Comment Text:
i0-001
COMMENT
CL-03016
From:
Sent:
To:
Subject:
Manfred Bartz
Friday, January 22, 2010 8:48 PM
secretary
Regulation of Retail Forex
Dear Mr. Stawick,
I am concerned about the CFTC's proposal to limit Forex leverage to 10:1.
While this may be well intentioned, aiming to limit risk to a trader, it may have some
unintended consequences.
1. For example, brokerages limit damage to the size of the account, so if a trader for some
reason looses the ability to close his position, at worst it can wipe out the account. At
high leverage, only a relatively small account is needed to control a reasonable amount
of currency. Limiting leverage as proposed may lead some traders to increase their
account significantly, possibly with money borrowed elsewhere, and thus exposing
themselves to greater risk than before.
2. Another, obvious consequence of reduced leverage would of course be that traders will
move their accounts off-shore, e.g. to the UK.
3. There may also be other unintended consequences, e.g. an erosion of the US's standing
as the world's 2nd biggest Forex market.
Please consider not only the concerns raised by traders but also the possible cascade of
unintended consequences the proposed leverage limit may have.
Sincerely
Manfred Bartz
