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Proposed NFA Capital Requirement

  • #121
  • Jul 31, 2007 7:08pm Jul 31, 2007 7:08pm
Quoting forexsavior
Such cynicism forexfun! First of all I have dispararged no one.
Implying a firm is undercapitalized when under current regulations, they are capitalized would be misleading in my book.

Quote
As for an apology, wtf? You want me to apologize for informing the trading public about the risks of trading with an undercapitalized firm?
They're not undercapitalized yet.... they meet current requirements.

Quote
Furthermore, I have little sympathy for firms that continue to insist being undercapitalized is no big deal
you get me quotes from every company on that list saying where they think that, I'll agree with you. currently though, they ARE capitalized.

i would bet, if contacted, not many of those companies would say that being undercapitalized is "no big deal". they'd say they're meeting current requirements. some of them are no doubt crooks. some of them though might not be, but you keep lumping them together (making the ones that will be fine seem guilty by association in your list) and you'll make no apologies later for throwing them into the same lot. It's like saying "This group of people in Rosemont Apartments are a bunch of thievess. Three of them were convicted for robbery, and because the rest of them live in the same neighborhood, they must ALL be thieves, because otherwise, they'd move out of Rosemont Apartments." You're making them seem like they're guilty by lumping them in one group and then saying "Well, I'll just remove them from the list later". It doesn't matter at that point, you've already smeared their names with the lumping. If they meet any new requirements later, you insist that you don't have to apologize for anything - never mind that if anyone read this thread, they'd think the sky was falling on all of those companies.

i can't make it any clearer.

Quote
The burden of proof is on the dead forex firms walking.

Burden of proof of what? THEY MEET THE CURRENT REQUIREMENT. If the requirement gets passed, I have no doubt some of them can make the new requirement, but that doesn't mean they have to put up now.

i admire your zeal for trying to protect consumers, but as i just read on another thread, it's your tone that needs work.
  • #122
  • Jul 31, 2007 7:58pm Jul 31, 2007 7:58pm
Quoting Ghostpipper
ForexSavior,

Did that 5 Million dollar cap law pass? I thought i read on the NFA's website 1 month ago that it did pass and that the deadline was July 31st? Am I wrong? Where can I go to talk to a live person about this? Do u have a link plz?

Thanks
Ghost
The FX Week article I quoted earlier states, "Following redrafting to include industry feedback, the proposals will be presented to the NFA board in August and then to the CFTC, and are not expected to be effective until the end of the year, the NFA explained."

So basically that gives the dead forex firms walking several more months to put up the money necessary to stay in business.
  • #123
  • Jul 31, 2007 8:13pm Jul 31, 2007 8:13pm
Quoting forexfun
Implying a firm is undercapitalized when under current regulations, they are capitalized would be misleading in my book.

They're not undercapitalized yet.... they meet current requirements.
Once again I'll state that it is that national futures association which has proposed this rule. It is the regulators who have proposed raising capital requirements to $5 million because they feel firms below that are not adequately capitalized and do not have enough money to run a proper functioning forex firm. That is the way regulators see it regardless of the fact that the dead forex firms walking are meeting today's capital requirement.

It is the regulators who are fed up with forex fraud and broker dealer insolvencies. It is the regulators who have stressed this problem. So is it unfair that some smaller FDMs which run clean operations may be getting stigmatized as well? Sure it is. Guess what? That's life.

I don't think the average customer gives a damn about the hurt feelings of a small forex broker dealer. They want to make sure their money is safe. And right now the odds are greatly stacked against the firms listed in the dead forex firms walking list. Customers should know that. And when regulators are saying it that carries quite a lot of weight in my book.
  • #124
  • Jul 31, 2007 9:01pm Jul 31, 2007 9:01pm
Quoting forexsavior
Once again I'll state that it is that national futures association which has proposed this rule. It is the regulators who have proposed raising capital requirements to $5 million because they feel firms below that are not adequately capitalized and do not have enough money to run a proper functioning forex firm. That is the way regulators see it regardless of the fact that the dead forex firms walking are meeting today's capital requirement.

It is the regulators who are fed up with forex fraud and broker dealer insolvencies. It is the regulators who have stressed this problem. So is it unfair that some smaller FDMs which run clean operations may be getting stigmatized as well? Sure it is. Guess what? That's life.

