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Trading The Forex Through Banks

  • #1
  • First Post: Sep 16, 2006 11:29am Sep 16, 2006 11:29am
Hi everybody....I was doing some reasearch on google to learn more about the REFCO scandal that I see mentioned here a lot. Wow....what a mess !

Anyways, while doing my research I came across a surprising ad by DEUTSCHE BANK. I did not know that you can actually trade with them online. Only standard accounts, and the spreads are pretty big in some cases...BUT, I guess HUGE peace of mind regarding your funds, right ?

I mean, it is almost impossible that naything bad can happen to your money if you use such a big bank.

So I was wondering....do other banks offer trading online ? If yes, who ? (eg Bank of America...Wachovia....CitiBank)

And also...trading with DEutsche Bank or any other bank, would it be ECN or retail ?

Anyone trading through banks ?

Thanks a lot...

Future
"Lunch ? Lunch Is For Wimps !"
  • #2
  • Sep 16, 2006 12:11pm Sep 16, 2006 12:11pm
Hey Mr. F,

Funds would be more secure if trading with a group like Deutsche Bank. Though many brokers hold your funds in outside banks such as JP Morgan, Wachovia and others.

What you referenced in your post is DBFX. This is Deutsche Banks retail platform. They are currently using fixed spreads with the FXCM platform but there are rumors that they will be changing to an ECN type platform. If this is true they will likely be one of the better brokers out there.

As for trading with an actual bank, you will generally need at least $250k initial deposit. AutoBahn FX is Deutsche Banks institutional platform. You need I believe $500k or $1million to open an account with them. There are other bank platforms such as CitiFX, BearFX etc. There are other instititual platforms such as FXall, CurreneX, eSpeed and HotSpotFXi that to open an account direct you will also need anywhere from $500k, to $1million. This is because they require such an incredible monthly volume to be cleared.

An alternative to the above is trading with a broker like PropFX, AaronTrader and others that give you access to CurreneX, FXall and even the HotSpotFXi platforms.

Dont know if this helped at all. There is a lot I dont know because I tell agents that I only have a certain dollar figure and they kinda dont want to chat : .
The market is my nation. Traders, my family. Hello, brothers and sisters!
  • #3
  • Sep 16, 2006 1:05pm Sep 16, 2006 1:05pm
StockKJay,

You do not know if you helped at all ? Are you kidding me, you gave me more details than an FBI agent

Thank you very, very much for your help. I really appreciate it.

Well, as you can imagine I do not have 500K or a million...so I guess bye-bye trading with big banks. But at least now I know that it is available, thanks to you

Now, you said that some retail brokers keep the money with big banks and are therefore safe to deal with. Any names of who does that, or any way I can find out ?

Deutsche Bank looks good, but expensive spreads..... and no wonder why it reminded me of the FXCM platform when I first saw their website

But definitely big peace of mind to have money with them....

I am still trading with several demo accounts, but once I go live I want a broker who has a good protection for my funds in case they go the Refco way. I know that my trading will never be as effective if in the back of my mind I know that the funds are not safe in the first place.

I know that nothing in life is guaranteed, but a broker that keeps my money with JpMorgan is definitely better than the broker that keeps the money for themsleves to cover for thier business....

Thanks

Future


Quoting StockKJay
Hey Mr. F,

Funds would be more secure if trading with a group like Deutsche Bank. Though many brokers hold your funds in outside banks such as JP Morgan, Wachovia and others.

What you referenced in your post is DBFX. This is Deutsche Banks retail platform. They are currently using fixed spreads with the FXCM platform but there are rumors that they will be changing to an ECN type platform. If this is true they will likely be one of the better brokers out there.

As for trading with an actual bank, you will generally need at least $250k initial deposit. AutoBahn FX is Deutsche Banks institutional platform. You need I believe $500k or $1million to open an account with them. There are other bank platforms such as CitiFX, BearFX etc. There are other instititual platforms such as FXall, CurreneX, eSpeed and HotSpotFXi that to open an account direct you will also need anywhere from $500k, to $1million. This is because they require such an incredible monthly volume to be cleared.

An alternative to the above is trading with a broker like PropFX, AaronTrader and others that give you access to CurreneX, FXall and even the HotSpotFXi platforms.

Dont know if this helped at all. There is a lot I dont know because I tell agents that I only have a certain dollar figure and they kinda dont want to chat : .
"Lunch ? Lunch Is For Wimps !"
  • #4
  • Sep 16, 2006 1:52pm Sep 16, 2006 1:52pm
abn amro has an oanda based retail 40:1 platform. Although I'm not sure to which countries it is open to. Probably not US I guess.
  • #5
  • Sep 16, 2006 4:05pm Sep 16, 2006 4:05pm
Quoting MrFuture
StockKJay,

Now, you said that some retail brokers keep the money with big banks and are therefore safe to deal with. Any names of who does that, or any way I can find out ?
Almost every retail broker keeps the funds with one of the big banks...This is actually a must for transactions clearing purposes...For example, MG Financial, the broker whom I deal through, keeps the funds with JP Morgan Chase...You can know where any broker holds the funds simply by knowing to which bank are you going to send your wire transfere to while funding your account with the broker...


