Foreign Exchange Dealers Coalition (FXDC)
Re: CFTC Proposed Retail Forex Regulatory Changes
To Whom It May Concern.
My letter to you addresses both your concerns as well as the concerns of the CFTC.
I have read the complete script of the CFTF proposal and find a distinct lack of positive direction within its contents.
Clearly, investor protection and integrity in the Forex Industry is of utmost concern to all of us.
The CFTC has stated the need to protect Forex investors and has complained of the numerous occasions in which fraudulent actions by unscrupulous/unregulated brokers have caused massive losses by retail traders.
We all favor a cleaner industry but as it stands the good intentions of the CFTC proposal, rather than making the Forex less hazardous, would likely cause irreparable harm.
As you are aware, the first rule of risk in the Forex market is that a trader should never trade with any more capital than he/she can afford to lose. Contrary to its objectives, the principle flaw of the CFTC 1:10 leverage proposal is that of seeking to ward off risk by blatantly disregarding the industry’s first rule of risk.
I live in Canada. I’m a Canadian by birth and as such I have little to gain or lose as a trader by the CFTC proposal. However, I also have many friend and colleague traders who are Americans. Many of them look to me for leadership regardless of their citizenship or mine.
What is the answer to the CFTC proposal? Where is the solution that will help the CFTC, Brokers/Dealers and Investors alike?
I respectfully suggest the answer may be closer than you think. In fact the answer may be right next door to you, in Canada. Please consider in your thinking that Canada has an organization called IIROC (Investment Industry Regulatory Organization of Canada). IIROC is a model which you can use to counter the CFTC proposal and stave off what could be a catastrophe in the making!
I urge you to read about IIROC and Forex regulations in Canada and/or Contact Mr. Bob Wong, Vice President of MF Global Canada at 1-800-268-9294.
Sincerely,
Jeff Langin
Forex Trader and Educator
Here is the framework of my proposal to the CFTC.
1. Leave leverage at 1:100
2. Weed out frauduent broker/dealers by publishing a list regulated Forex broker/dealers.
3. Have all regulated Forex brokers subscribe to the SIPC – Securities Investor Protection Corporation.
-This addresses the CFTC issue of investor risk protection.
-Weeds out bad apple brokers.
-Brings more business into the fold of reputable brokers.
-Allows the Forex business to flourish in the U.S.
-Informs the public as to which brokers are safe to do business with and
which are not.
-Allows the CFTC to completely free itself from having to chase after
funds stolen by fraudulent brokers.