Comment Text:
i0-001
COMMENT
CL-03563
From:
Sent:
To:
Subject:
Wallace H. Jenkins
Sunday, January 24, 2010 4:22 PM
secretary
Regulation of Retail
Forex
David Stawick, Secretary
Commodity Futures Trading Commission
1155 21st Stxeet N.W.
Washington, DC 20581
Dear Secretary Stawick:
I am writing to you with great concern regarding the proposed regulations
contained in t~e Food, Conservation, and Energy Act of 2008 (RIN3038-AC61),
also known as the "Farm Bill". The portion of the bill limiting foreign
exchange lxading leverage to 10:1 will decimate l~e industry in l~is country
and effectively put legitimate traders like myself out of business
completely.
I applaud l~e efforts of the CFTC and have welcomed recent changes in
regulations intended to increase protections for inexperienced traders and
naive investors. The new anti-fraud measures, concern for customer
complaints, and t~e effort to reduce predatory practices are all laudable.
But this new concern with leverage in foreign exchange accounts is not only
counter productive, it will make it impossible for retail traders to do
business.
The nature of foreign exchange makes it quite different than trading the
securities markets. I have been involved with both for many years.
Leverage of at least 100:1 is a necessity for any retail lxader to realize a
sufficient profit to trade the market at all. And contrary to what one
might l~ink, l~e limit on leverage below l~ese levels will actually put more
txaders into risk.
Prudent trading requires l~at an account not be overlxaded and that
lxansaction sizes not exceed one or two percent of account net balance. At
10:1 leverage, this prudent sizing of lxades would be virtually impossible
for most traders, forcing t~em to risk dangerously high portions of their
funds. Without going into l~e subtleties of trading here, the proposed
leverage limits will cause many lxaders to incur margin calls leading to
failed trades that would otherwise be successful. And the less experienced
lxaders, the ones this new proposal is intended to protect, will be forced
into lxading positions that would heretofore have been considered
irresponsible, leading to quick losses and empty accounts.
I urge you stxongly to reconsider l~is new regulation carefully before
taking fur~er action.
Sincerely,
Wallace H. Jenkins, Ceo
Rivendell FX Llc
