Comment Text:
i0-001
COMMENT
CL-04808
From:
Sent:
To:
Cc:
Subject:
Eric Kahiga
Wednesday, February 3, 2010
5:08 AM
secretary
[email protected]; afranzese ; [email protected]
Proposal to regulate retail Forex
Dear Sir.
I' am writing about the proposal to control retail forex in the USA.
Some of the proposed regulations are good and timely namely;
1. All forex brokerages in the USA will have to be registered somewhere.
2. All forex account managers in the USA will have to be registered.
3. All US based investment pools claiming to be trading forex will
have to be registered.
4. All IBs to registered brokerages will have to be registered.
This is a good measure and will protect the industry from numerous forex scams.
However, some of the proposals will kill the industry and take jobs
away from the USA because traders like me will prefer to trade with a
company registered elsewhere. The proposals are namely;
1. FCMs and RFEDs would need to maintain a net capital of at least $20
million, plus 5% of any amount of retail customer liabilities that
exceed $10 million.
(This will make competition really hard for the upcoming start ups and
it is bound to only benefit the more established companies. Another
problem is that this could easily make smaller and other~vise well
regulated companies move offshore. Some of these will set up shop in
places with little or no regulation. This moves both jobs and money
out of the USA. It will also make traders in the USA exposed to scams
originating in other countries with less regulations. Regulators
should have a scaled in capital requirement for start up brokerages
while having those below the final minimum be under higher levels of
scrutiny.)
2. The plan to set the maximum leverage for US retail forex to 10:1.
This is by far the worst of the regulations. While it is important to
protect naive first time traders who might out their life savings by
using too much leverage, this will affect everyone else who uses
sensible money management. It will only make traders look out for
other countries that have favourable leverage limits. One of the
attractiveness of forex trading is the leverage offered and one of the
most important forex lessons is money management and using leverage
wisely. Leverage is a very important tool and albeit dangerous tool.
What the Government should is educate the public instead of punishingi0-001
COMMENT
CL-04808
the traders who know how to effectively use the tools. New traders
should be advised to get educated about the forex market before
starting to trade.
Kind regards.
