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Proposed NFA Capital Requirement

  • #761
  • May 13, 2008 11:06pm May 13, 2008 11:06pm
the farm bill is gonna flip this industry upside down. All of these unregistered IBs out there are going to have a real mess on thier hands. I'm really suprised that FXDD is getting registered. I figured that they would just scoop up all of those unregistered IBs.
  • #762
  • May 14, 2008 8:10am May 14, 2008 8:10am
Quoting Voldemort
the farm bill is gonna flip this industry upside down. All of these unregistered IBs out there are going to have a real mess on thier hands. I'm really suprised that FXDD is getting registered. I figured that they would just scoop up all of those unregistered IBs.
More brokerages closing/merging. Bigger brokers buying out their competition and consolidating. Less competition = more ways to screw the client. When there are 3 brokers left in the US, they will be able to do anything to their clients. After all, who else are they going to go to?
The basis of a democratic state is liberty. ~ Aristotle
  • #763
  • May 14, 2008 8:14am May 14, 2008 8:14am
Quoting Vensik
More brokerages closing/merging. Bigger brokers buying out their competition and consolidating. Less competition = more ways to screw the client. When there are 3 brokers left in the US, they will be able to do anything to their clients. After all, who else are they going to go to?

How could the politicians let that happen? Whatta hell are they doing?
  • #764
  • May 14, 2008 8:27am May 14, 2008 8:27am
Quoting cka6c
How could the politicians let that happen? Whatta hell are they doing?



Responding to what the NFA is telling them, and the NFA is getting their marching orders from their biggest clients the larger brokerages. It's all relative; I'm just putting some contrast in the thread that these changes aren't necessarily in the best interest of us as traders. It's not going to affect my business as an IB, as I am registered, but it is going to affect my business in the forex as competition is removed from the market and the reason for brokers to treat clients like customers is removed with it.

My honest opinion is that this is actually going to push more people into the unregulated offshore brokers, which is the opposite affect the NFA is touting this will have. Who wants to trade in a market where their funds could be seazed overnight because someone sneezed the wrong way? We have seen time and again that the numbers reported to the CFTC mean nothing as far as stability within the brokerage. Regulation and closer scrutiny is fine, I'm all for closing down fly by night scam operations. However, I would rather my brokerage be allowed to spend their excess capital on building more infrastructure and upgrading their servers (the servers My orders are going through) than being forced to simply bank that money and let it sit there rotting and doing nothing for me. Shutting down brokerages that care about their clients and strive to do what’s best for them because they didn't meet some made up "safe" number is ridiculous if they have passed every other regulatory requirement for the safety of their clients funds.
The basis of a democratic state is liberty. ~ Aristotle
  • #765
  • May 14, 2008 11:43am May 14, 2008 11:43am
Quoting Vensik


Responding to what the NFA is telling them, and the NFA is getting their marching orders from their biggest clients the larger brokerages. It's all relative; I'm just putting some contrast in the thread that these changes aren't necessarily in the best interest of us as traders. It's not going to affect my business as an IB, as I am registered, but it is going to affect my business in the forex as competition is removed from the market and the reason for brokers to treat clients like customers is removed with it.

My honest opinion is that this is actually going to push more people into the unregulated offshore brokers, which is the opposite affect the NFA is touting this will have. Who wants to trade in a market where their funds could be seazed overnight because someone sneezed the wrong way? We have seen time and again that the numbers reported to the CFTC mean nothing as far as stability within the brokerage. Regulation and closer scrutiny is fine, I'm all for closing down fly by night scam operations. However, I would rather my brokerage be allowed to spend their excess capital on building more infrastructure and upgrading their servers (the servers My orders are going through) than being forced to simply bank that money and let it sit there rotting and doing nothing for me. Shutting down brokerages that care about their clients and strive to do what’s best for them because they didn't meet some made up "safe" number is ridiculous if they have passed every other regulatory requirement for the safety of their clients funds.
This is all true... and I agree. This is a market that is run primarly by banks and in the future I can only imagine that all brokers will be bought up by all the large banks. I think people are starting to worry to much; pick a broker that you like, that is regulated and hope for the best. There is nothing more you do so trade more and worry less.
  • #766
  • May 14, 2008 12:49pm May 14, 2008 12:49pm
According to Republican Senator Charles Grassley the Congress will have the votes to override a Bush veto of the farm bill.
http://www.nationaljournal.com/congressdaily/cdp_20080513_6699.php

