Comment Text:
i0-001
COMMENT
CL-08594
From:
Sent:
To:
Cc:
Subject:
John Dunn
Friday, March 19, 2010 10:12 AM
secretary
[email protected]
Proposed 10:1 leverage limitation
Dear Sir,
Over the past 18 month's I have been learning to trade the FOREX market, I have been successful and look forward to a
rewarding career as a retail trader. I have employed an account with 200:1 leverage, and using conservative trading strategies
done very well.
I have no intention of limiting myself to a 10:1 leverage account. So if this passes, I will take my account to an overseas
broker, most likely in the UK, thus depriving a US based firm my business. Of my peers that I stay in touch with, this is the
prevailing response to be expected.
I will include some facts and figures that I assume you have seen before, but the bottom line is, this proposed regulation will
cost our country, jobs, tax revenue and will force traders into overseas markets possibly exposing themselves to greater risk
due to less regulation.
Respectfully,
John Dunn
US Citizen
¯ Today the U.S. retail forex industry can boast hundreds of thousands of live accounts. Should the
10 to 1 leverage rule be adopted 90% of those accounts can be expected to go offshore. And the
first place they'll go is to the United Kingdom where customers can trade with leverage as high as
200 to 1.
¯ The U.S. retail forex industry (forex dealers and introducing brokers) employs thousands of
people. The vast majority of these jobs are high paying, white collar jobs that require advanced
education and range from software developers to accountants to foreign exchange dealers. The
industry is just as much a high tech industry as it is a financial services industry.
¯ The domestic industry's revenue is well over $1 billion. This revenue is money generated from a
product that is in many ways an export. Furthermore, as capital markets open in the BRIC
countries the number of new accounts that will flow out of places like China and India will lead
to huge job and revenue gains in the United States. Trillions of dollars of trade volume are at
stake. This is money that could (and should) be booked in the United States as taxable revenue.
But if this rule passes the United States could well be costing itself billions of dollars in taxes
down the road.
¯ The problem of Forex fraud will get worse absent legitimate dealers offering retail forex. Retail
forex fraud is not something that is caused by the actions of retail forex dealers; rather it is caused
by unlicensed con-men who masquerade as forex experts promising silly and unjustifiable returns
before disappearing with customer funds. That is why the FXDC fully supports the CFTC's rule
requiring all introducing brokers be licensed. That rule will solve forex fraud, not 10 to 1
leverage.
¯ The 10 to 1 leverage rule will be highly unpopular with traders. The fact is 100 to leverage is
very popular with the retail forex trading public. They simply will not accept 10 to 1 leverage.
¯ Unregulated dealers from around the world will also be the beneficiaries of the 10 to 1 leveragei0-001
COMMENT
CL-08594
rule. These unregulated forex dealers don't have to worry about capital requirements, risk
management
models, marketing
ethics,
dealing
practices
or even returning a customer's funds.
These
dealers
will be out of the
reach
of the CFTC and they will thrive.
The case against the
10
to
1
leverage rule is clear. The rule will be a boon to foreign forex dealers (both
regulated and unregulated) who will grow entirely at the expense of retail forex dealers in the United
States. Thousands of high paying jobs will be lost and the potential for tens of thousands of more jobs
will forever vanish as well. Consumers will be hurt and more vulnerable to fraud. And the United States
will toss away one of the most promising export industries that it has, all in the midst of 10%
unemployment. There is no good reason that this should be so.
John Dunn
Office: 479 236 6413
Home: 479 899 6667
"When you are courting a nice girl an hour seems like a second. When you sit on a
red-hot cinder a second seems like an hour. That's relativity." AIbert
Einstein
