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Attachments: Proposed NFA Capital Requirement
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Proposed NFA Capital Requirement

Interesting article on the topic:

http://www.euromoney.com/Article/185...ng-field-.html

Basically FXCM and Oanda are arguing that NFA/CTFC are founded and dominated by futures firms, and that they are trying to skew regulation in their favour.
Great read!!

clearly proves my points,, clients funds are not safe with off-change FX dealers as they are structured now and changes for the better are about to take place, apparently what you call bulletproof big FX dealers with their big caps in place are very wearied what’s to come.
Forexsavior if you’re truly posting this info this list as a unbiased source trying to help others. Why don’t you start a new one using the new laws qualifications as your list criteria’s? Chances are he will not agree, why? Because the firms he’s doing this for wouldn’t make the new qualifications. http://www.euromoney.com/Article/185...ng-field-.html
Quoting KasperFX
Great read!!

clearly proves my points,, clients funds are not safe with off-change FX dealers as they are structured now and changes for the better are about to take place, apparently what you call bulletproof big FX dealers with their big caps in place are very wearied what’s to come.
Why would this be changes for the better? Clearly, the ideal solution would be to allow FX dealers to seggregate client funds like futures firms, thus providing the same level of saftey of funds like them, and keep an environment with healthy competition.

The argument was that FX firms are not *allowed* to segregate funds like futures firms, and that futures firms and CME abuse their influence within NFA and are lobbying in washington that it stays that way. Instead, they try to direct as much bussines from the off-exchange FX dealers towards themselfs (aka only FCMs with a considerable on-exchange branch are allowed to do retail FX business, like in that proposed bill). This isnt about regulation or improving things for retail customers, this is more about getting rid of competition by the futures establishment, after completly missing the retail FX trend for years. Note that all this proposed new regulation never was about quality and fairness of execution and pricing, an FCM can rip you off just like a normal fx dealing desk can do now. To me it looks more like an attempted blatant land-grab through legislation, using their lobby-groups.

P.S. note that all three, NFA, CME, and futures brokers have a big financial interest in this throuh NFA-fees, commissions and exchange fees. So these new laws may actually go through, but IMO the intention is more the personal gain of all involved rather than the interests of clients.

No mater how you choose to interpret this it gives clear indications of the changes about to take place, while the current bunch of poorly managed off-exchange retail FX firms have gotten rich and powerful from plundering their clients their no match for the giant well organized on-exchange participants.

Again, Time will tell what’s to happen.
Quoting KasperFX
Forexsavior if you’re truly posting this info this list as a unbiased source trying to help others. Why don’t you start a new one using the new laws qualifications as your list criteria’s? Chances are he will not agree, why? Because the firms he’s doing this for wouldn’t make the new qualifications. http://www.euromoney.com/Article/185...ng-field-.html
What a copout! Your logic is "If you don't agree with me, then you must be a corporate rat." Never mind that they could just NOT AGREE WITH YOU.

Quote
No mater how you choose to interpret this it gives clear indications of the changes about to take place, while the current bunch of poorly managed off-exchange retail FX firms have gotten rich and powerful from plundering their clients their no match for the giant well organized on-exchange participants.
I fail to see how your solution is "better", when the implication of the article that you mentioned is that the futures firm are using their market weight and influence to unfairly tilt the forex market in their favor. Likely the truth lies in the middle - we know there are FX firms that are being unfair to their clients (although I would argue that 100% of the smaller firms are not "fraudsters" and that some of them are just up and coming firms getting their feet under them), and we know there are futures firms that have a lot of money and would like to eliminate enterprising competitors before they can challenge those larger futures firms in a developing market like the forex.

You consistently come on here and spout that those who do not agree with your contention that this potential law is a good thing must be either fools or "the enemy"/plants for a company that wouldn't make it. That's a very George Bushian attitude ("If you're not with us, you're against us."). The fact of the matter is that I am not personally convinced this potential move is better for the state of competition in this area, and I'm certainly not convinced its a good idea to move to it so quickly when the 5 million cap requirement was just put through and we have no idea yet of how that is affecting things in terms of fraud with any statistical certainty.

