2009.02.05 BIG BROTHER WANTS TO REDUCE FOREX LEVERAGE

[TheRumpledOne]

2009.02.05 BIG BROTHER WANTS TO REDUCE FOREX LEVERAGE

Retail Forex
FINRA Requests Comment on Proposed Rule to
Establish a Leverage Limitation for Retail Forex
Comment Period Expires: February 20, 2009

Executive Summary
FINRA is requesting comment on a proposed rule prohibiting any member firm from permitting a customer to: (1) initiate any forex position with a leverage ratio of greater than 1.5 to 1; and (2) withdraw money from an open forex position that would cause the leverage ratio for such position to be greater than 1.5 to 1.

The text of proposed FINRA Rule 2380 (Leverage Limitation for Retail Forex) is set forth in Attachment A.

Questions concerning this Notice should be directed to:

 Gary Goldsholle, Vice President and Associate General Counsel,
Office of General Counsel (OGC), at (202) 728-8104; or
 Matthew E. Vitek, Counsel, OGC, at (202) 728-8156.

Action Requested

FINRA encourages all interested parties to comment on the proposal.
Commentsmust be received by February 20, 2009.


Emailing comments to pubcom@finra.org

========================================

Full text attached.


EVERYONE MUST SEND AN EMAIL AND TELL BIG BROTHER TO BUTT OUT!!


UPDATE: I called Gary today. I asked for the name of the person who came up with the idea. Of course, he refused to give me the name. We need to find out who thought of this!! They should be fired.

[Ari Gold]

This is the worst news ever. This would make Forex worthless... in the US anyway... Correct to assume that high leverage would continue in the rest of the world?

Perhaps we should get a petition together with a few hundred thousand signatures...???

[Gert Frobe]

lets follow the money and see who would gain the most from this. hmmm... maybe the CME? they would be the only game in town for leverage on fx futures contracts.

airball

[frito]

balls

but i doubt itll be passed.

if so all brokers will move abroad, and people to futures.
bet its some lobbing group connected to CME

[eagles]

Some comments that may be appropriate in emails to FINRA:

The proposed rule has no basis in logic. The comparison to protecting investors from the securities industry is not logical. The premise for protection from highly leveraged positions in the securities industry is from the potential losses that could be greater than the initial investment or even greater than the individual?s account value. In the retail Forex industry the potential for loss is limited to the individual?s account value, a fact that is well publicized and known by all retail Forex investors.

Implementation of this rule will effectively eliminate access to the retail Forex industry for the bulk of the investing public. So how is this rule consistent with aiding the economic recovery? Answer: It isn?t.
Even with the lower leverage allowed in stocks, if I had owned Lehman Bros. stock (LEH) I would have lost my entire investment. What actions did FINRA take to protect the investors in LEH? If FINRA?s objective is to protect investors shouldn?t there be more focus on the quality of the underlying assets; or the egregious wasting of shareholder assets in bonus payments to incompetent executives?

Someone should explain to FINRA that the Forex retail market is not the securities market, and any comparisons between them has no value.

This type of rule is presented by the stuffed shirts who believe trading is ?bad? and only investing is ?good?. Individuals trading the Forex market actually desire ?the speculative and volatile nature of retail forex activity?? that FINRA foolishly and incorrectly identifies as a problem.

Do people lose their entire account value trading forex? Yes.
Do people lose their entire account value trading securities? Yes.
Trading involves risk. That's why we sign all those disclosures telling us that trading involves risk.

It?s not broke, don?t try to fix it.

[george9nine]

Hi,
wrote them,
really not a big deal,
look what happened when they tried to stop online poker,
didnt have a bit of trouble funding an account. Someone offshore
will be willing to take the business. Told them to take their best shot,
I really don't care. Also that I would be writing my "elected officials" about
this fiasco. Funny how I can lose a fortune trading Enron but they want to
protect me from losing $300 in my forex micro account.
free country lol

[BlackMage]

"For example, a customer entering into a forex contact representing $750,000
of a foreign currency must deposit $500,000 to achieve a leverage ratio of 1.5 to 1."

