Comment Text:
i0-001
COMMENT
CL-00994
From:
Sent:
To:
Subject:
Andrew Gray
Wednesday, January 20, 2010 2:20 PM
secretary
Regulation of Retail Forex
Dear Mr. Stawick,
I am writing to you regarding the CFTC's proposed changes to the
regulation of retail Forex.
I am in wholehearted agreement with the need for better regulation of
Forex brokers. Requiring them to be registered and to have a minimum
net capital are both very good ideas that I would like to
see
implemented. However, I cannot agree wifla the proposed limitation of
leverage to a maximum of 10:1. While I see the reasoning behind this
proposed change - to help prevent new Forex traders overleveraging and
wiping out their capital with a few ill-advised trades - I feel flaat
individual traders should have flae freedom to choose higher leverages
so long as they are made aware of the potential risks involved.
Personally, I do not believe that limiting the maximum leverage will
save undereducated Forex traders from taking foolish risks in an
effort to maximise their profits. Such traders will simply open larger
positions at lower leverage. On the contrary, experienced traders who
can use leverage wisely should have the freedom to do so. The proposed
10:1 limit would only inconvenience them without being much help to
new ~xaders who cannot or will not take the time to educate themselves
prior to trading.
I would propose the following alternative to the proposed mandatory
10:1 leverage limit: All new retail Forex accounts should be opened at
a default leverage of 10:1. Account holders should then be given
papelwork or taken to a webpage (depending on how flae account is
opened) that clearly states the potential risks and rewards of using
higher (and lower) leverages and then given the choice to select the
leverage that they wish to use. This way the default status of new
accounts is relatively low risk and new users are educated before they
make their own choice about how much risk to take.
Thank you very much indeed for your time,
Andrew Gray, MRes
PhD Candidate
Laboratory of W. Martin Kast
USC, Norris Comprehensive Cancer Center
Harlyne Norris Research Tower,
Room 7517A, MC 9601
1450 Biggy Street,
Los Angeles, CA 90033
Tel: 1 323 442 3869
Email: [email protected]
