Comment Text:
i0-001
COIMMENT
CL-06647
From:
Sent:
To:
Cc:
Subject:
Susan Tipton
Tuesday, March 9, 2010 1:31 AM
secretary
Cummings, Christopher W. ; Stawick, David
; Bauer, Jennifer ; Sanchez, Peter
; Smith, Thomas J. ; Penner, William
Extremely opposed to 10:1 leverage limit and increased margin requirements in regulation of
retail Forex proposal RIN 3038-AC61
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Attn: David Stawick, Secretary, CFTC and all CFTC policymakers:
Regulation needs to be constructive instead of restrictive; otherwise it becomes destructive. For the sake of
competition and freedom of choice, leverage should be allowed to range depending on the broker you choose to use. I
am extremely opposed to lowering the leverage and raising the margin requirements. The leverage has already been
lowered once in the USA and does not need to be lowered again. Lowering leverage to your proposed amount means
you have to put 10 times more money in your account to make the same amount you are making now. Two problems
are quickly made evident. Most traders do not have 10 times more money to tie up in a brokers account. The second
problem is that money put in a brokers account is uninsured. If the brokerage goes bankrupt (which your proposal
drastically increases this risk of happening) you lose your money (because of your proposal you could lose 10 times
more). Raising the margin in each person's account also requires a person to put more money in their account in
order to trade at their current level.
If the proposal passed the trader would have three options.
I)
Unable to
Play--The trader could give up trading because the risk to their capital will be greater than the
potential reward. A higher margin means less money available to trade. Lower leverage means you make less
money. Now add these two together and you make a great deal less money. The increased margin will increase
the risk of a margin call. The margin on one mini lot for the GBP/JPY is around 5146.00 but your proposal will
bring that to 51460.00. Most small traders have 52000 to 53000 in their accounts. For someone with 52000
this leaves them with only 5540 to trade. Add on top of that the lower leverage and you will trade for pennies
instead of dollars. Your proposal increases the risk to a trader and drastically decreases their ability to make
any money. There is a TV segment on local news called
Deal or Dud.
If a potential trader was looking for a
broker and this is what they offered it would be considered a Dud.
2)
Desperate to
Trade--The second option is to continue trading where you are and accept the two
handicaps you have been saddled with by the CFTC. There are traders out there who use low leverage. The
margin requirement will be a huge hindrance. They will have to come up with ninety percent more capital to
make what they are currently making. So if they have 52000 they will need 520,000 in order to make the same
amount. The other thing these traders will be worried about is if their broker will remain solvent. A large
portion of traders will take their money out of USA broker accounts due to the restrictions. The traders who
are left may not be enough to keep their brokerage going and the remaining traders will lose their money due
to the bankruptcy.
3) Adios Bye
Bye--The third option is to find another place to trade. It can be done but this means moving
your money out of the USA. This causes headaches for all parties. The USA loses a money making industry that
up until now has been growing each year. The USA brokers will downsize first then either move offshore or go
out of business. Brokers for other countries who had branches in the USA will withdraw. The workers who lose
their jobs will not bring in tax revenue for the government but instead will collect unemployment adding to the
job crisis affecting our country at this time. Traders who had been using USA brokers will have to depend on
other countries and their regulations as they move their money and go.i0-001
COIMMENT
CL-06647
The CFTC needs to be part of the solution not the problem. Democratic government agencies are supposed to be
run
"by
people for the people". If you get rid of the 100:1 leverage and the smaller margin requirements that small
traders depend on it makes me wonder who "the people" are that you are actually working for? Who benefits from
you destroying the USA Forex industrv? It certainly won't be the true USA, the USA brokers or the people (foreign and
domestic) who depend on them. What power you must feel to take awav someone's right to make money just
because you can. This makes me angry because you are also the very people who are supposed to be helping us.
If you want to be part of the solution work with USA Forex brokers not against them. Constructive regulation is a
necessity to try and keep people focused on doing the right thing. Constructive regulation also needs to be done by
people who actually know the business. You need to hire or consult with Forex experts who actually trade the Forex
market. Your proposal is aimed at reducing fraud and deception. To do that you should start with your
proposal. Neither margin nor leverage is fraudulent or deceptive if they are revealed on a broker's website. They are
both tools to help you make money. Wisdom comes with practice and all good brokers have demo accounts so you
know exactly what you are getting before you even open a live account. If you want to find fraud and deception look
for brokers who don't spell out or correctly calculate the leverage and margin requirements. Find the brokers who
don't have demo accounts or whose demo accounts don't function like their live accounts.
If you want to help, find a way to insure my money when it's in a brokers account. If they go bankrupt I will then get
it back. This will decrease fraud. Help USA Forex brokers stay competitive. Leave the leverage and margin
requirements alone. This will reduce fraud because people will stay with USA regulated brokers. I like my broker and
want to keep my money in the USA. Please help me do this by being a constructive regulator instead of a restrictive
regulator.
I am opposed to the 10:1 leverage and the increased margin requirements because it is not good for Forex, it is not
good for the USA and it is not good for Forex traders. Your proposal discriminates against small traders and basically
says unless you are rich we don't want you to trade in the USA. One market (ex. Forex) should not be compared to any
other market (ex Futures). Leverage and margin requirements in one market are not the same as in another market. It
is like apples and oranges; both are fruits but not the same. Like an apple versus an orange one markets risk should
not be compared to another markets risk as they are completely different markets.
Some of the most innovative Forex brokers are in the USA. We need to keep jobs and traders (domestic and foreign)
money in the USA. We have outsourced way too many jobs already. This proposal would send both jobs and traders
money out of the USA. We need a regulatory agency that allows all people a chance to trade not just the rich. Give us
regulations that help us not hurt us; rules that will protect us not destroy us.
Let freedom instead of tyranny reign in the USA,
Susan Tipton
