Comment Text:
i0-001
COMMENT
CL-08879
From:
Sent:
To:
Cc:
Subject:
Cole Flournoy
Monday, March 22, 2010 3:24 PM
secretary
[email protected]
Regulation of Retail Forex
RIN 3038-AC61
From: Cole Flournoy in Richmond, VA
Dear Mr. Stawick,
The CFTC's fundamental goal is to protect US traders. However, sections of the proposed rules for "Regulation of Off-
Exchange Retail Foreign Exchange Transactions and Intermediaries," 75 FR 3282 (Jan. 20, 2010) have unintended
consequences which will lead to widespread abuses of US traders.
The CFTC and NFA together represent the most comprehensive and effective Forex regulatory organization in the world.
Today, traders seek out NFA registered firms so that they can feel comfortable trading with firms subject to this regulation.
However, if the CFTC proposal goes into effect as is, the majority of US Forex traders will, in effect, be forced to trade with
non-regulated firms putting themselves at great risks for abuses. We have already seen a clear example of this occur on a
smaller scale. When the anti-hedging rules were set in place, US regulated firms became the only firms in the world required
to force these rules upon their clients. Educated clients who understood the associated costs and issues of hedging demanded
ways that they could continue to trade with their long used hedging strategies and techniques. This caused a an industry wide
transition to move clients from US based (NFA regulated) accounts, to oversees accounts which were not under this
regulation. Even though clients were generally skeptical of leaving their NFA regulated broker protections, they felt it was
their only option to continue their trading strategies.
If either the requirement for IB's to be guaranteed by a single broker, or the 10:1 leverage limitation is put into place, we will
see this migration (clients moving from NFA regulated brokers to non-regulated brokers) on a much larger scale. It is in the
interests of US traders, and therefore the CFTC, that US regulated firms be able to stay competitive with non-regulated firms.
By requiring Independent IB's to be guaranteed by a single broker, many businesses who fundamentally rely on working as
an IB for multiple brokers will be faced with the choice of either going out of business, or moving their business to locations
not subject to this regulation. IB's provide valuable products and services to a large portion of retail Forex traders. If US
based traders wish to continue using these products and services, they will have no option but to use the non-regulated IB's
who offer them.
I ask that the CFCT please consider the severe overall loss of US retail Forex trader protections by imposing these unneeded
limitations on Independent IB's who willingly choose to be regulated by the NFA and meet minimum net cap requirements.
Sincerely,
Cole Flournoy
CEO, Forex On The Go
NFA, CFTC Member ID 0409594
This mail was sent via IB Coalition http://ibcoalition.org/take-action/
