Comment Text:
i0-001
COMMENT
CL-08913
From:
Sent:
To:
Cc:
Subject:
Mikhail Kostin
Monday, March 22, 2010 9:03 PM
secretary
[email protected]
Regulation of Retail Forex
RIN 3038-AC61
This is my argument why reducing the leverage down to 10:1 is a disastrous idea.
If my F OREX broker decides to leave the business (bankruptcy or
whatever) I will have a little chance to recover my account, because
the FOREX market is not regulated. To mitigate possible losses I would
keep 2/3 of my trading account in a bank and only 1/3 is kept in the
brokerage account. Position sizes are chosen as if all 100% of the
account is available for trading. The 10:1 leverage will be too low to
use this strategy, so traders would have to keep all the capital in
the brokerage accounts which in turn means they can loose everything
due to broker failure. If trading account is really big or other
people's money used (moral responsibility) then only 10% of the
trading account is kept with the broker. This is only possible with
100:1 leverage.
To summarize, if you want to reduce the leverage, make FOREX regulated
first. Or better yet do not touch anything. Almost any interference
from the government turns into a disaster. I know better how to run my
business.
Mikhail Kostin, Ph.D.
