Comment Text:
i0-001
COMMENT
CL-03011
From:
Sent:
To:
Subject:
David Cater
Friday, January 22, 2010 8:35 PM
secretary
RIN 3038-AC61 Regulation of Retail Forex
Sir -
I understand that a proposal has been made to make a maximum of 10:1 leverage on currency trades.
While such a margin might be possible with a Goldman Sachs employee account, this will be
devastating to the average retail customer.
You will be aware that setting stops too tightly is a major cause of whipsaw and loss - and yet this is
what is being proposed.
I can only think that the legislators either are so rich that they see no need for leverage or that they have
no concept of trading, certainly as is carried out by small traders.
I trust you will look to resist any such proposal.
In summary, there are two immediate reasons that I can see for this resistance:-
1. Traders cannot afford poorly leveraged transactions
2. The US has the cheapest transaction costs. This means that business naturally gravitates to US
companies, which (as a UK citizen) I expect you would find desirable. You will be aware that the EU is
keen to drive FX business away from London by introducing the Tobin tax, so implementing the
proposal would drive business to poorly regulated areas, inevitably leading to losses through fraud.
Regards
David Cater
