Comment Text:
i0-001
COMMENT
CL-03193
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[email protected]
Saturday, January 23, 2010 9:59 AM
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:
first name David
last name Hood
address1 [email protected]
city Lewisville
country United States
us state NC
zip 27023
company
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 a 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!
2. 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 maximum leverage.
