Comment Text:
i0-001
COMMENT
CL-02734
From:
Sent:
To:
Subject:
Joe Broadhurst
Friday, January 22, 2010 2:08 PM
secretary
Regulation of Retail Forex
Gentlemen,
Re: identification number RIN 3038-AC61
My name is Joseph D. Broadhurst and I am the Managing Member of Southwinds
Trading Company, LLC, in Louisville, KY. We are retail traders in the Forex market and
as such we are very concerned about the proposed CFTC regulation changes in margin
requirements for our Industry.
Our understanding is that this proposed change would limit our leverage to 10:1 for all
of our US based trades. To my knowledge all Forex traders acknowledge and accept
that one component of currency trading risk is variable leverage. We use this tool to
manage our risk in each and every trade situation.
For example: If our technical analysis of the US Dollar vs. the British Pound leads us to
believe that the relationship is out of balance and as the situation is corrected we could
profit by selling the Dollar and buying the Pound. If we believe this situation is LOW
risk we would sell and buy a greater number of lots however using fairly low leverage.
If we believe this situation is HIGH risk we would sell and buy a lesser number of lots
however using higher leverage. The higher leverage is required to offset the greater
risk we are assuming.
Historically many US Retail Brokers have offered leverage as high as 400:1 and to be
restricted to 10:1 leverage would greatly reduce our ability to control the risk we
assume with each trade.
I also believe the proposed rule change would drive most US traders to move their
accounts to other countries where this repressive regulation does not exist. With
today's high level of communications it simply does not matter where our trades are
placed, however we do prefer to do business with US Brokers.
Best regards,
Joseph D. Broadhurst
Managing Member
Southwinds Trading Company, LLC
1310 Crosstimbers Drive
Louisville, KY 40245
(502)
494-4619
