Comment Text:
i0-001
COMMENT
CL-05426
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bob
Wednesday, February 17, 2010 3:28 PM
secretary
Regulation of Retail FOREX
CFTC proposed RIN 3038.doc
Bob DeSistoCFTC proposed Regulation of Retail FOREX- RIN 3038-A C61
Most people understand the need for and support the regulatory process.
For example, traffic laws promote driving safety and building codes protect
people by enforcing standards for safety. Most people would argue that
traffic laws are not there to prevent driving or building codes to prevent
building.
The CFTC is there to enforce laws passed by Congress and to ensure fair
and orderly operation of the markets. Its job is not to eliminate a market or
to favor one market over another or to mandate who can or cannot
participate in a market (unless mandated by law).
This, however, is exactly
what the proposed new regulations will accomplish.
Some of the recent changes mandated by the NFA were not only
unnecessary but also harmful to the retail FOREX market. It was especially
harmful to brokers who had to scramble to retool software and to new
traders exposed to higher risk. It also drove many traders out of the country
to non-US brokers.
The CFTC proposal will expand this process of hurting United States retail
FOREX. Beginning retail traders who could trade risking 1% of their
accounts per trade will now be forced to risk 10% of their accounts per trade
in order to see the same profit potential on a trade. The lower 'risk of ruin'
using higher leverage gives traders time to learn the skills necessary to trade
successfully. Correct money management, especially for inexperienced
traders, is easier with higher leverage.
I will simply not be able to earn a living using NFA/CFTC regulated
brokers. IfI want to stay in the FOREX market, I'll be forced to face
additional risk because I will be driven from a poorly regulated U.S. market.
With the 10:1 leverage proposal, the trickle of U.S. capital to out-of-country
brokers will expand into a flood.
When I first began trading retail FOREX, I looked for NFA/CFTC regulated
retail FOREX brokers. If these new regulations are implemented, these will
be retail FOREX brokers I will avoid.
Sincerely,
Robert A. DeSisto
Austin, Texas
