Comment Text:
i0-001
COMMENT
CL-01814
From:
Sent:
To:
Cc:
Subject:
Josh Levy - Tactical Group
Thursday, January 21, 2010 12:39 PM
secretary
Stawick, David ; Smith, Thomas J.
; Bauer, Jennifer ; Penner, William
; Cummings, Christopher W.
; Sanchez, Peter
Re: STRONGLY OBJECT TO 10-1 LEVERAGE LIMIT IN REGULATION
OF RETAIL FOREX PROPOSAL RIN 3038-AC61
STRONGLY OBJECT TO 10-1 LEVERAGE LIMIT IN REGULATION OF RETAIL FOREX
PROPOSAL RIN 3038-AC61
Attn : David Stawick, CFTC Secretary and ALL CFTC policymakers re: RIN 3038-AC61
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. (100-1 is the correct level.)
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 unrefiable, higher-risk offshore
FX broker to trade through, whose practices might be questionable.
3. would HARM & DIMINISH my ability to adequately diversify & protect my entire
investment portfofio. If I need to use substantially more margin-funds for Forex, I will
have less money to aflocate into 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 - 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.
Automobile speed limits are socially beneficial because they may reduce or prevent propertyi0-001
COMMENT
CL-01814
damage & physical harm to the driver, passengers and many innocent others all around.
THIS pointless limitation, however, addresses only a victimless, non-existent, voluntarily self-
imposed "phantom" risk.
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.
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 10-1 leverage-limitation proposal. Is the absurdity of your
proposal obvious yet?
I am very concerned because ever since Congress empowered the CFTC to rule-make in
Forex via the Farm-Bill, it's as though you've been given a huge ray-gun with no idea how to
use it so you're just shooting anything & everything in sight... To the man with a hammer,
everything looks like a nail. Worse even is the fact that, to my understanding, none of you
even actually trade Forex or have ever done so. How can you undertake to regulate what
you don't even understand or appreciate? Unfortunately, with this (and other ill-
conceived proposals) you have greatly damaged the very credibility of the CFTC.
The bottom line is that O TC 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. Leave 100-1 leverage intact.
Please remain focused ONLY on
pursuing anti-fraud provisions and crime prevention, as per your congressional mandate.
Don't let proposal RIN 3038-AC61 become an expensive lesson in unintended
consequences ....
Thank you.
Josh A Levy
New York State
State of Connecticut
FX
Trader for over 15 years
