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Comment for Proposed Rule 75 FR 3281

  • From: Dianne Fecteau
    Organization(s):

    Comment No: 5427
    Date: 2/17/2010

    Comment Text:

    i0-001
    COMMENT
    CL-05427
    From:
    Sent:
    To:
    Subject:
    Dianne Fecteau
    Wednesday, February 17, 2010 3:55 PM
    secretary
    RE: Regulation of Retail Forex (RIN 3038-AC61)
    Why are you not displaying all comments received on your public website of comments? Mine is not there nor
    are others that I'm aware of that were submitted. I have perused the following website:
    http://www.cftc.gov/lawa n d regulation/fed era lregiste r/fed e ralregistercom me nts/2010/10-001, html
    Dianne Fecteau, CMT
    From:
    secretary [mailto:[email protected]]
    Sent:
    Tuesday, January 19, 2010 9:04 AM
    To:
    [email protected]
    Subject:
    RE: Regulation of Retail Forex (RIN 3038-AC61)
    Your submission has been received by the Commodity Futures Trading Commission. Please be advised
    that this acknowledgement does not constitute either Commission approval of the subject proposal or a
    determination that the proposal is consistent with the Act and the regulations thereunder.
    From:
    [email protected] [mailto:[email protected]]
    Sent:
    Monday, January 18, 2010 12:49 PM
    To:
    secretary
    Subject:
    Regulation of Retail Forex (RIN 3038-AC61)
    I am writing to object to the proposed regulation of retail Forex traders (Rill
    3038-AC61).
    Specifically, I object to the provision that states, "Leverage in retail forex customer accounts would
    be
    subject
    to a 10-to-i limitation."
    While I understand you see increasing margin requirements as increasing consumer protection, the
    result will be the opposite of what you intend because this provision would drive small retail traders
    to offshore brokers who are not subject to any regulation. As a result, they may be in danger of
    losing all their money, regardless of any specific trading decisions they make, because of unethical
    brokers.
    In addition, the retail Forex market is comprised of many different levels of individuals. Your
    proposed rule does not allow for this. For example, I have passed the three exam series from the
    Market Technician Association and have been awarded my Chartered Market Technician (CMT)
    letters. I also have five years of trading experience as an independent trader. I should not be
    subject to a 10-to-1 limitation and have no idea why you think this would be protective of me. It
    will prevent me from moving profits out of my trading account on a regular basis because I would
    need additional capital to maintain margin requirements. The result would be that I would have
    more money, not less, at risk at any given time.
    Finally, it is tempting to say that the small retail trader is most at risk in trading because they're
    uninformed. This, however, is a questionable statement based on various studies. Research has
    found that mutual fund managers, newsletter writers, Wall Street strategists, and investment
    advisors make the same behavioral errors in the financial marketplace as the "uninformed public"i0-001
    COMMENT
    CL-05427
    does. One only has to look at the behavior that led to the financial crisis of 2008 to know this is
    true as regards risk. While the response might be that these people can afford it, I remind you that
    it was the public's money used to bail out the financial institutions.
    Rather than a blanket requirement of 10-to-1 leverage, it would be more appropriate to require
    some sort of training for those who intend to trade, even if this was only confined to risk
    management issues as opposed to a more general how to trade approach. Traders who could not
    show sufficient training or experience could be required to pass an online exam that would show
    they understand risk and money management. The individuals could be assessed a fee for this so
    that the cost would be borne by those who wished to trade. Brokers could not open an account
    unless the individual could show proof of passing this exam. This would do more to limit risk than
    to have a blanket provision such as 10-to-1 margin requirements. This is no different from
    requiring a driver's license for someone who wishes to drive.
    Dianne Fecteau
    PO Box 942
    Crystal Beach, FL 34681
    727.366.1392