I don't think the average customer gives a damn about the hurt feelings of a small forex broker dealer. They want to make sure their money is safe. And right now the odds are greatly stacked against the firms listed in the dead forex firms walking list. Customers should know that. And when regulators are saying it that carries quite a lot of weight in my book.
Well well,
calm down calm down.

You say regulators has proposed this rule. Could you mind give me some harder evidence You know, I am very concerned of my clients' fund safety.
I tired my best to do my homework, and give NFA several calls right after hearing this message. Nothing happend, maybe the guys at NFA who picked up my phone don't have a high rank and they don't know insider news. LOL

As to MBTF, aha, MBTF have a fully ownership of 3DForex,LLC, which only deals with institutional customer. As far as I know, according to CFTC's May report, both MBTF and 3DForex are around 4 million. So I don't have any doubt that MBTF can't pass the so called "5 million" line. LOL again

P.S Are you savior of those MM platform or savior of our people trading forex?
Trading is a business
  • #125
  • Jul 31, 2007 9:07pm Jul 31, 2007 9:07pm
Quoting Changzhou
You say regulators has proposed this rule. Could you mind give me some harder evidence You know, I am very concerned of my clients' fund safety.
Looks like you are a little late to the party Chang. No worries. The NFA has already made several public statements about this proposal. goto this link to read why the NFA has decided to raise capital requirements:

http://www.forexfactory.com/showpost...&postcount=115
  • #126
  • Jul 31, 2007 9:10pm Jul 31, 2007 9:10pm
Quoting forexsavior
Looks like you are a little late to the party Chang. No worries. The NFA has already made several public statements about this proposal. goto this link to read why the NFA has decided to raise capital requirements:

http://www.forexfactory.com/showpost...&postcount=115
I am a little confused, these are just news articles.. Do you have the CTFC or NFA actual reports or releases? It would be better to read it from the source... thanks much
  • #127
  • Jul 31, 2007 9:51pm Jul 31, 2007 9:51pm
Quoting smjones
I am a little confused, these are just news articles.. Do you have the CTFC or NFA actual reports or releases? It would be better to read it from the source... thanks much
his links refer to NFA statements. from that perspective, he is telling the truth - they wouldn't propose these things in committee if someone at the NFA didn't have reason to. but it's important to realize that the NFA doesn't put things in the same light - probably because they're being responsible with that they say because the requirements are not actually in place.

for instance, the NFA says "They're concerned..."

forexsavior says "they don't have any confidence in the manner in which undercapitalized firms operate"

he is sensationalizing what they're saying as they didn't say they have no confidence. they're concerned. I'm concerned when my kids cross a busy street, that doesn't mean I have no confidence in them doing so. see the difference?

more importantly, they're not undercapitalized yet, and some of those firms can probably make higher capitalization. MB Trading's guy said as much for his company.

also, no one in any of the posts that talk about his statements truly knows why - he might be concerned, or he might be working for another forex firm that is a competitor to those firms. in fact, several posts I read did hypothesize based on information he gave that he was working for a competitor.

I think he's an individual who is concerned about people's money. but he has a cavalier way of doing it, and he doesn't seem to understand that he might damage a legitimate firm that hasn't done anything wrong with his sensationalism. either that, or he doesn't care because he thinks he is doing some greater good. my opinion is that the firms should be given the time to see if they can make a new cap requirement - as the NFA will do. it's not like a new cap will go into place and everyone will have to meet it overnight. and the nfa will be watching.
  • #128
  • Jul 31, 2007 9:55pm Jul 31, 2007 9:55pm
Quoting forexfun
his links refer to NFA statements. from that perspective, he is telling the truth - they wouldn't propose these things in committee if someone at the NFA didn't have reason to. but it's important to realize that the NFA doesn't put things in the same light - probably because they're being responsible with that they say because the requirements are not actually in place.

for instance, the NFA says "They're concerned..."

forexsavior says "they don't have any confidence in the manner in which undercapitalized firms operate"

he is sensationalizing what they're saying as they didn't say they have no confidence. they're concerned. I'm concerned when my kids cross a busy street, that doesn't mean I have no confidence in them doing so. see the difference?

more importantly, they're not undercapitalized yet, and some of those firms can probably make higher capitalization. MB Trading's guy said as much for his company.

also, no one in any of the posts that talk about his statements truly knows why - he might be concerned, or he might be working for another forex firm that is a competitor to those firms. in fact, several posts I read did hypothesize based on information he gave that he was working for a competitor.

