Comment Text:
i0-001
COMMENT
CL-03663
From:
Sent:
To:
Subject:
Mark Werner
Monday, January 25, 2010 12:13 AM
secretary
Regulation of Retail Forex
Re: Proposal RIN 3038-AC61
Dear CFTC,
Reducing LEVERAGE from 1:100 to 1:10 is NOT the answer. The proposal as it stands as a disaster-in-
waiting for retail traders.
In order to protect the new/naive/self destructive and or otherwise uneducated trader from him or
herself, ACCOUNT MARGIN LIMITATIONS should be Revised so that the trader's out of pocket
Capital Investment RISK EXPOSURE is never any greater than 5% or 10% or his/her trading account at
any time.
At the proposed 1:10 leverage, the trader is entitled to trade THE SAME $10,000.00 worth of currencies
but his/her out of pocket Capital Investment RISK EXPOSURE is $1,000.00 as opposed to $100.00.
The CRTC proposal 'INCREASES' out of pocket Capital Investment RISK EXPOSURE by '10 TIMES
MORE RISK'
Clearly something is wrong with this proposal.
Leave leverage alone. 'LEVERAGE IS NEITHER THE PROBLEM NOR THE SOLUTION.'
The answer to RISK EXPOSURE is NOT LEVERAGE CONTROL. In fact LEVERAGE CONTROL
would have the exact OPPOSITE Effect by INCREASING RISK - 'TEN FOLD'.
The answer is 'MARGIN CONTROL'.
Sincerely,
Dr. Mark Werner
2090 Joslyn Place
Boulder, CO 80304