Hu?? Retail?

[RicG]

Hi All,

In addition to FINRA wanting to take away leverage, a bill has been re-introduced in Congress to tax every stock, option and futures trade.

The potential financial transaction tax was re-introduced in the house Friday February 13th by U.S. Congressman Peter DeFazio. The bill proposed is H.R. 1068: ?Let Wall Street Pay for Wall Street's Bailout Act of 2009?. It would inpose a .25% tax on every stock, option and future transaction. In other words, if you purchase 1000 shares of a stock at $10, and then sold that same stock at $10 (for no profit), you would owe the government $50 ($10,000 X .0025 plus $10,000 X.0025). Please understand, this is NOT a tax on your profit, it is simply a tax on the total amount of your trade.
The link for the aforementioned bill is here:
http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.1068.IH:

Not only is this proposed tax mentioned in the above bill, it is also is listed as a line item in "The National Health Care Act" (HR 676 Section 211, Sub-Section C - "Funding".)
The link to that bill is here:
http://www.govtrack.us/congress/billtex ... 3Aih%3A173

There is a petition at the link below that you can "sign" showing your opposition to this tax:
http://www.rallycongress.com/no2tradert ... rader-tax/

I also urge you to contact your own U.S. Representative and let them know how this tax would negatively affect you.

Thanks for your help,
Ric

[RicG]

Hi all,

In addition to FINRA wanting to take away your leverage, the U.S. Congress is once again considering collecting a tax on every stock, future, and option trade you make.

The potential financial transaction tax was re-introduced in the house last Friday February 13th by U.S. Congressman Peter DeFazio. The bill proposed is H.R. 1068: ?Let Wall Street Pay for Wall Street's Bailout Act of 2009?. It would inpose a .25% tax on every stock, option and future transaction. In other words, if you purchase 1000 shares of a stock at $10, and then sold that same stock at $10 (for no profit), you would owe the government $50 ($10,000 X .0025 plus $10,000 X.0025). Please understand, this is NOT a tax on your profit, it is simply a tax on the total amount of your trade.
The link for the aforementioned bill is here:
http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.1068.IH:

Not only is this proposed tax mentioned in the above bill, it is also is listed as a line item in "The National Health Care Act" (HR 676 Section 211, Sub-Section C - "Funding".)
The link to that bill is here:
http://www.govtrack.us/congress/billtex ... 3Aih%3A173

There is a petition at the link below that you can "sign" showing your opposition to this tax:
http://www.rallycongress.com/no2tradert ... rader-tax/

I also urge you to contact your own U.S. Representative and let them know how this tax would negatively affect you.

Thanks for your help,
Ric

PS - Has anyone heard anything further on the FINRA leverage nonsense?

[RicG]

Hi all,

In addition to FINRA wanting to take away your leverage, the U.S. Congress is once again considering collecting a tax on every stock, future, and option trade you make.

The potential financial transaction tax was re-introduced in the house last Friday February 13th by U.S. Congressman Peter DeFazio. The bill proposed is H.R. 1068: ?Let Wall Street Pay for Wall Street's Bailout Act of 2009?. It would inpose a .25% tax on every stock, option and future transaction. In other words, if you purchase 1000 shares of a stock at $10, and then sold that same stock at $10 (for no profit), you would owe the government $50 ($10,000 X .0025 plus $10,000 X.0025). Please understand, this is NOT a tax on your profit, it is simply a tax on the total amount of your trade.
The link for the aforementioned bill is here:
http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.1068.IH:

Not only is this proposed tax mentioned in the above bill, it is also is listed as a line item in "The National Health Care Act" (HR 676 Section 211, Sub-Section C - "Funding".)
The link to that bill is here:
http://www.govtrack.us/congress/billtex ... 3Aih%3A173

There is a petition at the link below that you can "sign" showing your opposition to this tax:
http://www.rallycongress.com/no2tradert ... rader-tax/

I also urge you to contact your own U.S. Representative and let them know how this tax would negatively affect you.

Thanks for your help,
Ric

PS - Has anyone heard anything further on the FINRA leverage nonsense?