Comment Text:
RE: Public Roundtable to Discuss Additional Customer Collateral Protections
RIN numbers 3038-AD70 and 3038-AD71
Dear Mr. Stawick:
I am writing to request the CFTC implement a regulation pertaining to collateral protection for customers of brokers offering retail foreign exchange (FOREX) trading.
U.S. FOREX brokers are identified as both FCMs (Futures Commission Merchant) and RFEDs (Retail Foreign Exchange Dealer) registered with the CFTC, yet do not have to segregate customer funds. The monthly Financial Data for FCMs reports issued by the CFTC shows all RFEDs have 0 (zero) listed in the column identifying funds held in segregated accounts in compliance with Section 4d of the Commodity Exchange Act. It seems illogical that RFEDs do not have to abide by the same customer protection regulation as other FCMs.
These brokers should be required to keep funds in their customer’s accounts entirely segregated from the broker’s operational accounts, and these segregated customer accounts should be completely unavailable to the broker in any way except for the customer’s trading and redemption requests authorized by the customer. There should be no difference in how customers funds are protected when deposited for trading with a FOREX broker compared to when funds are deposited for trading with a commodities/futures broker.
As a trader in the FOREX market I can (and have) implemented money management rules in my trading which protect me against market volatility and inevitable losing trades. However I am unable to control what the broker does with my money in my trading account. I see this lack of regulatory requirement as a huge and real risk to my livelihood and my family’s wellbeing. Furthermore, I am completely at risk should my FOREX broker go bankrupt.
As you certainly know, my request is not for anything not already afforded to people who trade in other markets in the U.S. This very safeguard – segregation of customer’s funds – has been a requirement of brokers in the futures markets for a very long time. I am simply requesting the same safety be provided for customers in the FOREX market as already exists for customers in the futures market.
Thank you for your time and consideration.