Thanks,

Nader
  • #6
  • Sep 16, 2006 6:28pm Sep 16, 2006 6:28pm
I had ACM sometime back, and there was a tie-in with Revco, even though your funds are not segregated with ACM, I would feel comfortable opening an account with them again...they came out Ok with the Revco scandal....besides No Capital Gains tax, and No Record Keeping Garbage for the Government

minnesota-goose
I'm only a bird in a gilded cage
  • #7
  • Sep 16, 2006 6:57pm Sep 16, 2006 6:57pm
Well, one thing is still not completely clear to me. You guys are saying that most retail brokers keep our money into big banks thus we should feel safe.

So, what was the deal with REFCO ? Where did they keep their customer's money ?

Does the fact that a broker keeps their customer's money into a big bank automatically means we are safe ? Can't their account with such bank be frozen if any problems comes up, just like in the REFCO scandal ?

I am just trying to understand to what extend a broker who deals with a big bank is safer than the others....can't they still use our money for their business even though that money is in a big bank ?


Future
"Lunch ? Lunch Is For Wimps !"
  • #8
  • Sep 16, 2006 7:13pm Sep 16, 2006 7:13pm
Well, I guess that I found the answer to my previous question....not too promising:





"From NYPost April 24, 2006
REFCO'S RUINS

CLIENTS CAN'T GET $$ BACK FROM BROKEN BROKER

"April 24, 2006 -- Bankrupt and disgraced trading giant Refco has barred thousands of individual investors from taking cash out of their accounts - leaving many not only frustrated but financially ruined.
The 17,000 customers, who have accounts at Refco's foreign currency trading unit, RefcoFX, have been unable to withdraw their money since last October when ex-CEO Phillip Bennett was indicted for stealing $430 million and plunging the company into bankruptcy.

Gary Gray, who started trading foreign currency on the RefcoFX platform as a way to supplement his retirement income, has $30,000 tied up in his account that he can't touch.

"I believe I have been conned by RefcoFX," Gray said. He wrote a letter this week to bankruptcy court Judge Robert Drain pleading for access to his cash. Gray said that before he opened an account at Refco he was assured that his money would be safe.

"RefcoFX is committed to offering clients unrivaled retail and institutional execution, easy accessibility, safety of funds," read a pitch he received from RefcoFX last July.

After news of the bankruptcy hit, Refco told Gray his funds were safe.

"We have our own separate bank accounts from Refco LLC, and in addition, client funds are held in a separate account from our operating funds," a Refco rep wrote him on Oct. 14.

"Therefore, please be assured that your funds are in no way affected by this recent news, are held safely with RefcoFX at Bank of America, and are available to trade or withdraw anytime."

The frozen accounts reveal how bankruptcies of major financial institutions can affect not only the company's investors but its clients as well.

Gail Butler began trading foreign currency with Refco last spring as a way to support herself and her four children after her husband lost his job and had to declare personal bankruptcy.

"I can't say that all my financial problems are a result of the collapse of RefcoFX, but I can say that I never expected my problems to be exacerbated by a crooked businessman who makes more in a year than I can dream of making in 20 years," said Butler, who has $50,000 in a frozen account.

Sean Fitzpatrick, who has $8,700 in a frozen Refco account, said after telling him his funds were secure, Refco customer service reps then informed him that, in the worst case scenario, he could lose all his money.

"We never at once thought our funds would be at risk," Fitzpatrick said. "We thought we were making an investment ourselves and, if we lost any money, it would just be out of a poor trading position."

Refco has been trying to sell its FX division to another brokerage firm, Forex Capital Markets, which would unlock the frozen accounts.

But Refco's creditors, who are trying to recover $1.6 billion from Refco, recently rejected a $130 million offer, which prompted Forex to walk away from the deal.

link: http://www.nypost.com/seven/04242006/business/62797.htm"





Therefore, back in April according to this article somebody from REFCO assured a customer not to worry 'cause the money was with Bank Of America.

Now, we are talking about the biggest bank in the USA, yet, look what happened....

Therefore, as I was suspecting, it has nothing to do with the bank, but it is the broker that matters.

No matter how big and powerful the bank with which the broker deals is, if the broker goes bankrupt, the money is frozen.....

