Comment Text:
i0-001
COMMENT
CL-03020
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[email protected]
Friday, January 22, 2010 8:58 PM
secretary
Public Submission for 2010-00456
Public Submission for 2010-00456.zip
Please refer to the attached file.Please Do Not Reply This Email.
Public Comments on Regulation of Off-Exchange Retail Foreign Exchange Transactions and
Intermediaries:
Title: Regulation of Off-Exchange Retail Foreign Exchange Transactions and Intermediaries
FR Document Number: 2010-00456
Legacy Document ID:
RIN: null
Publish Date: Wed Jan 20 00:00:00 EST 2010
Submitter Info:
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last name
address1
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Andrew
Lemon
To Whom It May Concern;
Due to the brevity of space allotted, I am unable to provide my statement here; however,
have provided it below via the attachment option.
It is my most sincere hope the CFTC will read and understand my meaning and intent found
therein.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 L
or anyone else~ expose their tradin~ 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 andongoing economic difficulties, the best protection the CFTC could provide to its traders,
as a whole, is to mandate each registered broker to have ALL accounts traded through
them to be fully insured against the possible insolvency of the brokerage itself. This
insurance would act to protect the brokerage itself from litigation in the even of
bankruptcy, while also protecting 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 insuring all
trading accounts through registered brokers for an automatic sum of 51,000,000 {CAD),
with the option for the account holder to increase their insurance coverage (for a fee)
up to 59,000,000 (CAD). It is my professional opinion and recommendation that you, as
the CFTC, should do the same.
Best regards,
Mr. Andrew Lemon
(Trader)
