Comment Text:
i0-001
COMMENT
CL-03199
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Subject:
Neil Patel
Saturday, January 23, 2010 10:06 AM
secretary
RIN 3038-AC61
I definitely agree with the CFTC that we need to regulate the leverage in the FX markets. This over the
counter market gives retail players 100:1 leverage and over 90%
of these accounts get wiped out in the first month of trading. As a former sales trader for Forex Capital
Markets, I explicitly remember that statistic very well.
In fact, many of FXCM's leverage policies were aimed at taking advantage of that specific statistic...At
one point, we offered 200:1 and 300:1 on mini accounts.
While I understand that leverage is a double edged sword, I believe that limiting the impact of the bad
side of the sword is the government regulators responsibility, for the
greater good of the financial community. At present, the OTC FX market includes much more than
simply Spot FX, it includes swaps, options, forwards and many
other products, many of which trade on leverage as well.
Before another systemic failure occurs in our financial markets, I believe it is important that those shops
like Forex Capital Markets and FX solutions be required to reduce
leverage quite alot to perhaps 3:1 or 2:1 to ensure the safety of their clients accounts as well the financial
sector.
Last year, we had the failure of one or two banks threaten the entire finance sector. NExt time, we might
have one or two asset classes, like FX, threaten the entire sector.
Please regulate this industry and please do it sooner than later.
Kindest Regards,
Neil Patel
<225-772-7523>
