Comment Text:
i0-001
COMMENT
CL-05333
From:
Sent:
To:
Subject:
[email protected]
Thursday, February 11, 2010 6:56 PM
secretary ; Gensler, Gary ;
Stawick, David ; Smith, Thomas J.
; Bauer, Jennifer ; Penner, William
; Cummings, Christopher W.
; Sanchez, Peter
OPPOSE FOREX INTRODUCING BROKER (IB) PROPOSALS in RIN 3038-
AC61
To whom it may concern at the CFTC:
I am wiring to inform you that (in addition to my strong opposition to your proposed restriction of FX
leverage down to 10-1 (100-1 is already the appropriate level)) I am
fiercely opposed to your
proposed restrictions on Forex IBs.
While ANY reasonable FX trader and FX IB will admit that they are in favor of a strong and respected
registration & regulatory framework, these specific Forex IB proposals will ultimately be very harmful
to the end FX customer, to all FX IBs, and to the entire FX industry.
Here's why: ALL FX BROKERS ARE NOT THE SAME. IBs need to be free to direct their different
customers, each with their differing needs, to the most appropriate FX Broker for them.
For just a few examples:
1. Some FX Brokers offer fixed bid/ask spread-widths while others offer dynamically-fluctuating
bid/ask spread-widths. Each offers various pros/cons depending on the type of end-customer and
when/how frequently they trade, (Ex: A trader who trades only after major news releases)
2. Some offer highly sophisticated charts, news, research tools, technical studies & analytics while
others offer none at all. Depending on trading style, this may or may not be important to a
customer. (Technical vs. flow vs. fundamental vs. discretionary traders)
3. Some FX Brokers offer platforms that are simple, fast and robust, while others are far more
functional, advanced, complicated and feature-rich. High-volume traders prefer fast & easy. Long-
term position traders may not.
4. Some FX brokers offer the METATrader programmable FX software, while others offer a
different, custom-designed trading software depending on customer preference.
5. Some brokers offer an ECN-style open limit orderbook "self-trading" platform where customers
can post their own bids & offers as price-MAKERS, while others require that customers trade as
price-TAKERS only on their posted prices. Each offers significantly different advantages,
depending on the type of end FX-customer. Scalpers for example might use an FX ECN.
Beginners, however, might not be right for an ECN.
6. For those customers that are interested, some FX FDMs offer automated-trading via computer API
(Programing Interface) while others don't at all. Of those that offer trading APIs, some are
programmed in FIX protocol, others are JAVA, others are MQL, others C++, depending on client
preference.
7. This list can continue until 100, but for brevity i will not drag on ...i0-001
COMMENT
CL-05333
VERY Importantly, some RFED's may be very poorly capitalized and financially unstable but
offer a highly competitive compensation package. Other FDMs or RFEDs may be better
capitalized but offer a less generous compensation package for the IB. Since FX client funds are
NOT segregated, confining or trapping the IB to one single Broker creates a VERY dangerous
conflict of interest for the IB between serving his own financial interest or that of the customer.
Navigating the complex universe of FX trading - with all its different FDMs, FX FCMs, RFEDs and
their various cons & advantages is no easy task. This is where the 113 can intermediate and serve a
VERY valuable function for both the clients and brokers by directing the right customers to the
appropriate broker. BUT, as you can see, the IB can't be needs to be FREE to refer his customer (which
presumably he knows intimately) to the most appropriate FX trading venue or broker FOR THAT
SPECIFIC CUSTOMER's NEEDS. The end FX customer will be far more well-served this way, and
the FX IB will not feel as though he is being constrained in his ability to both make an honest living and
serve the interests of the customer.
In on-exchage Futures trading, IBs are able to work with any number of FCMs that they choose. Why
are you treating OTC FX so differently?
PLEASE DO NOT IMPRISON OR CAGE FX IBs TO BE GUARANTEED BY JUST ONE
SINGLE FX BROKER AT A TIME. THIS WOULD HAVE THE UNINTENDED EFFECT OF
SEVERELY CONSTRAINING AND HINDERING THE IB's ABILITY TO EARN A LIVING
AND WOULD GREATLY UNDERMINE THE INTERESTS OF THE END FX CUSTOMER.
PLEASE ALLOW IBs THE OPTION TO WORK WITH AS MANY FX BROKERS AS THEY
FEEL APPROPRIATE, SO THEY CAN BEST SERVE THEIR CUSTOMERS' INTERESTS.
With Great Respect,
Thomas Benedetti
Forex-Tech.net