I think he's an individual who is concerned about people's money. but he has a cavalier way of doing it, and he doesn't seem to understand that he might damage a legitimate firm that hasn't done anything wrong with his sensationalism. either that, or he doesn't care because he thinks he is doing some greater good. my opinion is that the firms should be given the time to see if they can make a new cap requirement - as the NFA will do. it's not like a new cap will go into place and everyone will have to meet it overnight. and the nfa will be watching.
Well perhaps that is true, but my Momma always told me "Don't believe everything you read"... So Again I would like the source to read it with my own eyes not a translated version... How to I get my hands on that source?
  • #129
  • Jul 31, 2007 10:12pm Jul 31, 2007 10:12pm
Quoting forexsavior
The FX Week article I quoted earlier states, "Following redrafting to include industry feedback, the proposals will be presented to the NFA board in August and then to the CFTC, and are not expected to be effective until the end of the year, the NFA explained."

So basically that gives the dead forex firms walking several more months to put up the money necessary to stay in business.
Gosh, that's shocking! You mean, they don't just change a rule and shut down firms overnight? The NFA is orderly and out to work with the firms and protect the public!?!? How can it be? I'm so distraught, after everything that forexsavior said, I was dumb enough to believe that all of these firms were on the verge of being shut. Gosh, now I have to accept the fact that maybe things aren't so bleak and the industry isn't going to come down to just 7 platforms.

Wow, tomorrow, I can wake up and the sky is blue again. Can't believe I fell for it! I've been on medication worrying about my account at MBT/EFX ever since forexsavior showed up to save us, and now, there's more time? And these firms are still capitalized under the current requirements? I just didn't see that coming.

End sarcasm.
FXChant Singing the World of Forex
  • #130
  • Jul 31, 2007 10:16pm Jul 31, 2007 10:16pm
Quoting forexsavior
I don't think the average customer gives a damn about the hurt feelings of a small forex broker dealer. They want to make sure their money is safe. And right now the odds are greatly stacked against the firms listed in the dead forex firms walking list. Customers should know that. And when regulators are saying it that carries quite a lot of weight in my book.
No, let's be clear. The regulators are saying that they would like to see the industry raise it's capital requirements, and that they are pushing to have this occur at a future date that is orderly to the industry. In the meantime, they have set a capital requirement level, and the firms you keep bashing are operating at that level or higher. Those firms will be deemed UNDERcapitalized when the requirement is moved up, a date is set for its application, and some of them don't meet that requirement. And frankly, to your point quoted above, I don't think the average customer gives a damn about any of this until the rule changes.
FXChant Singing the World of Forex
  • #131
  • Jul 31, 2007 10:17pm Jul 31, 2007 10:17pm
Ok I just went thru the entire thread and read every link. Almost all of them are about a specific case or a specific individual. There was only one testemony before congress posted by Numb3rs and that is nearly 3 years old. is there anything that is from the NFA or CTFC that is sited in the articles by the two news organizations list in the links by Forexsavior...

That is what I would like to read... BTW, The Federal court stated that CTFC had no juristicion the the fraud case that brought most of this about...

Did that ever change?

I cannot find any first hand info about any of this.. Help would be appreciated...
  • #132
  • Jul 31, 2007 11:09pm Jul 31, 2007 11:09pm
Quoting forexsavior
Looks like you are a little late to the party Chang. No worries. The NFA has already made several public statements about this proposal. goto this link to read why the NFA has decided to raise capital requirements:

http://www.forexfactory.com/showpost...&postcount=115
Let's put things straightly. I hope everyone can see the full paragraph of this news.

US regulators clamp down on retail FX dealers

July 30th 2007

CHICAGO – The National Futures Association (NFA) last week (July 24) took emergency action against Fort Lauderdale-based forex dealer member (FDM) Nations Investments, for being undercapitalised by $3.5 million – the largest undercapitalisation seen by the industry regulator.

