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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Sam who wrote (2372)1/15/2000 10:19:00 AM
From: TimbaBear   of 3536
 
I'm just now catching up on the reading and this aspect of your post may already have been addressed, if so, please accept my apologies.

Regarding raising margin requirements....what's your target audience?....is it to stop hedge funds?....then wouldn't options be the place for regulatory ammendment?....Is it to stop speculating by big mutual funds?....How much do they do via margin accounts?....Is it to stop the small investor from taking risk to extend returns?....How much impact would margin requirement change have if only applied to that segment?

I think the only effective way to curb speculation would be to drain liquidity....this is done outright by the Fed physically taking money out of circulation; it is also accomplished discretely by allowing alternate investments to become attractive, say, bonds yielding attractive rates.

Also, I believe that the speculation in the market is due to the potentials for both global market reach and increased margins offered by technological advances....these potentials have their own force of attraction that will cause circumnavigation of unduly restrictive policies, thereby weakening the positions of the policy-makers and enforcers....it is better to step carefully here...IMO
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