Comment Text:
i0-001
COMMENT
CL-02992
From:
Sent:
To:
Subject:
Andrew Lemon
Friday, January 22, 2010 7:56 PM
secretary
RE: Regulation of Retail Forex
To Whom it May Concern;
Identification number RIN 3038-AC61
As a full-time trader of both the stock and Forex markets, I find the very suggestion that the CFTC
thinks it needs
"to
collect security deposits in a minimum amount in order to prudentially limit the
leverage available to their retail customers on such transactions at 10 to 1" in order to protect traders
from their own willful stupidity and thus their exposure to risk in the market to be, quite frankly,
insulting.
Does the CFTC think that, as traders, we are not FULLY aware of the markets' volatility and thus our
exposure to risk? To answer this question in the affirmative is a direct insult to our collective
intelligence! ANYONE who currently opens an account with a registered broker and/or trades the
markets has been informed of the possible risks to which they are exposing themselves many times
over via brokerage agreements/contracts, fellow traders, course facilitators, and MANY other sources
already. For an individual trader or corporation to willfully ignore what they know to be true is,
pertaining to their possible over exposure to market risk/volatility, places them directly in harms
way...and as traders we know this.
Having stated the above, increasing the required minimum amounts for placing trades will NOT
provide any benefit (added, perceived, or otherwise) to traders who CHOSE to trade with a reckless
abandon of their senses, money management methodologies, and over leveraged accounts.
Individual or corporate traders of this ilk will continue to "gamble" with their funds regardless of
allowable leverage levels and, in the end, they may be taught a lesson by the market herself. There is
nothing the CFTC can do to protect persons or corporations from a fate of this nature, as it is the
trader (a.k.a., gambler) that will continue to push themselves, and their account, beyond any limits
(regulated or otherwise) until they find themselves either at a margin call, a 100% loss of their
account funds, or they LEARN how to trade correctly.
Personally, I have always traded my accounts using the highest leverage available to me( be it 400:1
or 100:1 or 10:1); however, that in and of itself does not expose me to greater or lesser risk.
What
the CFTC must come to understand is that the risk to which I, or anyone else, expose their
trading funds is entirely separate from available levels of leverage and remains the same
regardless of leverage levels.
The risk exposure comes solely from the ACTUAL (not leverage
implied) risk exposure I allow myself to be subject to via my OWN choices and trading methods.
That said, even when it was possible to trade the Forex market in the USA with a 400:1 leveraged
account, my ACTUAL risk exposure, via my money management methods, always remained at the
MUCH lower rate of 5:1 leveraging...a full doubling of the level you are now suggesting.
It is my most sincere hope that the CFTC will recognize the fact that traders, new or seasoned, once
made aware of the various levels of risk involved in their trading market, CANNOT be protected
from their own actions. We are not children in need of a parental overseer in the manner you seem
to imply; rather, especially given the current and ongoing economic difficulties, the best protectioni0-001
COMMENT
CL-02992
the CFTC could provide to its traders, as a whole, is to mandate each rel~istered broker to have ALL
accounts traded throul~h them to be fully insured al~ainst the possible insolvency of the brokeral~e
itself. This insurance would act to protect the brokeral~e itself from litil~ation in the even of
bankruptcy, while also protectinl~ the funds of the account holders from losses that may occur
which they have no part in, and no control over whatsoever. Measures such as these have already
been put into effect by the Canadian IIROC and CIPF insurinl~ all tradinl~ accounts throul~h rel~istered
brokers for an automatic sum of $1,000,000 (CAD), with the option for the account holder to
increase their insurance coveral~e (for a fee) up to $9,000,000 (CAD). It is my professional opinion
and recommendation that you, as the CFTC, should do the same.
Best rel~a rds,
Mr. Andrew Lemon
(Trader)
