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Comment for Proposed Rule 75 FR 3281

  • From: Caron Hood
    Organization(s):

    Comment No: 3195
    Date: 1/23/2010

    Comment Text:

    i0-001
    COMMENT
    CL-03195
    From:
    Sent:
    To:
    Subject:
    Attach:
    [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 Caron
    last name Hood
    address1 1658 South Marblehead Road
    city Lewisville
    country United States
    us state
    zip 27023-7788
    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.