Comment Text:
i0-001
COMMENT
CL-06770
From:
Sent:
To:
Subject:
Barry Bahrami
Thursday, March 11, 2010 1:59 PM
secretary
Regulation of Retail FOREX
RE: RIN 3038-AC61
Dear Mr. Secretary,
I am writing to you in response to the proposed new regulation of retail FOREX brokers in the USA. I am the owner of
Commercial Network Services. We are a 15 year old online service provider and host what I believe is the largest group of
hosted FOREX traders in the world, who collectively use every single broker available. We host thousands of FOREX traders
who reside in over 120 countries and serve them out of three datacenters in the USA and UK.
As a global online service provider, we are in a unique position to identify new FOREX trader trends. For example, a new
broker may open their doors and our helpdesk will receive multiple tickets by our subscribers to move their hosted FOREX
trading platform to the CNS datacenter closer to the new broker. Or a new "expert advisor" (software to enter automated
trades) will become popular and we will receive support tickets to help with configuration, etc. I have no doubt that through
this large pool of subscribers, we have the best "birds eye view" of what global FOREX traders are doing.
I am sure you will agree that history is the best teacher and the only opportunity to learn from our mistakes. Just last year the
NFA implemented new rules on hedging. As FOREX is a truly global market and largely traded over the Internet, this only
served to put US brokers at a competitive disadvantage because the reach of the regulation did not extend beyond US
borders. From our helpdesk, we observed FOREX traders leaving US brokers and moving their accounts to foreign brokers
without the limitations. Some brokers established "UK" branches on paper in order to survive. The regulation also had a side
effect of putting more traders at risk because not all brokers outside US borders are regulated. It did not actually have any
effect on trading, except US brokers saw less of it.
The fact is no one country can regulate the FOREX market. It is too global. Any further regulation will only result in US
brokers losing more accounts to foreign brokers, while at the same time putting those same traders at more risk due to the
unregulated brokers they move to. This is exactly what happened with the recent NFA regulation on hedging and it will only
happen again with new regulation on leverage.
Please do not hesitate to contact me if you have any questions.
Sincerely,
Barry Bahrami
Commercial Network Services
www.CommercialNetworkServices.com