You have the right to your opinion, but you are certainly wrong in your conclusions about everyone who agrees with you. The fact that I'm now agreeing with Savior, when I was one of his biggest critics early on, should prove that your conclusions are faulty to some degree.

And as a final point, do you have proof for this claim: "poorly managed off-exchange retail FX firms" - as if size shows that companies in general are properly managed. Worldcom was a large firm - it was poorly managed... if you'd like, we can go through some more, but size does not show good management nor does it show that smaller firms are poorly managed. I'm tired of people who keep jumping to that conclusion.
ForexSaviour, where are you getting your figures from?
Quoting forexmoments
ForexSaviour, where are you getting your figures from?
He gets it from here:

http://www.cftc.gov/marketreports/financialdataforfcms/
Quoting KasperFX
Forexsavior if you’re truly posting this info this list as a unbiased source trying to help others. Why don’t you start a new one using the new laws qualifications as your list criteria’s? Chances are he will not agree, why? Because the firms he’s doing this for wouldn’t make the new qualifications. http://www.euromoney.com/Article/185...ng-field-.html
Kasper I have already stated I think it is a good idea for CFTC to have more control over this industry. You're really barking up the wrong tree here. My sole concern is that we are now moving too fast on net capital. Look no one has been a bigger advocate of higher net capital than me. Well, I got what I wanted. NFA hiked it to $5 million and the weakest firms were weeded out. As ForexFun said let's give it a chance to work.

For months I have been riding these smaller firms pretty hard, well, they made the cut (although again I have serious concerns about Bacera and AMIFX). If the problem of undercapitalization does not go away in 2008 I'll be happy to endorse the $20 million net capital idea.

But in my opinion it is not the Government's job to pick winners and losers in the marketplace. If the market consolidates on its own that's one thing. But the Government is basically driving a lot of firms under with such a rule without even waiting to see if the current increase will work.

Hey if we see these smaller firms continuing to blow up in 2008 like in 2007 I'll be the first one to get out there and start screaming for higher cap requirements. But Uncle Sam appears to be stumbling into this with a shotgun spraying everything that moves. And EVERY forex trader should be worried about that.
the real matter that us gov would be focused on is to make customers' funds INSURED

5 then 20mln net capitalization is only a move to delete little firms...
Been doing well trading recently so I haven't had much time to post (gotta love volatility!)

In any case the shysters are busy as ever out there so beware. Forex Fraud is happening all over the world. The trading public really needs to be careful about who they trade with. Again, I recommend sticking with firms that are regulated, have good track records and have a healthy capital number. Above all I STRONGLY recommend that you not trade with a firm that is unregulated.

All the crooks busted below were unregulated rogues (especially Zimbabwe's dictator Robert Mugabe. lol.) As a guide it should be noted the following firms are not regulated and as a customer you have no rights in a dispute or if the firm gets into trouble and goes bankrupt:

Unregulated Brokers
Finex
Tradex Swiss AG
ACM
WestCapFX
MIG
DukasCopy
GFX Group (Forex.CH)
Crown Forex
GCI
Northfinance
FXDD

Quote
NYC Man Sentenced in Forex Scam
http://www.portfolio.com/news-market...-in-forex-scam
Feb 15 2008 3:13PM EST

A New York man was sentenced to more than 12 years in prison Friday in connection with a foreign currency exchange scam that bilked more than 200 investors out of $6.5 million.

The U.S. Attorney's office in Manhattan said Boris Shuster, also known as "Robert Shuster," was sentenced to 150 months in prison at a hearing in U..S. District Court in Manhattan.

U.S. District Judge Victor Marrero also ordered Shuster to forfeit $7.89 million and pay a $10,000 fine.

Shuster,guiltyleaded guilty to conspiracy, 14 counts of wire fraud and 13 counts of mail fraud last June. Prosecutors had sought a sentence of 235 months to 293 months in prison, said Sarita Kedia, Shuster's lawyer.
"We do plan to appeal," Kedia said.

Shuster was previously sentenced to 60 months in prison after pleading guilty to criminal charges in a separate forex scam in federal court in Brooklyn. He had remained free pending his sentencing in federal court in Manhattan, Kedia said.

