Comment Text:
i0-001
COMMENT
CL-01952
From:
Sent:
To:
Cc:
Subject:
[email protected]
Thursday, January 21, 2010 3:59 PM
secretary
Stawick, David ; Smith, Thomas J.
; Bauer, Jennifer ; Penner, William
; Cummings, Christopher W.
; Sanchez, Peter
Re:
STRONGLY OBJECT TO 10-1 LEVERAGE LIMIT IN REGULATION OF RETAIL FOREX
PROPOSAL RIN 3038-AC61
Attn : David Stawick, Secretary and
ALL
CFTC policymakers re: RIN 3038-AC61
As a non-affiliated US-based Retail FX trader, please note for the record that I am STRONGLY OPPOSED to
the 10-1 leverage limit as proposed in RIN 3038-AC61
relating to the Regulation of Retail
Forex. (100-1 is the
correct level.)
Counter-productive effects
This senseless limit would in NO way protect, aid or benefit me but rather would
greatly harm me
since this
restriction, if passed,
1. would require that I submit substantially more margin-funds into non-protected, non-FDIC insured, non-
SIPC eligible accounts, actually exposing me to
increased
risk in the event of bankruptcy of my Forex
Broker.
2. would NOT divert my business into regulated-Futures trading (as the CFTC is probably hoping), but rather
would cause me to seek an unreliable, higher-risk offshore FX broker to trade through, whose practices
might be questionable.i0-001
COMMENT
CL-01952
would HARM & DIMINISH my ability to adequately diversify & protect my entire investment portfolio.
If I need to use substantially more margin-funds for Forex, I will have less money to allocate into other
instruments (stocks, bonds, commodities (gold, oil) cash, real-estate, etc..), I will be
LESS well-diversified
and therefore I will have
even more risk.
Social Utility [] Nanny not needed
I do not want the CFTC to treat me like a child and dictate how I should trade. While 100-1 leverage is available
to me - should I choose it - I am never forced to use it.
Automobile speed limits are socially beneficial because they may reduce or prevent property damage & physical
harm to the driver, passengers and many innocent others all around.
THIS
pointless limitation, however,
addresses only a victimless, non-existent, voluntarily self-imposed []phantom [] risk.
Lower FX vols
require
far greater leverage
FX volatilities are generally substantially lower than in the Equities or Futures market. Therefore, substantially
more leverage is required simply to capture equivalent trading opportunities.
Slippery-Slope Absurdity
If client loss-prevention is your aim, then consistency dictates that you also ban trend-following trading strategies
since a strong argument can be made that this will prevent more customer losses than your 10-1 leverage-
limitation proposal. Is the absurdity of your proposal obvious yet?
I am very concerned because ever since Congress empowered the CFTC to rule-make in Forex via the Farm-Bill,
it's as though you've been given a huge ray-gun with no idea how to use it so you're just shooting anything &
everything in sight... To the man with a hammer, everything looks like a nail. Worse even is the fact that, to my
understanding, none of you even actually trade Forex or have ever done so. How can you undertake to regulate
what you don []t even understand or appreciate? Unfortunately, with this (and other ill-conceived proposals) you
have greatly damaged the very credibility of the CFTC.
The bottom line is that OTC Retail Forex trading is NOT Futures trading. Please do not try to treat it as such.
PLEASE IMMEDIATELY STRIKE YOUR PROPOSED
10-1 LEVERAGE
LIMITATIONS.
Leave 100-1
leverage intact. Please remain focused ONLY on pursuing anti-fraud provisions and crime prevention, as per your
congressional mandate.i0-001
COMMENT
CL-01952
Don[]t let proposal RIN 3038-AC61 become an expensive lesson in unintended consequences
Thank you.
Tom Delaney
OTC FX Trader
New Jersey
