Comment Text:
i0-001
COMMENT
CL-05000
From:
Sent:
To:
Subject:
Donald Speirs
Thursday, February 4, 2010 2:21 PM
secretary
Regulation of Retail Forex
I am an active but small trader in Retail Forex. I consistently trade in small but highly leveraged micro
lots. The effect of your proposed rule change regarding a massive reduction of leverage available in this
marketplace will in effect drive all smaller participants out of these markets.
Many now including myself are now fleeing to more sensible markets overseas. Is that your desired
effect? I like most others in this market only risk that capital that could I can afford to lose. On the other
hand I do at times make enough money to enhance my retirement income. I am sure there are many
others like me. All together we provide greater liquidity and therefore stability to these markets.
We all know that large financial institutions and government agencies can effect and dominate these
markets at any time. Your proposed rule changes do not address, nor could they giving the nature of this
market. Most traders are aware of these potential interventions and hedge there orders with reasonable
stop loss orders. Your last round of rule changes made it awkward for traders to enter stops on existing
orders. Everybody has come up with a "work around" to still accomplish the same level of hedging.
All these existing and proposed rule changes are really politically driven as a seeming response to the
massive losses by banks and hedge funds. While some increased regulation in some markets may make
sense, IE certain exotic derivatives. It does not make sense in the Retail Forex market which played no
part in the financial meltdown.
Some day there will be a TOTAL review on the causes of financial collapse. I,m sure some of it will
disclose that "unintended consequences" of laws and regulations passed by congress and other entities
such as yourself contributed to the problems.
IE Social Good banking regulations passed by the Carter Administration forced banks to approved
mortgage loans to high risk borrowers. (The default rate was much higher on these then the norm used
when calculating derivatives like 100 unit bundled mortgages.) Result when the higher rate of defaults
started to affect these financial instruments, the value fell. When the Social Good banking regulations
were passed no thought was given to this possible outcome. Then there is "Mark to Market" accounting
rule. On the surface a good and fair rule for valuing assets. But nobody could see the effect that this rule
would amplify the asset losses that were the effect of the Social Good banking rules.
I am sure most of us could go on and on regarding the above problem. Human nature and politics can be
hard to predict. All that I am asking is that you take all or some of what I have had to say into
consideration. While some may think these rule changes solve a problem (real or perceived) I myself
think they will cause greater harm in the long run. Please scrap or table the rule for now. Sometimes no
decision is the best decision.
Thank you for you time and consideration.
Donald Speirs
