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Comment for Proposed Rule 75 FR 3281

  • From: Joey Weaver

    Comment No: 3
    Date: 1/14/2010

    Comment Text:

    Joey Weaver
    Thursday, January 14, 2010 1:33 AM
    Regulation of Retail Forex
    Hello Mr. Stawick,
    I must strongly protest the current proposal to limit leverage to 10: 1. I believe the NFA recently had decided
    that such a move would leave USA-based brokers unable to compete internationally. If the new rule does come to
    pass, there will be an immediate and substantial exodus to overseas brokers, many of which are poorly regulated.
    Moreover, some trading strategies are built completely around the trading of short moves with high leverage, with
    small stop losses and profit targets. Even using 100: 1, such strategies often pose much less risk than a longer term
    approach using 10:1 may. To assume that anybody using 100:1 leverage is at greater risk than others is
    completely untrue. Also, many traders that have spent years of hard work perfecting strategies such as these, will
    no longer be able to use them. This is completely unfair.
    I understand and appreciate the desire to protect inexperienced traders from over-leveraging, but there are other
    ways to do this. Brokers could be required to give a more detailed explanation of the effects of leverage on their
    account balance. This is the logical and reasonable way to protect them, while not alienating experienced traders as
    a leverage reduction would.
    Given that there are other ways to warn traders of the risk of leverage, and that many traders understand and
    REQUIRE a high degree of leverage for their strategies, and to prevent an exodus to overseas brokers, I humbly
    request the current requirements stay the same. Thank you for your time.