Quote
Senate Finance ranking member Charles Grassley said today he has signed the farm bill conference report and will work to override a likely presidential veto, predicting that both chambers have enough support for an override. Grassley told Iowa reporters in his weekly teleconference that he is disappointed by the payment limitation provisions in the bill, but said they are better than current law. He also praised the bill's "long list" of other changes, including farm program and tax provisions that he wants enacted. Grassley expects the White House will not push Republicans to sustain the expected veto. If Bush does push support for the veto, cautioned Grassley, he should expect "very weak loyalty in the Congress from his own party."


It looks more and more like this bill is going to become law. I’m trying to dig up the actual language of the bill to find out the time frames the industry is going to get in order to comply with the law. I’ll have more tomorrow.
  • #767
  • May 14, 2008 2:05pm May 14, 2008 2:05pm
Excuse my ignorance but what a farm bill (agriculture) has to do with forex?
  • #768
  • May 14, 2008 2:59pm May 14, 2008 2:59pm
Quoting motanu
Excuse my ignorance but what a farm bill (agriculture) has to do with forex?
Good question. What the Congress did was to dump a bunch of bills onto the Farm Bill. The Congress is too busy to debate and pass all these bills individually. So instead they tacked it onto a bill that has to move. The forex stuff is itself a part of the CFTC Reauthorization bill that has been sitting around a couple years.
  • #769
  • May 14, 2008 4:19pm May 14, 2008 4:19pm
Quoting Vensik
More brokerages closing/merging. Bigger brokers buying out their competition and consolidating. Less competition = more ways to screw the client. When there are 3 brokers left in the US, they will be able to do anything to their clients. After all, who else are they going to go to?
I disagree - once upon a time there were 3 car car makers in the U.S. and they produced crap. Competition & competitors always find a way albeit sometimes slowly. p
  • #770
  • May 14, 2008 5:36pm May 14, 2008 5:36pm
By MARY CLARE JALONICK – 1 hour ago

WASHINGTON (AP) — The House passed a $290 billion farm bill Wednesday with a strong veto-proof majority, offering more subsidies for farmers, food stamps for the poor and special projects that lawmakers can bring home to voters this election year.

The 318-106 vote for the five-year bill came despite President Bush's promised veto. He says the measure is too expensive and gives too much money to wealthy farmers.

About two-thirds of the bill would pay for nutrition programs such as food stamps and emergency food aid for the needy. An additional $40 billion is for farm subsidies while almost $30 billion would go to farmers to idle their land and to other environmental programs.

Senators planned to begin debating the bill later Wednesday. A rejection of a Bush veto may be even easier in the Senate, where farm states have greater representation than they do in the House. Congress has only overridden one veto, on a water projects bill, during Bush's two terms.

This measure is not perfect, said the chairman of the House Agriculture Committee, who believes it is balanced. "We've put a bill together that I think addresses what people are concerned about in this country," said Rep. Collin Peterson, D-Minn.

Republicans, however, criticized the mostly bipartisan and popular bill because home-state projects added in an election year. The bill includes tax breaks for Kentucky racehorse owners, extra help for farmers in Hawaii and Alaska, and dollars for salmon fishermen in the Pacific Northwest.
"This bill has been under consideration for a long, long time, and yet still we have earmarks that have been 'air dropped' into the legislation," said Rep. Jeff Flake, R-Ariz.

Ahead of the House veto, Bush made his objections clear, noting that married farmers who make up to $1.5 million still could collect subsidies under the new farm bill. "I believe doing so at a time of record farm income is irresponsible and jeopardizes America's support for necessary farm programs," Bush said.
  • #771
  • May 14, 2008 11:16pm May 14, 2008 11:16pm
Quoting piprac
I disagree - once upon a time there were 3 car car makers in the U.S. and they produced crap. Competition & competitors always find a way albeit sometimes slowly. p
I love the 38-40mpg on my Toyota, but see my post about people moving to offshore and/or non-US brokers to get that better product.
The basis of a democratic state is liberty. ~ Aristotle
  • #772
  • May 15, 2008 10:25am May 15, 2008 10:25am
Cue up the Michael Myers Halloween Theme…

I have just finished reading the Farm Bill language and it is clear that the Congress is not giving the industry much time to adapt to the incredible changes they are forcing upon retail forex dealers and introducing brokers.

