Comment Text:
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COMMENT
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From:
Sent:
To:
Cc:
Subject:
Steven J. Morales
Monday, March 22, 2010 9:02 PM
secretary
[email protected]
concerned citizen
Dear Secretary Stawick,
I would have no interest in writing you
except I find the public (" PR generated")
outcry opposing your proposed FOREX
regulations to be
repugnant considering what our country
has had to bear in the last 18 months.
I was surprised to read your Chairman was
considering capitulating on the CFTC
proposal when he testified before congress.
The capitulation is not what is disturbing.
It is the reasoning why the Chairman
decided to "revisit" his proposed changes.
Changing ones thoughts based on factual
data is acceptable. Bowing to pure politicali0-001
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pressure and a well-planned battle, waged
via professional PR firms is unacceptable.
The large industry leaders have exerted
political pressure via Congressmen and
Senators Collin C.
Peterson (Dem., Minnesota) and
Rep. Jim Marshall (Dem., Ga.).,
Senator Orin Hatch. The
representatives
cite the potential lost jobs and US clients
trading in rouge regulatory environments
as reason to not implement your proposed
changes.
What these Representatives are unaware of
is each member of the PAC opposing your
measures has already moved their clients
and JOBS! to these same
regulatory regimes you/we are told to fear!
How hypocritical. It is a scary thought
Senators and Congressmen would issuei0-001
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blind statements without fully exploring
the reality of what they are saying.
I receive advertisements daily informing
me I have a choice of where to open my
accounts.
I am offered an immediate
option of transferring my account to these
companies "offshore affiliate". Rather than
express concern over these same
regulatory umbrellas you and the public
are told to fear from the PR campaigns, the
advertisements EXTOLL the benefits of
their new offshore entities.
I myself have been made aware of the
impending changes in FOREX via mass
mailings from FX brokerages urging me to
oppose the new regulations as well via FX
STREET.com. and other "FOREX" sites. I
can actually "write " a pre formatted letter
to you simply by hitting an accept buttoni0-001
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and inserting my mail. I am not sure this
qualifies as a legitimate letter.
I did not take the communications from the
brokers or postings seriously until I read
HEADLINES (March 18th, 2010) Wall
Street Journal. The article sites FINRA
intervention of SEC regulations. I could
not believe the evidence presented in the
article. I would have found it unthinkable
as well as unconscionable a regulatory
agencies would directly undermine, via
back room deals, what they publicly
purport to support.
However, the evidence in that article
demonstrates the underlying basis for my
communication.
The FX Chat boards are now mentioning
the impending fears over the proposed
CFTC reduction in leverage is ill founded.i0-001
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The large FOREX brokerage houses are
now communicating to their best clients
and introductory channels the extensive
PAC activity and Public Relations
campaign opposing the change has worked
very well.
According to communications posted on
Chat boards and representations made to
colleagues of mine directly, The NFA,
held a secret non - public meeting with the
largest FOREX brokers and committed to
supporting the FOREX Brokers opposition
to the CFTC changes or some watered
down version of the bill. This in exchange
for an easing of the all out war the
Brokerages are waging against the
regulators. Thus the NFA position paper.
The Brokers have already communicated
to their best clients the pressure they havei0-001
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brought via political pressure and a letter
writing campaign has worked well.
Regardless of the final disposition of your
decision, the SECRET NFA meeting in a
NON PUBLIC FORUM is unethical,
illegal, and reason the public in general
should not have any reason to believe your
agency is above sacrificing its political
well being for what you purports your
mission 1S.
Congress should investigate why you offer
a public comment window, during which
time you are secretly meeting with the
same groups you purportedly are looking
t regulate. The minutes and attendees of
the secret NFA meeting should bei0-001
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published and disclosed.
Those responsible for undermining the
transparent communication required by
law should be held accountable.
In a time when your administration
promises full transparency and an end to
the Wall Street back alley shenanigans; the
actions of the CFTC/NFA become more
disturbing. Any public servant or agency
willing to thumb their noses to the
American taxpayer under the current
environment is an agency that should be
held accountable.
The public should have no expectations
that your agency has any recall of the true
nature of why financial system melted
down. A. Professional Institutions utilizing
leverage at a rate of 30-1 times. B. Lack ofi0-001
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oversight. C.Regulations watered down via
political pressures. Sadly the public is
asked to accept the average trader is more
sophisticated than the professionals.
The argument inexperienced non-
professional clients are suitable to handle
the leverage at any level is folly. The true
genius of the entire argument presented by
the PR firms on behalf of the FOREX
industry is that to reduce leverage from
100-1 is somehow bad for business. The
real question is how you allowed 100-1 to
begin with. If you are going to allow 100-1
you might as well allow 1000-1 it has no
statistical difference.
If you are looking for a true point of
reference ask Mr. Gensler to phone his
prior firm and inquire if Goldnam wouldi0-001
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allow 100-1 leverage in the FOREX
market.
Shame on the CFTC, the NFA for not
having the courage to stand above politics
and demand real data. Shame on Senator
Hatch for communicating his concern for
worrying about potential job loss when his
constituent sends out PR messages
announcing loud and clear they have
already moved.
The most recent financial meltdown was a
result of no responsible oversight, and
allowing financial firms to implement
rules in their own best interest. This lack of
oversight was supported by the threat of
lost jobs and markets moving elsewhere, if
the foxes were not allowed to run the hen
house. These are re cycled objectionsi0-001
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utilized when no plausible evidence or
case can be made to refute responsible
oversight
What ever your decisions please do not
cite lost jobs or the impact upon the
industry as your reasoning. These are
arguments are presented without data and
without any factual basis.
The notion clients would have to deposit
more funds that they could actually lose is
designated risk capital or supposed risk
capital. The argument is non-seneschal.
The comparison made by the brokers to
other markets simply does not hold water.
The other markets are traded on an
exchange basis with transparent clearing.
These firms opposing your proposal can
take on unlimited risk. The reduction ini0-001
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leverage insulates clients from having their
de facto clearing agent absorb risk at 100-
1. Has anyone given thought the real
beneficiaries of leverage are the brokers?
The leverage cuts both ways. Have the
regulators forgotten multi billion dollar
institutions vaporized over night due to
what has been determined excessive
leverage at 30-1 times. The public is asked
to swallow 100-1 as appropriate for non
professionals. The NFA continually
discusses the public interest and traditional
measures by which the appropriate
leverage is determined. The NFA would
like to support the old guard. This
argument is not only client centric. This is
not about ensuring only client does not
lose more than they have in their account.
This is about ensuring the FDM does not
absorb excessive leverage.i0-001
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The tax payer and public have learned the
traditional old fashioned ways of
measuring risk and leverage were
inadequate and exposed the public to the
ultimate risk. For any regulatory
agency not to err on the side of extreme
caution only demonstrates short memory
and arrogance at having their old
traditional club questioned and evaluated.
If the ultimate protection of clients is
anticompetitive so be it. There is no
evidence of anti competitive backlash.
The reality is the tough CFTC position will
reinforce in clients minds the largest free
market on the globe is watching.
Are
the PR machines so arrogant
to assume the proposal wasi0-001
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put forth by the CFTC
¯
"
ly"
without a detailed ana s s?
If so we are in a worse
position than could be
¯
¯ mag ned.
The public demands decisions are
not the
result of a few market participants, and
their PR machines.
