Comment Text:
i0-001
COMMENT
CL-03113
From:
Sent:
To:
Cc:
Subject:
Jerry
Saturday, January 23, 2010 1:56 AM
secretary
Congressman Darrell Issa ; U.S. Senator
Barbara Boxer ;
[email protected]
Regulation of Retail Forex
I oppose intended regulatory changes on forex leverage.
The existing 100:1 rate came into being for good reason -- currencies seldom lose more than
a fraction of a percent in a trading session.
Reducing leverage simply increases margin requirements by the same factor. In other words
if I want to gain $100 of a dollar-euro trade, I now put at risk about $20, known as "the
spread" between bid and offer.
Under the proposed change, I will have to put $200 in the pot just to see if I can make $100.
If the trade goes sour, I can presently exit quickly, because I have a small initial stake.
Under your proposal, a sour trade may take less margin as it sours, but but but -- the $200
initial spread to buy a standard lot acts as a disincentive to exit the trade, leading to higher
losses.
If you really want to serve the retail investor, do something to reduce the spread, and then
look into machine trading by Goldman Sachs, et al., who have suddenly and suspiciously
vastly increased their forex profits, quite possibly by milking their electronic equities trading
for information to guide their forex trading, even before the latest split-second equities
moves hit the big board.
The correlation between equities and forex during NYSE trading is above 90%.
Your proposed changes will hurt the retail trader while enhancing the dominance of
Goldman Sachs, et al.
I expect a personal response from you. You work for 'We the People" and stand accountable
for the time I've taken to write this. You must take the time to answer it with more than a
form letter.
Jerry Colburn
550 Seagaze #28
Oceanside, CA 92054