Nations Investments was ordered to liquidate all firm and customer FX positions and to not accept any new accounts or place any trades.
The case highlights US regulators' concerns over increasing fraud and insolvency issues among retail forex dealers, that has led to the NFA proposing stricter rules for FDMs.
On June 19, the NFA sent out for industry comment proposals to raise the minimum adjusted net capital requirements for FDMs from the current $1 million – or $5 million if forex options are offered – to $5 million whether or not forex options are offered.
Following redrafting to include industry feedback, the proposals will be presented to the NFA board in August and then to the Commodity Futures Trading Commission (CFTC), and are not expected to be effective until the end of the year, the NFA explained.
The NFA said it has been concerned about the lack of protection for FX customers. "From what we've been seeing and the enforcement actions we've been taking recently, for the protection of the customer in the markets, we really need to raise the minimum capital requirement for these firms," said a Chicago-based NFA spokesman. "There is so much more regulation and protection for FCMs, but this is not in place in the forex arena."
The CFTC has also seen a rising number of cases of retail forex fraud (FX Week, April 9). Last Tuesday (July 24), the regulator revoked the registration of introducing brokers Next Financial Services and New World Trading for fraudulently soliciting $3.4 million from 199 retail customers for trading FX options.
Since March, eight FDMs have fallen under the NFA's early warning requirement of $1.5 million, and the regulator's worries have been heightened as the amount of retail customer funds held by FDMs has increased to more than $1 billion (as of May 22).
The largest FX dealer firms are well clear of the proposed $5 million requirement, according to the CFTC's May 31 report of adjusted net capital holdings, which showed CMS holding $11,512,421, FXCM $55,668,469, FX Solutions $12,650,227, Gain Capital $18,694,143, GFT $47,681,883, and Oanda $35,361,139.
Anna Gordon-Walker

We can have several facts from this news:
1,On June 19, the NFA sent out for industry comment proposals.
2,The proposal is still not be presented to NFA board. (I gave a call to NFA yesterday)
3,On the last paragraph, the author don't forget to mention several FX Dealer's name.

So I can see:
1, Yes, there will be new policy, that the net cap requirement will be more than 1 million. Will be 5 million? Maybe yes, maybe not.
2, This new policy will be effected next year, not tomorrow, or next month.We have still 5 months left.
3, This author obviously was slightly marketing for those big name. Look at the words she use "well clear of". LOL. Actually these firms are already surpass the 5 million numbers long time ago, due to its heavy advertisment. Smart people will smell this small trick We all know, most of this names are sponsor for FX Week

For my personal: 5 million is not a metionable issue for MBTF.

regards,
Mike

P.S: Margin Forex Business is really an Gold Mine. US Venture Capital's will not leave it alone. They will definitely have interest for those companys who have potential to be the next Top3.
Trading is a business
  • #133
  • Aug 1, 2007 3:12am Aug 1, 2007 3:12am
tx forexsavior, your list at least gives a warning and if you're interested you could then investigate more, and I agree that if we could get hard evidence it would be a bonus
  • #134
  • Aug 1, 2007 9:49am Aug 1, 2007 9:49am
For those who want to read the proposal you can goto this link:
http://www.forexfactory.com/showpost...8&postcount=20

I expect the NFA will be putting this up on their website later this month.

As for screaming "the sky is falling, the sky is falling" guess what? It has been falling. NINE firms have recently been shut down. The CFTC and NFA websites are littered with the carcasses of fallen firms and forex fraud advisories are posted everywhere. The NFA spokesman has good reason to be concerned. And judging from the action they are taking they are acting on that concern. Now forexfun you say your concerned when your child crosses the street but I hope you would follow that up with action if you saw the street was littered with corpses. That's what the NFA is doing. Why else would they be slapping Forex Dealers with sky high fees that no other Futures Commission Merchant has to pay? They put them in place because of the disproportionate amount of time they have to spend liquidating and regulating the dead forex firms walking: http://www.nfa.futures.org/news/news...ArticleID=1905

As for FXChant, we simply disagree. Firms under $5 million are undercapitalized in my book. Are they violating current regulations? No. But once again if the NFA is uncomfortable with firms under $5 million (which is why they are proposing this rule in the first place) then I say customers should be concerned as well. This thread is meant to alert them to that concern, which is a pretty damn serious one.
  • #135
  • Aug 1, 2007 9:56am Aug 1, 2007 9:56am
Quoting forexsavior
For those who want to read the proposal you can goto this link:
http://www.forexfactory.com/showpost...8&postcount=20

I expect the NFA will be putting this up on their website later this month.

