Comment Text:
i0-001
COMMENT
CL-08081
From:
Sent:
To:
Subject:
Ken Berry
Tuesday, March 16, 2010 10:57 PM
secretary < secreta ry@ C FTC. g ov >
Regulation of Retail FOREX
Dear Mr. Stawick,
Let me begin by commending your commission for providing a comprehensive overhaul of the rules
and regulations for the FOREX market. The Federal Register update issued on January 20, 2010
does a good job of informing people what the underlying issues are, namely fraud and regulation
interpretation. Also, the many proposed changes and additions go a long way to providing clear
guidance to bodies that rule on disputes that arise as well as provide some welcome consumer
clarification.
However, there is one specific item that I am concerned with, the new Regulation 5.9. While I
understand the intent to minimize exposure and/or losses by brokers and consumers alike, I do not
believe that government regulating the limits on a free market are in either the government nor
the industries best interest. It is true that a 400:1 ratio is very risky for both the broker and
client, but dropping this down to a maximum 4:1 is definitely overkill and which will most likely
hinder the markets growth. I would recommend instead that the maximum be changed to the
market norms 100:1 on majors and 25:1 on all others as an alternative to the current proposed
limit of 4:1.
In addition, as stated, the brokers are currently required to obtain capital from prospective
investors prior to any trading. I would like to propose as an additional safeguard that Brokers
should be required to develop a mechanism to guarantee an investor does not over-leverage their
account. This would protect the broker and client and would also ensure stability in the market by
ensuring that there was the proper capitalization available at all times, at least for US based
entities.
I am a new investor to this market. I am spending the time learning the market before I invest any
real money. Being a "small investor", the proposed new changes as written today would not be
attractive to me as a potential new investor due to the lack of earnings potential. The risk/reward
just isn't there at 4: 1.
Thank you for taking the time to read this.
Sincerely,
Ken Berry
A "small investor"
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