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Proposed NFA Capital Requirement

  • #741
  • May 12, 2008 10:47am May 12, 2008 10:47am
The NFA is described as a "quasi" governmental body. As such, I don't trust them as far as I can spit.

The new regs mandating the $5Mil cap isn't even what, a year old? Now they want to jump it up to $20M?! Ridiculous. I smell a big dead stinking rat and that's what a truly independent, investigative agent should be looking into.
  • #742
  • May 12, 2008 12:33pm May 12, 2008 12:33pm
Quoting opie999
The NFA is described as a "quasi" governmental body. As such, I don't trust them as far as I can spit.

The truth is, it's not a government organization at all. The NFA is a private entity and as such they have customers. Some customers earn more money for the NFA than others, ie the larger brokerage firms. The NFA earns money through dues and by finding reasons to fine the brokerages they "regulate". It's never a good idea to bite the hands that feed you, so the larger brokerages are largely left alone while the NFA continues to feed on the little guys.

As long as the NFA is a private organization that has financial incentive to work for the benefit of the larger organizations in this business you can never trust them. Don't be fooled by them, the NFA is not in this business to protect the trader or the individual. They are in this business to earn money, like everyone else. They do this by keeping the larger brokerages happy by shutting down their competition. Not to fight fraud or protect the traders, but to benefit their contributors.

The CFTC is a government organization. The CFTC does not have any financial incentive to treat any brokerages different from others. I have watched the CFTC step in and tell the NFA no before for the benefit of the actual individual traders involved and I do appreciate them for it. They are here to protect the industry and the traders.
The basis of a democratic state is liberty. ~ Aristotle
  • #743
  • May 12, 2008 2:24pm May 12, 2008 2:24pm
Hello,

I apologize if this is not the thread to post this, or if NF has already been discussed (I searched but didn't find any thread nor mention in this one) but we received today an announcement from N o r t h F i n a n c e which among other things states the following:

Quote
.......The many changes that have taken place recently affected our industry and in particular the provision of online trading services for Forex and CFDs. Due to various events and the increasing demand from investors and regulators, the whole industry is moving under the supervision and regulation by competent financial authorities. Based on the above, and to ensure the best interests of our clients, we have decided the following:
EuroOrient Securities and Financial Services Ltd, owner of FxPro.com, will acquire all operations of North Finance Co Ltd as of June 1st 2008.

Who are EuroOrient and FxPro.com
EuroOrient is a European company, registered in the Republic of Cyprus (certificate 181344) and it is regulated in the European Union by the Cyprus Securities and Exchange Commission (www.cysec.gov.cy) under license 078/07. The trade name "FxPro" and the domain "www.FxPro.com" are owned by EuroOrient. You can verify the information on EuroOrient and FxPro by visiting the websites www.FxPro.com and www.EuroOrient.eu.
......

I really don't know what to think about this, and what would be the best approach... If EuroOrient is (as it seems to be effectively) registered and regulated, it's ok, but a lot of things might change, amongst a bunch of complications with the transfer and such...

I would appreciate if anyone who trades at NF could give his/her opinion about this matter.

If I'm violating any rules with the links please discard as needed.

Much regards
Caroline
  • #744
  • May 12, 2008 2:28pm May 12, 2008 2:28pm
I have always been a big supporter of North Finance, as it is a true example of free market. The only thing North Finance had going for it was it's customer service and the ability to outperform it's competition. They didn't need to fear regulators, they weren't snuffed out in their infancy. They beat their competition in the realms that mattered to the individual trader.

I kind of saw this coming, but don't know what to think about it. Best bet is to be cautiously optomistic. I don't trade with them, but as far as I can tell North Finance has a decent track record for doing what they think is best for their clients.
The basis of a democratic state is liberty. ~ Aristotle
  • #745
  • May 12, 2008 2:29pm May 12, 2008 2:29pm
Quoting Vensik
The truth is, it's not a government organization at all. The NFA is a private entity and as such they have customers. Some customers earn more money for the NFA than others, ie the larger brokerage firms. The NFA earns money through dues and by finding reasons to fine the brokerages they "regulate". It's never a good idea to bite the hands that feed you, so the larger brokerages are largely left alone while the NFA continues to feed on the little guys.