In the Manhattan case, prosecutors had alleged that Shuster and Alexander Dzedets operated a fraudulent forex firm named Holston, Young, Parker & Associates in Manhattan. Dzedets, 32, and nine others have pleaded guilty to criminal charges in the "boiler room" scheme, prosecutors said.

Employees of the firm allegedly used false and misleading sales pitches and high-pressure sales tactics to convince people to invest in its purported forex trading program, the government said.

Funds raised weren't used to invest in the forex market, but were instead diverted to bank accounts in Cyprus and Russia, prosecutors said.

Quote
NAB arrests forex fraud accused - DAWN http://aajtvnews.wordpress.com/2008/...-accused-dawn/

The Punjab chapter of the National Accountability Bureau has arrested Kashif Iqbal, business partner of M/s SKAF International, Lahore, on charges of fraud, misappropriation and cheating public.

According to a NAB press release, M/s SKAF International was involved in illegal forex business in 2003. Kashif along with three business partners fraudulently induced public at large to invest their money on false promises of profit up to four per cent to five per cent per month. They cheated 68 people, obtained deposits from them and misappropriated an amount of Rs29.308 million.

A reference against the accused had already been filed with the accountability court in 2007. After arrest, Kashif was produced in the accountability court and sent to judicial lockup.

Quote
Forex Scam Haunts Mugabe
http://www.mg.co.za/articlePage.aspx...ight__africa/#

President Robert Mugabe’s fight against corruption is closing in on his closest confidants. The 82-year-old leader is in a quandary and is unwilling to pass a routine political directive for the arrest and prosecution of Zanu-PF officials allegedly involved in illegal foreign currency dealings.

Police insiders have said that no arrest or prosecution of a Cabinet minister or member of Zanu-PF’s Politburo takes place without Mugabe’s sanction. It is a political formality that the police and Attorney General adhere to, but Mugabe’s selective approach has irked some of his colleagues in Cabinet.
The police’s criminal investigations department investigated Mugabe’s close ally, retired General Solomon Mujuru, husband of Vice-President Joice Mujuru, for flouting exchange control regulations and running Mafia-type shelf companies.

These companies would buy and trade foreign currency on the black market with individuals and companies in which the government has an interest. Mujuru then made weekly transfers involving billions of Zim dollars (see “The docket”).
Hm, I've always thought Dukascopy was a pretty solid outfit. I think I'd prefer them over regulated bucketshop like FXCM.
Forex Savior, do you really think what is posted on the CFTC website is all the capital a firm can put up or how much the firm actually has. I agree a lot of smaller firms that stay dangerously close to the 5m net cap requirement might be gone soon. However all of the other ones are fairly well capitalized. The point I am making is fx firms dont need to report all of the firms capital to the CFTC. They just have to put up enough to cover the net cap and enough money to cover customer positions every month. Personally I dont think you have a clue as to what is actually going on. The reason is all of these firms are PRIVATE, they are for the most part unregulated, and unless they open their doors to show you their financials you dont know more then anyone else. But I tell you what you are really good at searching the CFTC site and the NFA page.

To prove my point do you remember REFCO. They were a private company and then they tried to go public. Whoops, we hid a bunch of debt offshore in the name of our subsid. that happens to offer spot FX to our client base. I bet you would have said they were a safe company to trade with then too. Considering they were twice the size of FXCM at that point. Good luck with your wonderful insight which consists of regurgitating the same stuff anyone else can read. Cant wait to see your response if you have one.




The CFTC has finally released the December 2007 net capital numbers. This is our first look at the forex industry after the increase in capital requirements to $5 million in the United States.

I'm amazed that firms like Advanced Markets and Bacera made the cut, although judging from their paltry capital numbers they are barely treading water. In light of the One World and FXLQ fiascos I would view those cap numbers with extreme skepticism. These are not safe firms in my opinion.

An interesting piece of data as well is the number InterbankFX is now reporting. Their cap number has dropped dramatically from $30 million to $19.2 million in one month. Often times cap increases and decreases can be written off as being part of the forex business cycle. But the fact is over that same period of time the FXLQ scandal ruptured and it turns out Interbank had some $10 million stashed away at FXLQ. Something to keep an eye on here people. http://www.robbevans.com/pdf/forexlqreport01.pdf

Here is the full run down of net capital per firm. Remember the Congress is close to passing a law which would require firms to have a minimum of $20 million to stay in business. Should it pass the industry may only have about a dozen firms left.

