Comment Text:
i0-001
COIMMENT
CL-06624
From:
Sent:
To:
Subject:
Mark Costa
Monday, March 8, 2010 9:52 PM
secretary
Regulation of Retail Forex
To the Committee:
I am writing in opposition to the proposal to limit leverages used by retail traders. Under the current
system, I am able to generate a modest amount of extra cash flow with little invested money. I am able
to do this by using 100:1 leverage on min-lots (10,000 units). By using proper risk management, I have
yet to incur a loss in excess of $25 USD. I understand that the Commission feels compelled to protect
the "average" person, however in this case it may be driving many people out of the market in an
attempt to protect fools from themselves. I believe the net effect of this regulation would be to drive all
small traders from the markets, both successful and unsuccessful. Unfortunately for us successful
traders, we will be left without the modest addition to our income. I believe the fools will easily find
another way to lose their money.
I do want to point out that the 10:1 leverage limit can have the opposite effect than what was intended; it
may in fact expose small players to more risk. Under the current system, monies deposited into Forex
accounts are not protected in bankruptcies. Under the new regulations, traders will be forced to keep
more money in their accounts, thus exposing them to greater potential for losses. That is because the
current system provides no way for the average person to identify which Forex brokers are managed
properly, and which ones are nearing insolvency. If you are concerned about protecting the average
trader, please find a way to either a) make financial statements of brokers available to retail traders or b)
set up a deposit insurance system. I also want to point out that traders are not protected in the case of
system failures, which also pose a significant threat. I would also like to see some protection for retail
traders in the case of system failures.
Once again I want to reiterate my request that the Commission reject this proposal. I, as an educated
adult, have made an appropriate analysis of the risk associated with using leverage, and have done so
properly and safely. If the Commission chooses to change the regulations, it will be taking away the
only legal way I have to augment my income as a student. Currently that is money that I use to pay for
diapers and such for my child. Therefore I would greatly appreciate it if the Commission would focus on
protecting me from the real threats that I face, which include dealing with private companies that are not
obligated to make their financial data public and unexpected system failures.
Mark R. Costa
Ph.D. Student
