Comment Text:
i0-001
COMMENT
CL-07217
From:
Sent:
To:
Cc:
Subject:
David Lee
Saturday, March 13, 2010 8:17 AM
secretary
[email protected]
Regulation of Retail Forex
RIN 3038-AC61
This message is a response to the CFTC in regards to the possible changes of leverage in the
foreign exchange market. I know that the regulatory committees have been trying to tackle this
issue for quite some time. Given the fact that retail forex has had a huge increase over the past few
years, espcecially without any real regulatory involvement, has caused a double take reaction to
this growth. The leverage in forex definitely has played a substantial part in the growth of this
financial industry. Relative to the futures markets, the leverage involved does seem extremely
high, in comparison. But relative to the tick values of futures instruments i.e. e-mini products,
wheat contracts, coffee, they are pretty much in line with each other. Now I know the margin
requirements are different on these instruments at all levels, but when you see day trading
margins of some futures contracts to the margin requirements of a highly leveraged forex
instrument, they are approximately the same.
As an example lets look at a comparison between EUR/USD to the E-MINI S&P 500.
Margin for EUR/USD $1000 per contract
Margin for E-mini $1000 per contract (day trading requirement)
Tick value for EUR/USD is $10 per contract
Tick value for E-mini is $12.50 per contract
This example alone should tell you that leverage is not an issue, especially when its compared to
the highly regarded E-MINI S&P 500. This may seem like an apples to oranges comparison but
the information above is accurate.
So what I'm basically saying comes down to this, NO, NO, NO I do not believe the CFTC should
change the leverage requirements of this beautifully well oiled machine I have grown to love,
known as the FOREIGN EXCHANGE MARKET.
