Comment Text:
i0-001
COMMENT
CL-05838
From:
Sent:
To:
Cc:
Subject:
Big Bear
Wednesday, March 3, 2010 10:21 PM
secretary
Big Bear
CFTC RULE R1N 3038-AC61
Good Day,
The reduction in leverage does nothing to protect the trader from him self or the
broker. Education should be the priority not taking away a tool because someone
doesn't know how to use it. If you want to prevent us from losing money why not
close casinos. If you want to prevent scammers why not force brokers to separate
client funds.
Unlike no hedging and other rules adopted before, lowering retail forex margin to
10 to 1 will definitely hurt if not cripple retail forex in the U.S. Firms and traders
will just transfer accounts offshore or open new accounts offshore. Plain and
simple. I know that my trading will & a few of us already have.
FXCM already has a UK, branch, IBFX is getting approved by the FSA to open
offshore account, and the list goes on. It seems to me that the CFTC has a bias
against spot forex and more love for forex futures. But passing this rule is not
goincj to force spot traders into fx futures. There is not enough liquitidy there, and
people are very very upset about the government telling them how to trade.
Offshore is where they will go for sure. Not many traders are going to deposit
large sums of money in unsecured U.S. forex accounts because if the broker goes
bust, and most will because of this rule, they will lose all their funds. If the CFTC
really wanted to protect U.S. retail traders, then they would follow the FSA and
required segregated and insured accounts, and allow margin as before or as the
FSA mandates. This rule does not protect U.S retail traders but actually will
unprotect the ones that stay and have to fund accounts with high balances in
order to trade. Think this through before making such a bad decision.
Patrick Henry one said, "Liberty or give me death!" before being lead off the
gallows. Literally, I find myself in the same situation with the new regulation
proposal of 10:1 leverage on the retail forex. Why are laws made but to protect
the liberties and privileges of the American people. I do not see how this law
protects the free markets of capitalism or the privileges of the American people
rather it circumscribes and is rules for the sake of rules and once again stepping
on the "little man."
I wish to convey to you that such proposal would have the following effects:
1. Without warrant strip the investor of the freedom to make his own financial
decision and basically put the government in the role of a mother telling the
"investor baby" what he can and cannot do. This labors under the delusion that
"average Joe-does not know what to do with his money so the government must
tell him.
2. Steps on the little guy. A 25k retail forex account would be needed to start
trading. I am actually fortunate to have that income. Most average Joes do not
have that much disposable income to trade. Which leads to the sad statement they
hear all of their lives. "In order to make money, you have to have a lot of money."
This would limit the trading of forex to only the wealthy & is an attack an attack on
class. Retail FX is a way to interested investors feet wet in the investing world.
Most do not have the ca~)ital to trade Futures & Commodities ric~ht out of the c~ate,i0-001
COMMENT
CL-05838
but with FX they might in the future
3. The investor would stand to lose more under this new regulation. Since the
investor would be opening a much larger account than say a $1,000 or $500
account. The investor would stand to lose more, essentially at least 20 to 25k. If
the investor is going to lose his money, he will lose money wheter he has $1,000
or $20,000 this is simply augmenting the amount of unnecessary risk in his forex
account. I have an acquaintance who unfortunately trades in the stock market and
he requires that inane amount of capital to have his trading account, so he took
out a second mortgage on his house to get the stock trading account. Which of
these is more detrimental to the economy I ask you? The man who took out a
second mortgage on his house and lost 20k or the man who lost $700 and learned
forex wasn't the market for him.
4. Makes U.S. forex brokers non-competitive- Forex traders will simply open up.
accounts overseas where larger leveraging is allowed. I wouldn't be surprised ~f
only a handful of retail forex accounts remained in the states with an inane 10"1
leverage. Why put such a large amount of your capital in a trading account at once
when it is an unnecessary in another country.
5. Takes the American dream out of America- Mine is a true rags to riches story.
My mother passed away while I was attending college. So while I was going to
school pursuing an architectural engineering major I was having to take care of
my two sisters and get an extra job waiting tables to make ends meet. I took a
stock options course to learn how to trade for extra income, but realized the
incredible high capital start up requirements. And that's when I ran into forex. The
whole summer I went to barnes and noble took my notebook and read Technical
Analysyes of the financial markets by Murphy, forex made easy, Profiting with
forex, etc, I opened a demo account, paper traded for a few months, opened up
my first account with $500. Its been 4 years and through careful study I've made
a little over $200k in extra income to help care fo_r my sisters and pay for my
degree. I, a waiter, was able to take advantage of the markets anduse
fundamental and technical analyses to generate extra income for my family. That's
the American dream that Anybody can make it here.
6. Why is there no cap to leverage on banks in this market and just the retail
investor- If its education that you are worried about, I for one have definitely put
in the time and study to be able to use proper risk management to not lose my
whole account or over leverage myself. I would be much more open to a
mandatory money management course or forex education course your broker had
to provide you sponsored by the cftc at a reasonable cost of course so as to not
stamp out average Joe reaching the American dream. Not to exceed $500 for the
co u rse.
7. Spits in the face of freedom and says your too stupid to know what to do with
your money.
Bottom line is, with respect, stay out of our trading business. You deal with the
brokers, we traders can handle ourselves.
Regards,
Feras F Taha