As long as the NFA is a private organization that has financial incentive to work for the benefit of the larger organizations in this business you can never trust them. Don't be fooled by them, the NFA is not in this business to protect the trader or the individual. They are in this business to earn money, like everyone else. They do this by keeping the larger brokerages happy by shutting down their competition. Not to fight fraud or protect the traders, but to benefit their contributors.

The CFTC is a government organization. The CFTC does not have any financial incentive to treat any brokerages different from others. I have watched the CFTC step in and tell the NFA no before for the benefit of the actual individual traders involved and I do appreciate them for it. They are here to protect the industry and the traders.
I've seen the quasi-government part of the description used very loosely and comes from the fact that when the NFA votes to increase net cap minimums for members, the CFTC must first give their approval before that new policy can go into effect.

Of course you're entirely right about the nature of the NFA. They exist solely for the benefit of their bottom line and the continued profitability of their (larger) members. Individual traders are considered mere grist for the mill. It's amazing how many people are still under the mistaken impression that a broker must be NFA certified to do business in the US.

Is the CFTC truly the champion of the individual trader? I'm open to that possibility but I'm very...skeptical, to say the least. As a government bureaucracy, and I'm speaking in general terms here, they are highly prone to inefficiency, waste, fraud, etc. I think it could be argued that their influence over the NFA is the primary cause of any corruption in that organization, whether real or perceived.
  • #746
  • May 12, 2008 2:30pm May 12, 2008 2:30pm
Quoting doblece
Hello,

I apologize if this is not the thread to post this, or if NF has already been discussed (I searched but didn't find any thread nor mention in this one) but we received today an announcement from N o r t h F i n a n c e which among other things states the following:



I really don't know what to think about this, and what would be the best approach... If EuroOrient is (as it seems to be effectively) registered and regulated, it's ok, but a lot of things might change, amongst a bunch of complications with the transfer and such...

I would appreciate if anyone who trades at NF could give his/her opinion about this matter.

If I'm violating any rules with the links please discard as needed.

Much regards
Caroline
Big news for NF. Probably deserves its own thread.
  • #747
  • May 12, 2008 2:42pm May 12, 2008 2:42pm
Quoting opie999
Is the CFTC truly the champion of the individual trader? I'm open to that possibility but I'm very...skeptical, to say the least. As a government bureaucracy and I'm speaking in general terms here, they are highly prone to inefficiency, waste, fraud, etc. I think it could be argued that their influence over the NFA is the primary cause of any corruption in that organization, whether real or perceived.

Well, most of my impression of the CFTC comes from a brokerage I was personally close to being shut down by the NFA.

The NFA tied them up in court. The best thing for people with capital tied up in the ordeal would have been selling to another firm and transferring the capital so that they could withdraw.

The NFA actually stated that they wanted to make an "example" of the firm and asked the court to turn down their request to sell out (at a loss mind you) to another firm and force them to liquidate in chapter 7. This would have meant individual traders only receiving back a portion of their investment.

The CFTC stepped in at that point and slapped the NFA's request down stating that it would be much more beneficial to the traders to allow the sale to go through, about 2 months later traders were able to trade or withdraw their funds from the brokerage that bought the accounts out.

The interesting thing is, FXCM stepped in originally and offered a price that would have been profitable to the owners of the debunked firm. The court turned that down. The NFA didn't get pissy about selling out until a smaller firm, not one of their larger breadwinners, submitted the second offer.

I was very glad to see someone step in and mention the actual traders with capital tied up in the event, let alone factor them in to the outcome and work toward their benefit.