The full language is now available at the House of Representatives website:
http://agriculture.house.gov/inside/FarmBill.html

Title XIII (page 548) is the part of the bill that references the forex industry. Note the following language as it pertains to adjusted net capital requirements for forex dealers:
http://agriculture.house.gov/inside/Legislation/110/FB/Conf/CRlang.pdf

Quote
“(ii) The dollar amount that applies for purposes of this clause is-
“(I) $10,000,000, beginning 120 days after the date of the enactment of this clause;
“(II) $15,000,000, beginning 240 days after such date of enactment; and
“(III) $20,000,000, beginning 360 days after such date of enactment.


Assuming the bill passes by the end of June, that would give U.S. retail forex dealers until Halloween to increase their capital to $10 million. Then they would have until February 2009 to increase it to $15 million and then June of 2009 to reach the full $20 million. Halloween would also be the registration date for Introducing Brokers.

The bill also creates a separate registration category for Forex Dealers and gives the CFTC tremendous leeway in crafting rules governing this new financial services category. There is no telling what the CFTC might come up with (tough new Margin Requirements? Customer Funds Segregation? New Dealing Practice Rules?)

All in all the industry is in for a massive overhaul in the next 12 months. There are sure to be a lot of tricks and treats ahead. Stay Tuned.
  • #773
  • May 15, 2008 12:07pm May 15, 2008 12:07pm
The Farm Bill just passed the Senate in a landslide, 81-15, which is a veto proof margin. With veto proof margins in the House and Senate it is now clear that the Farm Bill is going to become law.
http://www.marketwatch.com/news/stor...&dist=hplatest

Bush is expected to veto the bill and it appears Congress is preparing to override the veto no later than Memorial Day.

In any case, this is a seminal day for the U.S. retail forex trading industry.
  • #774
  • May 16, 2008 9:06am May 16, 2008 9:06am
Quoting BostonForex
My post really sparked that much anger?

Please try to refrain, once again, from stating fallacies.

Thank you
BostonForex,

Looks like you guys cant introduce business to FXCM anymore due to your improperly registered firm. I guess now you can only introduce to Gain and FXDD... how long until you guys are out of business?
  • #775
  • May 16, 2008 10:35am May 16, 2008 10:35am
I heard all FX firms are sending unregistered IB their Cease and Desist Notice. this wall no doubtable negatively effect IB clients and FX firms profits.

best advice for anyone holding account in any none futures firms or bank related FX firms. GET OUT NOW IF YOU CAN, theirs bound to be allot of issue here.

May 15, 2008

To Whom It May Concern:

As per the termination letter sent to you, terminating the Referring Agreement between FXCM and xxxxxxxx, you were directed to remove all references of the FXCM name and soliciting accounts using FXCM's name. Please remove all links to FXCM.com.

Once again, please remove all references to FXCM and cease and desist using the likeness and name of FXCM.

Thank you for your immediate cooperation.

Kindest Regards,

Compliance Department
Forex Capital Markets LLC
Financial Square
32 Old Slip, 10th Floor
New York, NY 10005
United States
Tel (212) 897-7660
Fax (212) 897-7669
Email : [font=Courier][size=2][color=#0000ff][email protected][/color][/size][/font]
  • #776
  • May 16, 2008 10:51am May 16, 2008 10:51am
Quoting CurTrader
I heard all FX firms are sending unregistered IB their Cease and Desist Notice. this wall no doubtable negatively effect IB clients and FX firms profits.
I agree this could be a problem for small fx firms that rely primarily on IB's for their customers.
  • #777
  • May 16, 2008 11:03am May 16, 2008 11:03am
According to the Washington Post Bush will still veto the farm bill. However, the veto will not be sustained in Congress.
http://www.washingtonpost.com/wp-dyn/content/article/2008/05/15/AR2008051503985.html

Quote
Senate Passes Farm Bill, But Bush Still Plans Veto


President Bush will now follow the lead of the late Dwight Eisenhower by vetoing a comprehensive farm bill.

