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It has come to my attention that proposed regulation may have made a bad situation worse. The most shocking proposal is:
"to collect security deposits in a minimum amount in order to prudentially limit the leverage to their customers on such transactions at 10 to 1."
I, as a taxpayer and a govt. contractor (in Iraq), have a serious problem with this so-called "safety" regulation. The way I see it, this will only continue the economical bleeding of the US economy. In so doing, this will cause many investors...both small and large...to pull their funds out of any/all US Forex brokers and taking their accounts overseas. Doing so will cause many small/medium Forex brokers to either reduce staff, increase fees, or go out of business. This will also increase the unemployment rate, which is already high within the financial world.
Not saying that I would consider evading my income from the IRS, but since most overseas brokerages do not offer 1099's, this will require more labor/time/money from IRS agents to track these overseas investors to recoup taxes, who choose not to report said income.
Bottom line: We all already are warned by each Forex Brokerages about the leveraged risk we take with our own funds. Let us take this risk!!! If we loose our funds, we only have ourselves to blame. Stop treating us like babies and let us take responsibility for our own actions
regarding usa finance regulator's future plans -
01-22-2010, 11:52 PM
i am ust another litle trader among others,
and i can asure whoever is held responsible for tose future propositions that it would be a death blow to us reatil traders.
i hold my acounts in the uk but those issues concern me nevertheless. i cannot and would surely not be able to trade with 1:10 leverage as my sculping startegies requiers at least 1:100. i m glad my funds arent invested at the us.
please avoid those proposed steps. YOUR OB IS TO SERVE AND PROTECT, like any other public entity. dont do in purpose something which would be harmfull.
The proposed new rule does not protect investors. It will do the opposite, because an investor will now have to risk 10 times the amount as before to place the same trade.
Please, please do not pass this proposed new rule!!!!
If this proposed new rule is passed, it will just, once again, prove that our government is run by incompetents.
Thank you for your attention,
Christina Fortunato
Flushing, NY
My Response to the Proposed Leverage Reduction -
01-23-2010, 12:23 AM
RE: RIN 3038-AC61
Attention David Stawick,
I am writing you to express my extreme disapproval of the proposed rule changes you want to make to retail FOREX trading. I cannot imagine the real reason you want to do this. I assume you are telling people the reason is you want to make it safer for the average person to trade FOREX by lowering the available leverage, thus, in theory, lowering the maximum amount of money one can lose while trading. While it may be true that there are citizens of the U.S. who do not understand the concept of leverage well enough to be trading, yet these people trade anyway and many of them lose money. Where do I start on why this plan is so wrong?
1. People who trade without fully understanding leverage will lose money because they most likely do not understand how to be a successful trader. Leverage is just one small piece of the pie. Even if you lower leverage to 10:1, and they some how still have enough money to fund their accounts to trade at that leverage, they will still lose their money for a million other reasons.
2. Taking away my freedoms and all other traders' freedoms to protect people who should not be trading in the first place is anti-capitalist and anti-american. It's the equivalent of prohibiting stores from selling sharp knives because once in a while some one cuts themselves by behaving irresponsibly.
3. Traders will be more likely to experience more margin calls at 10:1 leverage than 100:1 leverage for the simple fact that most retail traders do not have $100,000 to fund an account with to trade the same way they were trading at 100:1 leverage with a $10,000 account. This new rule would punish many currently responsible and profitable traders because of this issue.
4. You would take away the main income and side income of tens of thousands if not hundreds of thousands Americans by stripping them of their ability to trade they way they are trading right now. Not only would traders lose their income, but brokers would go out of business, or at best downsize, due to the sudden lack of business and thousands of people would be put directly out of work.
5. Some traders may move their accounts off shore to continue to trade. But the mass reduction in trading will impact the markets' behavior and could render many trading systems ineffective. Traders would only figure this out after many consecutive losses. That translates into lost money, as well as the lost time and effort developing those now useless trading systems.
In the first paragraph I said I cannot imagine the real reason you want to make these rule changes, specifically the leverage reduction. I say this because these 5 points I mentioned above are quite obvious. I doubt you rode the short bus to school while wearing a helmet. I'll bet you are of above average intelligence. I'd also bet you realize the impact of reducing the maximum leverage in retail trading would be catastrophic to the industry, at least in the US. Much like the "First In First Out" rule, the reduced leverage does nothing to help us retail traders. Unlike the "First In First Out" rule, which is reduced to an annoyance by clever work-arounds, reduced leverage will most likely destroy my ability, along with countless other traders' ability, to continue trading.
What is the real reason you want to reduce leverage? Do you have even one letter or email to support this rule change? Who exactly supports this rule change and why?
I sent 2 different replies, as I was approached by 2 different entities asking that a message be sent. Reply #2:
Dear sir or madam,
Making the Forex trading margin a mandatory 10:1 really does not make any sense, and could only have been proposed by someone who does not completely understand the system.
Please do not implement a mandatory 10:1 margin for Forex trading.
I am concerned about the CFTC's proposal to limit Forex leverage to 10:1.
While this may be well intentioned, aiming to limit risk to a trader, it may have some unintended consequences.
1. For example, brokerages limit damage to the size of the account, so if a trader for some reason looses the ability to close his position, at worst it can wipe out the account. At high leverage, only a relatively small account is needed to control a reasonable amount of currency. Limiting leverage as proposed may lead some traders to increase their account significantly, possibly with money borrowed elsewhere, and thus exposing themselves to greater risk than before.
2. Another, obvious consequence of reduced leverage would of course be that traders will move their accounts off-shore, e.g. to the UK.
3. There may also be other unintended consequences, e.g. an erosion of the US's standing as the world's 2nd biggest Forex market.
Please consider not only the concerns raised by traders but also the possible cascade of unintended consequences the proposed leverage limit may have.
That is unfair and very discriminative!!!
Like that, only wealthy people will be able to trade Forex, which it's how it used to be years ago. It's a step backward and I'm voicing my opinion, even if the decision, hopefully, will not directly affect me, because I strongly believe that it's WRONG !!!!
People should have the right to choose the margin they prefer to use, it shouldn't be imposed by the government as a 1 only option, and 10:1 is an exaggerate change from the 400:1 many traders were used to. We are all adults, why don't you go and close all the Casinos around the world as well then?
What is the reason for these continuos changes for the worst that keep happening lately?
If you make this change, only Banks and big players will be able to afford to keep trading and you'll kill many Forex brokerage businesses, if not all of them.
You might as well change it to 1:1, as it won't make much difference anyhow. I thought 100:1 was bad enough, but 10:1 is ridiculous!!!! Why do you want to do that for?
Which are the PROS and CONS behind this proposal? I can think of plenty of cons, but I couldn't find a single pro. Maybe you can help me.
Thanks a lot for your attention, I hope to hear from you soon.Have a great day!!!
Stop it. Things are doing quite well as they are. Barry O sought to "change" America. Why? It's the best working plan in the world. So far, the FX system is working well -- LEAVE IT ALONE!!!
USA is a free country -
01-22-2010, 11:26 PM
My letter to the CFTC -
01-22-2010, 11:35 PM
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