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Comment for Proposed Rule 75 FR 3281

  • From: David Hood
    Organization(s):

    Comment No: 3183
    Date: 1/23/2010

    Comment Text:

    i0-001
    COMMENT
    CL-03183
    From:
    Sent:
    To:
    Subject:
    Boston-Boulder Enterprises, Inc
    Saturday, January 23, 2010 9:24 AM
    secretary
    Regulation of Retail Forex
    I
    would like to comment on your proposed change in Forex regulations,
    RIN 3038-AC61,
    to reduce the
    maximum leverage from 100:1 down to 10: 1.
    This is a very bad idea and another example of government commission deciding what is best for the
    individual investor, rather than allow the individual investor to decide what is best for him. I realize that this is
    the commission's attempt to protect the individual investor from himself, but unfortunately most small
    investors wipe out their trading accounts in Forex trading and many wipe the accounts out in unleveraged
    stock trading. You cannot protect those individuals from themselves, regardless of the maximum leverage
    allowed. You can't regulate the taking of imprudent risks in trading accounts by individuals. Beside the general
    problem of trying to regulate risky behavior there are two specific reasons to KEEP THE CURRENT 100:1
    allowed leverage.
    1.
    What your proposed regulation will do is give the Forex brokers a windfall of additional cash in their
    accounts. At the current 100:1 leverage, I can keep most of my trading cash in a safe, interest bearing
    account, and only move the cash as needed for leverage requirements into my Forex account. I never risk
    more than 1% of my TOTAL trading account (Forex cash balance + additional trading cash in a separate,
    interest bearing account).
    Your proposed regulation change will force me to deposit ten-times as much cash into my Forex
    account, which will not earn interest for me, and will only benefit the Forex broker by swelling
    their total account balances ten-fold!
    By reducing the maximum Forex trading leverage by a factor of 10, you will exclude many small
    investors, who are prudent traders, from fully participating in this market. For the small investor, the
    newly enlarged account balances will necessarily keep that small investor from making the profits
    available to them at 100:1 leverage.
    Please keep the current 100:1 leverage.
    David Hood, a small-time investor participating in a world-wide large Forex market.