Comment Text:
i0-001
COMMENT
CL-00920
From:
Sent:
To:
Subject:
Ranno Loit
Wednesday, January 20, 2010 6:04 AM
secretary
Proposed CFTC Regulation of Retail Forex; Federal Register - January 7th, 2010
Dear Sirs,
I am writing to express my opinion on the proposed CFTC regulation of retail foreign exchange
transactions:
-
Regulation of Off-Exchange Retail Foreign Exchange Transactions and Intermediaries
-17CFRParts 1, 3, 4, 5, 10, 140, 145, 147, 160, and166
- RIN 3038-AC61
I am citizen of a small European Union country and actively engaged in different global investment
activities including foreign exchange trading using U.S. based financial institutions. My country has
only 18 years of free capital markets experience and so far we have been looking up to United States and
UK, learning how to create competitive and innovative economy.
Today, looking all the developments concerning regulatory framework of financial institutions, financial
markets and related tax laws under consideration in the U.S. or Great Britain, I am glad I do not live in
these countries and feel deeply sorry to all the people and (small !!) businesses who suffer because of
these developments. This is not capitalism, this is socialism! Is that what you really want? I doubt that.
The new regulatory framework proposes 10:1 margin for all spot FX transactions, which in my opinion
is close to zero in terms of its economical value compared to the previously common 100:1 margin
requirements. But more importantly, the margin requirements are 3 times less competitive compared to
the fx-futures traded on Chicago Mercantile Exchange. EUR/USD futures contract has contract value of
125,000 and margin requirement 40505, resulting in 44:1 leverage based on today's exchange rate. The
spot transactions margin requirements should be at least at the same level with futures contracts as these
transactions are basically identical.
In my opinion, leverage between 30:1 - 50:1 should be allowed in both futures and spot transactions. It
is low enough to prevent novice retail traders from taking untolerable risk but, and it's a big but, it
allows professional (retail and proprietary) investors maximize the value of their knowledge and
experience.
I hope you will do what's right and good for the economy!
Yours faithfully,
Ranno Loit
Astover OY
[email protected]
Tel. +3725049348
