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Comment for Proposed Rule 75 FR 3281

  • From: Antonio S Brasse
    Organization(s):
    New York Life Insurance Company

    Comment No: 5227
    Date: 2/8/2010

    Comment Text:

    i0-001
    COMMENT
    CL-05227
    From:
    Sent:
    To:
    Cc:
    Subject:
    Antonio S Brasse/NYLIC
    Monday,
    February 8, 2010 5:26 PM
    secretary
    kirsten_gillibrand@gillibrand, senate.gov
    Regulation of Retail Forex
    These comments are in relation to the proposal to lower the maximum
    leverage allowed by retail forex customers from 100:1 to 10:1 (
    identification number RIN 3038-AC61). I am also CC'ing the office of our US
    State Senator Kirsten Gillibrand, whom just recently spoke at our New York
    Life Headquarters today, to bring awareness to this issue. I find it very
    relevant to her office as many of the retail forex brokers are located
    right here in NYC.
    I have very serious concerns regarding this proposal, both as a retail
    forex customer/trader and as a US citizen overall.
    As a retail forex customer, I am very concerned about having my freedom and
    right to choose the amount of leverage that is appropriate for my
    individual desired risk taken away from me. I am a firm believer in
    personal responsibility and traders should make intelligent decisions on
    what their acceptable risk levels are and should take responsibility for
    both their good and bad decisions. Additionally, this proposal would be
    handicapping the US based retail forex trader in the world of forex, where
    other non-US based traders can still trade at higher leveraged amounts and
    institutional and central bank traders will dwarf retail traders at very
    dangerous magnitudes making the retail trader even more susceptible to the
    legal forms of manipulation that occurs in the forex market. I understand
    that this proposal is probably related to wanting to protect the average
    consumer/trader, but this proposal will actually make it far more risky for
    the average trader/consumer. Take into consideration this: currently a
    retail trader would need only $100 to trade a particular position but under
    the new proposed leverage, a trader would need $1,000 for that same
    position, having their risks increased ten fold because of this proposal.
    Now if you multiply that number and compare $1,000 used now for a trade to
    needing $10,000 for the same trade under the proposal, you can see how
    badly this situation can get for the regular average American forex trader
    under this proposal. If I may, I believe a better solution to protect the
    average retail trader would be to institute some kind of training or
    certification course where the potential trader will have to prove certain
    basic knowledge of the forex market and risk management as it relates to
    forex before they are allowed to trade. This could be outsourced to
    organizations that already provide forex training so the government would
    not need to incur any huge additional costs to set up a program from
    scratch. You would just need to formalize the process for reporting
    purposes to the CFTC and also to provide brokers with information that a
    potential trader has completed a course and is eligible to trade.
    As a US citizen, my concerns are far more serious. We would be handicappingi0-001
    COMMENT
    CL-05227
    our country in just one more marketplace, adding it to the many other areas
    ~ve've handicapped ourselves already, unfortunately, this time, it ~vould be
    the largest marketplace to have every existed on this planet that ~ve ~vould
    be losing a huge competitive edge on. While ~ve go do~vn to 10:1 leverage,
    other countries ~vill remain at 100:1 all the ~vay up to 400:1 leverage. Our
    US-based forex brokers ~vill go out of business because any intelligent
    forex trader ~vill move their account overseas so they can keep the po~verful
    leverage. Jobs ~vill be lost and tax revenues (both W2 and investment
    related) ~vill be lost as traders look to overseas markets to trade
    currencies and our domestics brokers are driven out of business. In our
    current economic climate, ~vhere the j ob market and government revenue
    situation are already at dangerous points, this ~vould have devastating
    effects for this proposal to become la~v.
    As a concerned retail forex trader and US citizen, I urge you not to pass
    any ne~v regulations that ~vill affect the current maximum leverage allo~ved.
    Thank you for taking the time to consider our comments on this issue. If
    you ~vould like any additional feedback from me, please do not hesitate ~vith
    regards to contacting me. Thanks again for your time.
    Antonio Brasse, CPA, CIA, CFSA
    Corporate Audit Staff
    Corporate Audit Department
    Ne~v York Life Insurance Company
    51 Madison Avenue
    New York, NY 10010
    Phone: 212-576-6145 (Direct Line)
    Fax: 212-589-4447
    Antonio S [email protected]