Comment Text:
i0-001
COMMENT
CL-08882
From:
Sent:
To:
Subject:
Attach:
Charlie Delano
Monday, March 22, 2010 3:43 PM
secretary
Re: Regulation of Retail Forex - RIN 3038-AC61
FXDC Comment Letter.pdf
Dear Mr. Secretary,
Attached
is a comment letter from the Forex Dealers Coalition. If you have any questions please feel free to
contact me at
your convenience.
Best Regards,
Charlie Delano
Director of Government Affairs
Forex Capital Markets
2701
Dallas
Parkway, Suite 600
Piano, TX 75093
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e-mail system and is subject to archival and review by someone other than the recipient.FOR E IG N EXC H AN==G::E DEALERS C OAiLITI O Ni
March 19, 2010
Mr. David Stawick
Secretary
Commodity Futures Trading Commission
1155 21
st
Street, N.W.
Washington, D.C. 20581
Re: Regulation of Retail Forex
-RIN3038-AC61
Dear Mr. Stawick:
The Foreign Exchange Dealers Coalition ("FXDC") is a trade association comprised of 9 of the largest
U.S.-registered Forex Dealer Members which collectively account for the overwhelming majority of off-
exchange retail forex transactions
("Forex")
executed by Commodity Futures Trading Commission
("CFTC") - registered counterparties. The FXDC appreciates this opportunity to submit its comment on
,
,,
th
,,
the Commission s proposed rules, RIN3038-AC61 ( the January 20 Proposal ). The FXDC has been
and remains a staunch advocate in support of the CFTC's goal of creating a well-regulated domestic
retail forex market that is transparent and provides robust customer protection. The FXDC believes the
January 20
th
Proposal will go a long way towards achieving these goals.
FXDC, however, believes that the January 20
th
Proposal contains one provision that if adopted will have
a devastating impact on the retail Forex industry, drive it largely overseas, and on balance, offset many
positive provisions included in the January 20
th
Proposal. This provision, "Proposed Regulation 5.9 -
Security Deposits for Retail Forex Transactions," would restrict leverage on retail forex transactions to a
level of 10:1, which is a 90% reduction from the present maximum leverage level of 100:1 permitted
under Section 12 of the National Futures Association's ("NFA") Financial Requirements, which was
recently enacted by NFA on November 30, 2009.
The FXDC appreciates the CFTC' s concern regarding the possibility of a customer losing more money
than they have on deposit in their account due to currency fluctuations in the market. However, the
FXDC would like to point out that Forex dealers utilize radically different risk management protocols
than do Futures Commission Merchants, which strictly trade on-exchange futures. Retail Forex dealers
rely on electronic systems which automatically liquidate customer trades and prevent negative debit
balances when an account is subject to a margin call. In regards to a related CFTC concern about the
absence of bankruptcy protections available to retail Forex traders - (specifically, customer funds
segregation), the FXDC is aware of this issue and has been working diligently with Congress to ensure
this issue is addressed in the U.S. Bankruptcy Code. In the interim, requiring traders to post a larger
margin deposit would only serve to put more customer capital at risk in the event of bankruptcy.Should the 10:1 leverage provision be adopted, the FXDC would like to reiterate its concern about the
inability of U. S.-based Forex dealers to compete with competitors from overseas (primarily in the
United Kingdom where the Financial Services Authority imposes no comparable leverage limits on
Forex dealers). As demonstrated by the over 8,000 comment letters to the CFTC to date, many
despondent Forex traders will choose to take their business outside the United States if 10:1 leverage is
imposed. Many of these traders may also choose to trade with foreign, unregulated dealers thus leaving
them susceptible to fraud.
The FXDC respectfully submits that the CFTC withdraw proposed regulation 5.9 and maintain the
NFA's current leverage regime (100:1 maj or currencies, 25:1 on exotic currencies) that went into effect
last year. We sincerely thank you for your time and consideration.
Signed:
Drew Niv
Chief Executive Officer
Forex Capital Markets LLC
32 Old Slip
New York, NY 10005
Todd B. Crosland
President
Interbank FX LLC
3165 East Millrock Drive
Suite 200
Salt Lake City, UT 84121
Gary Tilkin
President & CEO
Global Forex Trading
4760 East Fulton Rd., Suite 201
Ada, MI 49301
Vera Hawkin
Chief Executive Officer
Capital Market Services LLC
Empire State Building
350
5
th
Avenue, Suite 6400
New York, NY 10118
Glenn Stevens
Chief Executive Officer
Gain Capital Group
135 Route 202/206
Bedminster, NJ 07921
Emil Assentato
Chairman
FX DirectDealer, LLC
75 Park Place,
4
th
Floor
New York, NY 10007
Michael Cairns
Chief Executive Officer
FX Solutions, LLC
1 Route 17 South
Saddle River, NJ 07458
Michael Stumm
President & CEO
Oanda Corporation
140 Broadway,
46
th
Floor
New York, NY 10005
Yaroslav Shevchenko
Managing Director
Alpari (US), LLC
14 Wall Street, Suite 5H
New York, NY 10005
