massive scale or perhaps some other
criminal activity. Gives the good guys a bad name. You can't lump them all together in the same basket.
Hopefully the CFTC and the NFA are aware of these criminal retailers and are engaged in prosecuting
them
to the fullest extent of the law. They have no business in the forex community and they are the
ones that should be punished, not the consumer or the honest forex retailer.
I think what the CFTC forgets is that the forex community is a very close-knit one and word gets around
very quickly about the bad apples, and their scams, as a rule, are very short-lived just like the life
expectancy of their respective companies. I believe that, overall, the complexion of the forex industry as
a whole has changed, due in no small part, to the current ongoing financial crisis in America. The
retailers (forex) who are above board, who have been around for a while and who actually provide a
valuable service for their customers are now probably in the majority. I tend to think that because of this
ongoing financial crisis people have become much more careful and discerning with their money. There
are always of course the people that want nothing more than a "get-rich-quick-scheme" and if they are
pinning their hopes on trading the forex they will be sorely disappointed.
Also, trading the forex is speculation, pure and simple, NOT investing and comes with its own
associated risks. EVERY reputable retailer posts a disclaimer to that effect on their website and if
people are unable to even understand such a basic premise then those people have absolutely no
business engaging in forex trading.
Also, the forex is really self-limiting as only the people with the tenacity, drive and some small
modicum of intelligence ever stay in the forex long enough to actually start making a living from it. If a
person, not ready for the forex, decides on a whim, without preparation, to try and make some money
from it, jumps in, starts trading right away and then loses a $100,000 account. And then tries to blame
everyone but themselves. To them I say,"tough beans", "looks good on you, jackass", "serves you right".
It's a lesson they won't soon forget. The hardest lessons stay with you the longest. But the financial
world is extremely unforgiving, especially since it's driven by the biggest players whose singular
motivation is profit at any cost. Regulate them, if you dare!
I think that the interests of the public would be better served by the CFTC and NFA collaborating to
create some kind of an in depth information and testing program for new candidates wanting to trade thei0-001
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forex, perhaps analogous to the same kind of system for obtaining a driver's licence. FOR A NOMINAL
FEE, PERHAPS. I am not advocating a cash cow for the government, by any means!
Firstly, a comprehensive educational course on all aspects of forex trading with an associated exam or
sets of exams which have a minimum passing grade for the "student" to advance, to show competency.
The "courses" given by most brokers online are a joke and biased in such a way that the investor makes
just enough money to keep them interested while maximizing the profit for the broker. The only
exception that I have run across thus far is IBFX, while not being perfect, nobody or nothing is; is what I
believe to be one of the finest forex brokers in the world, bar none.
After completing the course to the satisfaction of the CFTC and NFA the student would be given a
"learner's permit", authorizing that person to only engage in demo trading for perhaps a period of 90
days or so until some small grasp of the forex was shown by that person. In other words, they didn't
completely blow their account. Perhaps even showing a small profi!! At that point they would be ready
to start live trading as long as they could satisfactorily show that the money with which they wanted to
fund their account would have absolutely no effect on their lifestyle if completely lost. In other words,
they weren't using their mortgage money or "maxing" out another credit card to fund their account or
engaging in criminal activities.
Responsible, accountable brokers. Responsible, accountable
consumers!
If accountability and responsibility is required of the retailer, no less should be expected of the
consumer. And ANYONE with a criminal record related to financial matters, violence or mental
problems is automatically banned from taking part in forex trading. This applies to individuals and also
up to the very largest companies.
You may think that this last piece about education was said "tongue-in-cheek" but I can assure you that I
am quite serious about it because I firmly believe that a comprehensive, structured education is the
backbone of successful forex trading and I don't believe that such a program exists. It should! As it
stands now, one has to pick up an "education" about the forex in bits and pieces over a relatively long
period of time. I have been personally involved in the forex for years and am still learning something
new every day. To self-teach takes a huge investment of time and energy, something which the majority
of people don't have these days. They are much too busy going broke making a living to have much time
or money left over for this silly "forex thing".
I agree wholeheartedly with some of the changes that you propose regarding dealer accountability but to
make it even more difficult for the ordinary person on the street to start trading the forex with a small
bank account is utterly ludicrous and I can see no good coming from it. Rather the opposite.
If you propose to set the leverage at no higher than 10:1, I can see it effectively putting forex trading out
of the reach of the majority of the ordinary people making the forex world the exclusive domain of the
rich. As the same rules would apply to the moneyed minority, the banks and all the financial institutions
engaged in currency trading, they would instantly be up in arms and perhaps even seek legal redress
against some of the totally unconscionable changes proposed by the CFTC.
By such a seemingly innocuous change you would start a chain reaction where the majority of the
current and potential investors would have no choice but to close their trading account with American
brokers, those who have no branches in other countries, and trade offshore, so to speak.
If enough investors move their accounts overseas, there is the very real potential of many American
brokers going out of business with the subsequent loss of employment of thousands or perhaps even tens
of thousands of good, honest, hard working American people who don't deserve such punitive action by
the CFTC. In these times of high unemployment and severe hardship for so many people, not only
Americans, these proposed actions by the CFTC are especially onerous. For the CFTC to continue with
some
of the proposed changes verges on irresponsibility and criminality. I am loath to use the words but
these unthinking actions by the CFTC could have consequences which are possibly of a terrorist nature
because of the potentially devastatingly profound effect on a huge number of their own people. The last
thing America needs right now is more unemployment or more companies going into chapter 11.
Please do not get me wrong, I agree with more accountability from the brokers. It will help to weed out
the bad eggs. But along with more accountability from brokers should also come more accountabilityi0-001
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and responsibility from all the firms and individual traders engaged in currency trading and the agencies
regulating the forex industry. A comprehensive grounding in all things forex should be a mandated
prerequisite for all people seriously considering going into the forex to make a living from it.
Kindest regards,
Armin Rohde
