Font Size: AAA // Print // Bookmark

Comment for Proposed Rule 75 FR 3281

  • From: Tom Delaney
    Organization(s):

    Comment No: 1952
    Date: 1/21/2010

    Comment Text:

    i0-001
    COMMENT
    CL-01952
    From:
    Sent:
    To:
    Cc:
    Subject:
    [email protected]
    Thursday, January 21, 2010 3:59 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
    Attn : David Stawick, 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 unreliable, higher-risk offshore FX broker to trade through, whose practices
    might be questionable.i0-001
    COMMENT
    CL-01952
    would HARM & DIMINISH my ability to adequately diversify & protect my entire investment portfolio.
    If I need to use substantially more margin-funds for Forex, I will have less money to allocate 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 property 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 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.
    Leave 100-1
    leverage intact. Please remain focused ONLY on pursuing anti-fraud provisions and crime prevention, as per your
    congressional mandate.i0-001
    COMMENT
    CL-01952
    Don[]t let proposal RIN 3038-AC61 become an expensive lesson in unintended consequences
    Thank you.
    Tom Delaney
    OTC FX Trader
    New Jersey