So this brings me back to the original post: having DEUTSCHE BANK as your broker it is definitely safer than having any other retail I guess...

MrFuture
"Lunch ? Lunch Is For Wimps !"
  • #9
  • Sep 16, 2006 7:49pm Sep 16, 2006 7:49pm
Hi Mr Future,

I m glad to see Traders are getting worried b4 Opening a Live acc. abt there Fund-Safety.
Auctualy i started a Thread on Fund-Safety šAre ur funds safe...with ur Borkerš http://www.forexfactory.com/forexfor...ead.php?t=7777

Acutaly this Thread i started for all those traders who are looking frwd to open a live acc. and don't want to neglect the Importance of Fund-Safety.

Ur thread looks like u want to open a live account with bank only bcoz u r worried with the Fund-Safety thing. So i hope few replies on the thread abv should help u out and u can aswell leave ur views...

Quoting MrFuture
Well, I guess that I found the answer to my previous question....not too promising:

"From NYPost April 24, 2006
REFCO'S RUINS

CLIENTS CAN'T GET $$ BACK FROM BROKEN BROKER

"April 24, 2006 -- Bankrupt and disgraced trading giant Refco has barred thousands of individual investors from taking cash out of their accounts - leaving many not only frustrated but financially ruined.
The 17,000 customers, who have accounts at Refco's foreign currency trading unit, RefcoFX, have been unable to withdraw their money since last October when ex-CEO Phillip Bennett was indicted for stealing $430 million and plunging the company into bankruptcy.

Gary Gray, who started trading foreign currency on the RefcoFX platform as a way to supplement his retirement income, has $30,000 tied up in his account that he can't touch.

"I believe I have been conned by RefcoFX," Gray said. He wrote a letter this week to bankruptcy court Judge Robert Drain pleading for access to his cash. Gray said that before he opened an account at Refco he was assured that his money would be safe.

"RefcoFX is committed to offering clients unrivaled retail and institutional execution, easy accessibility, safety of funds," read a pitch he received from RefcoFX last July.

After news of the bankruptcy hit, Refco told Gray his funds were safe.

"We have our own separate bank accounts from Refco LLC, and in addition, client funds are held in a separate account from our operating funds," a Refco rep wrote him on Oct. 14.

"Therefore, please be assured that your funds are in no way affected by this recent news, are held safely with RefcoFX at Bank of America, and are available to trade or withdraw anytime."

The frozen accounts reveal how bankruptcies of major financial institutions can affect not only the company's investors but its clients as well.

Gail Butler began trading foreign currency with Refco last spring as a way to support herself and her four children after her husband lost his job and had to declare personal bankruptcy.

"I can't say that all my financial problems are a result of the collapse of RefcoFX, but I can say that I never expected my problems to be exacerbated by a crooked businessman who makes more in a year than I can dream of making in 20 years," said Butler, who has $50,000 in a frozen account.

Sean Fitzpatrick, who has $8,700 in a frozen Refco account, said after telling him his funds were secure, Refco customer service reps then informed him that, in the worst case scenario, he could lose all his money.

"We never at once thought our funds would be at risk," Fitzpatrick said. "We thought we were making an investment ourselves and, if we lost any money, it would just be out of a poor trading position."

Refco has been trying to sell its FX division to another brokerage firm, Forex Capital Markets, which would unlock the frozen accounts.

But Refco's creditors, who are trying to recover $1.6 billion from Refco, recently rejected a $130 million offer, which prompted Forex to walk away from the deal.

link: http://www.nypost.com/seven/04242006...ess/62797.html

Therefore, back in April according to this article somebody from REFCO assured a customer not to worry 'cause the money was with Bank Of America.

Now, we are talking about the biggest bank in the USA, yet, look what happened....

Therefore, as I was suspecting, it has nothing to do with the bank, but it is the broker that matters.

No matter how big and powerful the bank with which the broker deals is, if the broker goes bankrupt, the money is frozen.....

So this brings me back to the original post: having DEUTSCHE BANK as your broker it is definitely safer than having any other retail I guess...

MrFuture
  • #10
  • Last Post: Sep 16, 2006 8:11pm Sep 16, 2006 8:11pm
HI Kev,


I saw your thread and I find it very informative, thanks.

I think that especially after REFCO, knowing your broker is a MUST for any trader.

As we have seen, a broker can bank with a big bank, just like REFCO and Bank Of America....yet if the broker goes down, you go down with them.


I guess that at this point it is better to stay away from those brokers who have been in business for only a couple of years and stick with the veterans. I saw that some, like GTF (or GFT?) is dated 1997.....sounds pretty reliable to me at this point....but who knows....I might end up with Deutsche Bank just for peace of mind.....I'll see...

Future
"Lunch ? Lunch Is For Wimps !"
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