As for screaming "the sky is falling, the sky is falling" guess what? It has been falling. NINE firms have recently been shut down. The CFTC and NFA websites are littered with the carcasses of fallen firms and forex fraud advisories are posted everywhere. The NFA spokesman has good reason to be concerned. And judging from the action they are taking they are acting on that concern. Now forexfun you say your concerned when your child crosses the street but I hope you would follow that up with action if you saw the street was littered with corpses. That's what the NFA is doing. Why else would they be slapping Forex Dealers with sky high fees that no other Futures Commission Merchant has to pay? They put them in place because of the disproportionate amount of time they have to spend liquidating and regulating the dead forex firms walking: http://www.nfa.futures.org/news/news...ArticleID=1905

As for FXChant, we simply disagree. Firms under $5 million are undercapitalized in my book. Are they violating current regulations? No. But once again if the NFA is uncomfortable with firms under $5 million (which is why they are proposing this rule in the first place) then I say customers should be concerned as well. This thread is meant to alert them to that concern, which is a pretty damn serious one.
Ok I give up you are obviously not going to give up the source or you do not have one... Take care... I am through here it is a waste of time.
  • #136
  • Aug 1, 2007 10:02am Aug 1, 2007 10:02am
saviour:

And having a clean regulatory record since nearly 10 years counts for nothing? How long have your bancrupt firms been around, and how long has MB been around? IMO you can scratch MB from your list.
  • #137
  • Aug 1, 2007 10:09am Aug 1, 2007 10:09am
having a clean regulatory record is only part of the answer, as I will show in the days ahead plenty of firms with clean records have gone under as well...
  • #138
  • Aug 1, 2007 10:09am Aug 1, 2007 10:09am
Quoting forexsavior
For those who want to read the proposal you can goto this link:
http://www.forexfactory.com/showpost...8&postcount=20

I expect the NFA will be putting this up on their website later this month.
You are referencing your own post where you placed a proposal that may have been or probably was sent out to NFA members. If it is not on the NFA web site where did you get the information? What NFA member do you work for? I talked to the NFA on July 17th, 2007 and was told that there was no official information available to the public concerning the 5 million dollar number.
  • #139
  • Edited Aug 15, 2007 2:41pm Aug 1, 2007 10:11am | Edited Aug 15, 2007 2:41pm
deleted
  • #140
  • Aug 1, 2007 10:33am Aug 1, 2007 10:33am
Quoting nvwine
You are referencing your own post where you placed a proposal that may have been or probably was sent out to NFA members. If it is not on the NFA web site where did you get the information? What NFA member do you work for? I talked to the NFA on July 17th, 2007 and was told that there was no official information available to the public concerning the 5 million dollar number.
i strongly suspect he works for one of the competitors of those companies he posts against judging by his posting habits. it's mainly his tone - most people don't continually talk in the way he does.

my favorite example from his is the one company he really badmouthed - itrade fx. first he says they're bankrupt, then when the next report points out that they're not, he has to have the "I was wrong" dragged out of him. he doesn't apologize for saying they're bankrupt and possibly doing damage to their business (that I've seen, I might have missed it)... instead, he temporarily removes them from his list. the next month, they're back on. they're the most glaring example that I remember, i think mb Trading was another (or whatever the name was)

bottomline, he demands accountability from these companies, but doesn't offer any for himself and his allegations. if you have proof that a firm is a scam, say it. saying that a firm is undercapitalized by an UNPASSED CHANGE in your opinion is not the same as them actually being undercapitalized. he's like a tabloid reporter in accountability, shifting the blame onto anyone else when he's wrong and crowing when he's right.

To repeat, he's sometimes factually correct, but it's how he phrases it. As I said earlier, you can see it in the NFA example I gave:

Quote
for instance, the NFA says "They're concerned..."

forexsavior says "they don't have any confidence in the manner in which undercapitalized firms operate"

he is sensationalizing what they're saying as they didn't say they have no confidence. they're concerned. I'm concerned when my kids cross a busy street, that doesn't mean I have no confidence in them doing so. see the difference?
my guess - he doesn't see the difference, or he doesn't care. if he doesn't see, it's an honest mistake in his zeal to protect people. if he doesn't care, he's reckless and as irresponsible as a tabloid reporter.

like I said, he probably won't apologize to any company that meets a new cap WHEN THEY HAVE TO DO SO, but he could have done damage to them and their business. it'd be nice if everyone would be responsible with what they say.
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