No names mentioned, except FXCM.
The basis of a democratic state is liberty. ~ Aristotle
  • #748
  • May 12, 2008 5:09pm May 12, 2008 5:09pm
Quoting opie999
Big news for NF. Probably deserves its own thread.
Done
Moderators can delete this post if needed.
Thank you!
  • #749
  • May 13, 2008 2:23am May 13, 2008 2:23am
Quoting Vensik

The interesting thing is, FXCM stepped in originally and offered a price that would have been profitable to the owners of the debunked firm. The court turned that down. The NFA didn't get pissy about selling out until a smaller firm, not one of their larger breadwinners, submitted the second offer.

I was very glad to see someone step in and mention the actual traders with capital tied up in the event, let alone factor them in to the outcome and work toward their benefit.
This sounds oddly familiar...
  • #750
  • May 13, 2008 7:36am May 13, 2008 7:36am
Quoting ck_itrade
This sounds oddly familiar...
I would imagine it would sound familiar to a couple of people that were close to it or actually in it.

I worked upstairs from it, if we are talking about the same thing. The NFA came in to shut them down with armed agents. I couldn't help but laugh.
The basis of a democratic state is liberty. ~ Aristotle
  • #751
  • May 13, 2008 7:41am May 13, 2008 7:41am
Quoting ck_itrade
This sounds oddly familiar...
I wonder why ck_ITRADE
  • #752
  • May 13, 2008 8:08am May 13, 2008 8:08am
Quoting fxtrader42
I wonder why ck_ITRADE
Hehe, ok I just put 2 + 2 together on that one. Yes, CK, you should know about it. Sorry, usually tired before my "after london session" nap.

You sleep in the bed you make is all I can say on that one.

I always wondered what percentage of those clients withdrew once they had access to their money again.
The basis of a democratic state is liberty. ~ Aristotle
  • #753
  • May 13, 2008 9:23am May 13, 2008 9:23am
Armed agents??!! No way!
  • #754
  • Edited 9:33am May 13, 2008 9:27am | Edited 9:33am
I couldn't really say what percentage withdrew (mostly because I don't know). Some did, some stayed and are happy. I talked to a number of different CFG clients back in the day, and if they wanted to leave, we let them. I don't know what FXCM was offering nor how our bid affected anything - most of that happened before i came on board. The worst part was that they thought we were actually CFG, so some of them would get on the phones and yell their heads off.... so I'd have to sit back and let them scream, then see what I could do to help them out.

I do know we actually replenished those accounts so that they could actually withdraw if they wanted to (because the accounts that came from CFG were substantially in the red), and that replenishment was out of our own pockets. So, like I said, I don't know what was up with the NFA and FXCM's bid or how that worked out, but from my perspective, it wasn't the greatest experience. I actually don't think we were required to replentish - we were only required to pay out 100% of what we got [ note, I amended this to make sure I was being accurate ]
  • #755
  • May 13, 2008 9:33am May 13, 2008 9:33am
CKI,

Do you guys still use the ACT forex platform?
  • #756
  • May 13, 2008 9:44am May 13, 2008 9:44am
We do primarily use ICTS Wintrader (aka, ACT), and we're working on other things as well.
  • #757
  • May 13, 2008 9:45am May 13, 2008 9:45am
Quoting opie999
Armed agents??!! No way!


Yeah, I thought being armed was a little overkill just to throw a switch. I saw the guns though.

