Comment Text:
i0-001
COMMENT
CL-03746
From:
Sent:
To:
Subject:
jill levy
Monday, January 25, 2010 10:12 AM
Gensler, Gary ; secretary
Stawick, David ; Smith, Thomas J.
; Bauer, Jennifer ;
Penner, William ; Cummings, Christopher
W. ; Sanchez, Peter
< [email protected]>
Re: STRONGLY OBJECT TO 10-1 LEVERAGE LIMIT IN
REGULATION OF RETAIL FOREX PROPOSAL RIN 3038-AC61
Re:
STRONGLY OBJECT TO 10-1 LEVERAGE LIMIT IN REGULATION OF RETAIL FOREX PROPOSAL RIN
3038-AC61
Attn ¯
Gary Gensler,
Chairman CFTC
David Stawick,
Secretary CFTC
and ALL CFTC policymakers re: RIN 3038-AC61
As a non-affiliated US-based OTC 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.
3.
would HARM & DIMINISH my ability to adequately diversify & protect my entire investment
portfolio. If l 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.
Lower FX vols require far greater leverage
Clearly, with this proposal, you don't appreciate that 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.
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 generally considered
socially useful because they may reduce or prevent property damage & physical harm to the driver, passengersi0-001
COMMENT
CL-03746
and many innocent others all around. THIS pointless limitation, however, addresses only a victimless, non-
existent, voluntarily self-imposed "phantom" risk and delivers zero social benefit.
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 OTC 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) I fear 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.
Don't let proposal RIN 3038-AC61 become an expensive lesson in unintended consequences ....
Thank you.
Jill Susan Lipsitz-Levy
OTX FX Trader
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