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Comment for Proposed Rule 75 FR 3281

  • From: Mark Warner
    Organization(s):

    Comment No: 4256
    Date: 1/27/2010

    Comment Text:

    i0-001
    COMMENT
    CL-04256
    From:
    Sent:
    To:
    Subject:
    Mark Werner
    Wednesday, January 27, 2010 11:30 AM
    secretary
    Proposal RIN 3038-AC61
    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