The Big Six (Above $20 Million)
1. Oanda $156 million
2. RJ O'Brien $92 million
3. FXCM $75 million
4. GFT $69 million
5. Gain Capital $50 million
6. I Trade FX $34 million

Below $20 Million
7. PFG $19.7 million
8. Interbank FX $19.2 million
9. FX Solutions $17.9 million
10. IFX $15.5 million
11. CMS $13.8 million
12. GFS Futures & Forex $10.2 million
13. CMC $8.7 million
14. Alpari $8 million
15. Ikon $7.9 million
16. Easy Forex $7.6 million
17. Friedberg Mercantile $7.5 million
18. Forex Club $7.4 million
19. MB Trading $7 million
20. ODL $6.9 million
21. Hotspot $6.1 million
22. Money Garden $6 million
23. Bacera $5.4 million
24. Advanced Markets $5.2 million[/quote]
I found another two market maker registered as Approved NFA member,but both are not included in the 24 regulated forex company. Please help me to clarify this.
http://www.nfa.futures.org/basicnet/...tityid=0351765
Direct FOREX LLC
http://www.nfa.futures.org/basicnet/...tityid=0379678
ALPARI US LLC
Quoting sappp
I found another two market maker registered as Approved NFA member,but both are not included in the 24 regulated forex company. Please help me to clarify this.
http://www.nfa.futures.org/basicnet/...tityid=0351765
Direct FOREX LLC
http://www.nfa.futures.org/basicnet/...tityid=0379678
ALPARI US LLC

Last time I checked Alpari US wasn't open yet. Maybe that was part of the criteria??
Just received an e-mail from CFTC stated that selected FCM financial data as of January 31, 2008 (from reports filed by February 29, 2008) is now available.

It's time to digest the first and new data for year of 2008.

cheers
And with the Congress set to raise minimum capital requirements for forex dealers to $20 million these numbers are once again taking on greater significance.

Above $20 Million
Oanda $157 Million
RJ O'Brien $91 million
FXCM $82 million
GFT Forex $76 million
Gain Capital $50 million
I Trade FX $33 million
Interbank FX $23 million

Below $20 Million
PFG $18.6 million
FX Solutions $17.3 million
CMS $13.3 million
ODL $11.9 million
GFS Forex $10.4
IFX $9.3 million
CMC $8.7 million
Alpari $8 million
Ikon $7.9 million
Easy Forex $7.7 million
Hotspot $7.7 million
MB Trading $7.6 million
Friedberg Mercantile $7.5 million
Forex Club $7.4 million
Money Garden $6.3 million
Bacera $5.3 million
Advanced Markets $5.2 million

http://www.cftc.gov/marketreports/fi...fcms/index.htm
[rant]

You could probably fit into a phone booth all the individual Congress members who possess true honesty and integrity. As a whole, it's one of the most corrupt institutions on the face of the planet.

Clearly, raising the cap to $5M didn't force enough smaller brokers out of business. By God raising it to $20M ought to do the trick. And if someone comes on here and says "it's for our own protection", or some such statist group-think nonsense, I will surely blow chunks.

[/rant]
Yea the significance is: if any of the firms that are below the 20M mark will have to put up more capital in order to stay in business. However, the farm bill has not been signed by Bush so no one knows what the actual outcome will be or when. I hope all that read this thread know what the actual numbers mean and aren't scared by this guys posts. I also hope that everyone in here doesnt need forexsavior to get the data he posts. If you trade the forex and you dont check the NFA and the CFTC websites daily then you better start.
There will be a time table set forth as to when firms need to have the necessary adjusted capital put in place and you will all know when it happens.
One other thing you might want to look at when examining the brokers under 20M is the actual size of the company. For example their are a few firms below the 20M mark that are owned by much larger companies. Also, some of the brokers are larger companies then their adjusted net capital would lead you to believe. My biggest point is if your concerned do your own research and DD.

All the best and I hope no one is burned by another broker going out of business.
How come no one is mentioning that a big firm with so much capital is in the toilet, like " Bear Sterns"???

Its not the money, its the way you manage your risk.

Live and learn!!!
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