Bush, though, is no Eisenhower.

On Thursday, the Senate, by a comfortably veto-proof margin of 81 to 15, approved a farm bill that now faces a resistant White House. Bush says he will veto the five-year package, much as Eisenhower nixed a big farm bill in April 1956.

Eisenhower won his showdown, the last time a president vetoed a major, standalone farm bill. Bush, however, will lose. The House and Senate now have both approved the farm bill by more than the two-thirds vote needed to override a veto.

"Mr. President, you and your people have been at the table for more than a year," Sen. Larry Craig (R-Idaho) declared. "It's time you recognize the value of this project."
Craig was one of 35 Republican senators to abandon Bush on Thursday and support the farm bill. On Wednesday, 91 GOP House members voted for the bill, boosting the House's approval to a veto-proof margin of 318 to 106.

Sen. John McCain (Ariz.), the Republicans' presumptive presidential candidate, missed the vote but said he opposes the bill. Democratic Sens. Hillary Clinton (N.Y.) and Barack Obama (Ill.) both support the bill, but they likewise missed the vote.
  • #778
  • May 16, 2008 12:20pm May 16, 2008 12:20pm
Quoting forexsavior
I agree this could be a problem for small fx firms that rely primarily on IB's for their customers.
What are you talking about... FXCM has the most unregistered IB's in the industry. Most small firms rely on foreign IB's and that will not change even with the new regs.
  • #779
  • May 16, 2008 12:56pm May 16, 2008 12:56pm
Quoting fxtrader42
What are you talking about... FXCM has the most unregistered IB's in the industry. Most small firms rely on foreign IB's and that will not change even with the new regs.
Large firms get their customers from a variety of different places. I'm not worried about Oanda, FXCM, Gain or GFT. Remember these firms are regulated all over the world. Meanwhile small firms will see their referrals dry up at the same time they have to come up with more capital. That's a double whammy that will make it very hard on small and medium sized forex firms to stay in business. Of course, this is precisely the Government's intent. They clearly do not want small and medium sized firms to be in the industry anymore and have essentially changed the rules to put them out of business within a year's time.

It isn't fair, as I stated months ago here on this thread. Nowhere else in the world are capital requirements as high as $20 million. It is very anti-competitive. We've gone from absurdly low capital requirements (which I urged be increased) to sky high requirements in just one year. I would have liked to have seen the $5 million rule at least given a chance before increasing higher. And I tried to wake up people about this. But it doesn't appear much of the industry took this legislation seriously. Well, now it's about to become law.

The consequences of this law will be far reaching. I'll have more next week.
  • #780
  • May 16, 2008 11:20pm May 16, 2008 11:20pm
Quoting CurTrader
I heard all FX firms are sending unregistered IB their Cease and Desist Notice. this wall no doubtable negatively effect IB clients and FX firms profits.

best advice for anyone holding account in any none futures firms or bank related FX firms. GET OUT NOW IF YOU CAN, theirs bound to be allot of issue here.

May 15, 2008

To Whom It May Concern:

As per the termination letter sent to you, terminating the Referring Agreement between FXCM and xxxxxxxx, you were directed to remove all references of the FXCM name and soliciting accounts using FXCM's name. Please remove all links to FXCM.com.

Once again, please remove all references to FXCM and cease and desist using the likeness and name of FXCM.

Thank you for your immediate cooperation.

Kindest Regards,

Compliance Department
Forex Capital Markets LLC
Financial Square
32 Old Slip, 10th Floor
New York, NY 10005
United States
Tel (212) 897-7660
Fax (212) 897-7669
Email : [font=Courier][size=2][color=#0000ff][email protected][/color][/size][/font]
Huh? This is a cease-and-desist letter, I agree, but it doesn't say *why* they were asked to cease-and-desist. It's an odd assumption to say that it has anything to do with the registration issue without evidence.

If anything, it looks like a second notice sent to an IB.
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