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Comment for Proposed Rule 75 FR 3281

  • From: Stephen Fox

    Comment No: 95
    Date: 1/15/2010

    Comment Text:

    Friday, January 15, 2010 2:54 PM
    Public Comment Form
    Below is the result of your feedback form. It was submitted by
    ( on Friday, January 15, 2010 at 14:54:05
    commenter_subject: Forex Leverage
    commenter comments: While I understand the intent to limit the amount
    of leverage in the retail spot forex market, I
    implore you to maintain flexibility for traders to
    have the ability to place relatively small deposits
    with brokers. Since there is no FDIC or SPIC
    insurance, I'm personally not comfortable placing
    large amounts of money at forex brokers no matter
    how well capitalized they appear to be. Forex
    accounts held at Refco were tied up for long
    periods of time during the bankruptcy procedures
    which if a trader had a majority of their trading
    funds deposited there, they would effectively be
    put out of business. I also believe that they were
    the only accounts that lost money (could be wrong
    on that). If you impose a too restrictive leverage
    requirement, the traders with limited accounts will
    just open their accounts at an overseas broker
    which places their limited resources at greater
    risk. I agree that the 400 to 1 and even the 200 to
    1 accounts are ridiculous, however 100 to 1 may be
    reasonable if a trader wants to employ multiple
    strategies (some of which hedge other positions),
    the trader has other risk money that he/she doesn't
    feel comfortable having on deposit with the broker,
    the trader has a scalp methodology and wants to use
    a higher leverage based on his/her preset risk
    (stop) still within a level that employs sound
    money management principles (maybe risking 1% - 3%
    per trade), etc. Thank you for your consideration
    of my comments.
    commenter_name: Stephen Fox
    commenter withhold address on: ON
    commenter_phone: 646 536-4057