Comment Text:
i0-001
COMMENT
CL-08561
From:
Sent:
To:
Subject:
Attach:
[email protected] on behalf of
Paul Vermillion
Thursday, March 18, 2010 9:43 PM
secretary
Re: Public Comments on Regulation of Retail Forex
Regulation of Retail Forex - Paul Vermillion - 10 077 -.pdf
Hi Mr. Secretary: Regulation of Retail Forex comments attached. Sincerely yours, +PAULPaul Vermillion
6335 Double Eagle Dr
Stoney Creek, NC 27377
March 18,2010
The Honorable David Stawick
Secretary of the Commodity Futures Trading Commission
1155 21st Street Northwest
Washington, DC 20581
Re: REGULATION OF RETAIL FOREX
Dear Mr. Secretary,
In this decisive hour of our nation's history we are writin8 to express our deep concern
over a sinsle, specific provision, in the proposed Resulation of Off-Exchanse Retail
Foreisn Exchanse Transactions and Intermediaries.
We ask you to please OPPOSE the imposition oj
~
a 10-to-1 leverage ratio on Forex.
We ask that you please SUPPORT the maintenance of a 100-to-1 leveraqe ratio on Forex.
First, the proposal to put a 10-to-1 leverage ration on Forex is like putting a speed
limit
of 10 km/hr or 6 mph on the Autobahn.
What that means is that one would not be able
to make much money in Retail Forex. That is not good for the US or its businesses.
The Retail Foreisn Exchanse is like an Autobahn interstate hishway:
¯ In this illustration, at a
500-to-1
leverase (like speedin8 down the Autobahn at
500 km/hr or 310 mph), one could drive at the crazy speed of 310 miles per hour
on this major hish-speed road, that we will call the
ForexAutobahn.
¯
At a
400-to-1
leverase (400 km/hr or 250 mph), one could drive at 250 miles per
hour on the Forex Autobahn.
¯
Those are not safe speeds of travel for most financial motorists on the Retail
Forex financial hishway.
Setting a
100-to-1
leverage ratio would be like posting a speed limit of 100 km/hr or
62 mph on the Forex Autobahn. That is an appropriate speed limit for this major
financial highway.
However, to propose dropping the leverage ratio to
10-to-1
is like to propose dropping
the interstate speed limit down to 10 km/hr or 6 mph.
A speed limit of 6 miles per hour
(a 10-to-1 leverage ratio) is not an appropriate speed limit for the interstate highway of
foreign exchange we call the Forex Autobahn. It is not a sufficient speed/leverage to
make the road usable or safe. It is not a sufficient speed/leverage to allow the road toPaulVermillion
March 18,2010
Page 2
be used for serious commerce to generate income for US Citizens and US Businesses
and revenue for the US Government.
Second, taking into account the national median household income of US Citizens
(544k), a leverage ratio of 10-to-1 would require the outlay of an extraordinary
5200,000 per citizen who planned to trade the foreign exchange with safe position
sizes--risking no more than 2% of one's portfolio on any given trade.
Asking the average
citizen to put up 5200,000 (at a 10-to-1 leverage ratio) to be able to trade the Forex
market reasonably safely is too much to ask.
However, askin.q one to put forward
$20,000 Cat a i00-to-i leveraqe ratio) to trade the Forex prudently, is reasonable.
Third, at a 100-to-1 leverage ratio, the median US Citizen has the potential, with
proper training, to make a living for one's family,
successfully trading the foreign
exchange.
At a 10-to-1 leverage ratio, the opportunity to realize the American Dream
through trading Retail Forex is made impossible.
As we told the world's leaders at the U.N.:
"We
must choose between a world of fear
and a world of progress. We cannot stand by and do nothing while dangers gather. We
must stand up for our security, and for the permanent rights and hopes of mankind. By
heritage and by choice, the United States of America will make that stand."
Mr. Secretary, we make that stand with you. In so doing, while we cannot speak for all
of our constituents, we
are supremely confident that we are voicing the convictions
and concerns of the great preponderance of those we are privileged to
serve.
Please know that we are available to assist in any way you might deem helpful as you
stress our nation's commitment to responsible free enterprise and free markets.
Sincerely Yours,
Paul Vermillion