Quoting ck_itrade
I couldn't really say what percentage withdrew (mostly because I don't know). Some did, some stayed and are happy. I talked to a number of different CFG clients back in the day, and if they wanted to leave, we let them. I don't know what FXCM was offering nor how our bid affected anything - most of that happened before i came on board. The worst part was that they thought we were actually CFG, so some of them would get on the phones and yell their heads off.... so I'd have to sit back and let them scream, then see what I could do to help them out.
Quoting ck_itrade

I do know we actually replenished those accounts so that they could actually withdraw if they wanted to (because the accounts that came from CFG were substantially in the red), and that replenishment was out of our own pockets. So, like I said, I don't know what was up with the NFA and FXCM's bid or how that worked out, but from my perspective, it wasn't the greatest experience. I actually don't think we were required to replenish - we were only required to pay out 100% of what we got [ note, I amended this to make sure I was being accurate ]
He said the name! Hehe, yeah I don't know that I remember the exact agreement. I think there was a "required" portion to pay back what you got and an understanding in place that you would refund what they were supposed to have. I never talked to anyone on the phone, but I did generally go out and meet with anyone coming into the office.

I can't imagine you would have had a good experience. It wasn't much better on our end. I ended up leaving about a month later, but for completely different reasons. Everything that happened there could have been prevented so easily, but that's what happens when greed wins out over common sense. It's really not hard to make money as brokerage if you do so without being greedy and to the benefit of your clients. I know I cared for every client they had, and knew/trained a lot of them personally. A lot of them are still my clients. When we first started the brokerage and were introduced to The Dr. (you should know who I'm talking about) none of us trusted him. Every employee there advised Don to not trust that snake the day we met him, in the end greed won out I guess and the whole thing blew up because he was cooking the books. I think many of us felt pretty betrayed that no one trusted our unanimous opinion enough to do anything.

To illustrate the point of none of us trusting who was running our brokerage arm, not a single employee moved their personal trading account there that I know of. We were even offered free money to move our personal accounts over, but refused. I know I was upstairs trading my corporate account through FXCM and my personal account through CBFX.

Back on topic though, I was disgusted that the NFA wanted to punish the clients to basically teach them a lesson.
The basis of a democratic state is liberty. ~ Aristotle
  • #758
  • May 13, 2008 10:09am May 13, 2008 10:09am
Quoting Vensik
When we first started the brokerage and were introduced to The Dr. (you should know who I'm talking about) none of us trusted him.


I'm actually not familiar with The Dr and I only know Don by what I read about CFG later online.... by the time I came onboard here, we had received the accounts and were getting calls. It was always kind of interesting to get CFG clients on the phone - because some of them were as nice as can be, and others just wanted to chew someone up for their troubles. I can't blame them, and I did a lot of CFG transfers back in the day to make sure they were helped out.

In general, we tried to do the right thing for the client, and at the end of the day, that's all anyone can ask. So I guess in the end, I don't really know anything about the NFA wanting to teach anyone a lesson, but that's a sad sad thing for clients if true.

And back to the Net Cap discussions....
  • #759
  • May 13, 2008 11:58am May 13, 2008 11:58am
The big news this week is the farm bill which is close to passing the House and Senate. Inside that farm bill are provisions that would require U.S. forex dealers to have a minimum adjusted net capital of $20 million in addition to requirements that all introducing brokers be registered with the CFTC.

The big question is if Bush vetoes the bill will the Congress have enough votes to override his veto? According to this story the override vote will be a very close one:
http://deltafarmpress.com/topstory/farm-legislation-0513/

Quote
Chambliss, a Republican, has promised to try to override a White House veto. With other Republicans also taking such a stand, does President Bush have the votes to sustain a veto? It will be “very close” said Ed Schaefer, USDA secretary, during a May 9 press conference. Schaefer then played the populist and tied subsidy levels to U.S. families having trouble paying rising food prices. If politicians listen to such families “then we’re going to sustain the veto.”


Of course, the forex provisions are a sideshow in this fight, which has become a fight primarily over farm subsidies. The $20 million capital requirement has been agreed upon by the powers that be. So now the question is not if, but when. A veto override means this capital requirement will be enforced by the end of the year for sure.

Developing…
  • #760
  • May 13, 2008 8:37pm May 13, 2008 8:37pm
In all fairness to FS....there are so many forums and so little time.
We can't possibly expect him to read every word of every post of every thread.

After all, he has a job to do.
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