Comment Text:
i0-001
COMMENT
CL-01721
From:
Sent:
To:
Subject:
Daniel Baik
Thursday, January 21, 2010 10:59 AM
secretary
Regulation of Retail Forex
RIN 3038-AC61
The proposition of reducing leverage to a minimal 1:10 is ludicrous in light of the potential
repercussions that may arise because of it.
1. A reduction in leverage would lock out many potential retail investors because the procurement of
significantly large trading capitals is impossible for many traders.
2. This reduction may possibly even cause a mass exodus of U. S. investors and brokers, which would
mean a significant loss of tax revenue for the country.
3. If point 2 does not occur, this may mean that the global Forex market would suffer from a reduction
of liquidity, which would directly affect spread prices around the globe. In other words, if this proposal
were to pass, liquidity would decrease and spread, as a result, would increase, however small.
4. Education, not further regulation, is the only method of prevention.
It seems Capitol Hill is in love with regulation. However, this is the one time where further regulation
would be absolutely detrimental. High leverage in the Forex market causes no real risk for the broker,
simply because of margin calling. The one who undertakes risk is the investor. As such, the only
inherent danger in high leverage is the loss of an investor's capital, which is his or her own
responsibility.
Regards,
Daniel
