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Proposed NFA Capital Requirement

  • #781
  • May 17, 2008 3:10am May 17, 2008 3:10am
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.
correct, this bill only effect u.s. IB'S.
If I Go Broke Trying Then I Will die happy.
  • #782
  • May 17, 2008 4:18pm May 17, 2008 4:18pm
It’s due diligence time once again. With the Farm Bill set to become law the trading public needs to start preparing for the changes just over the horizon. The following U.S. registered firms do not currently meet the first 120 day benchmark ($10 million) the Congress has recently set for Retail Forex Dealers according to the latest CFTC Net Capital Report:

http://www.cftc.gov/stellent/groups/public/@financialdataforfcms/documents/file/fcmdata0308.pdf

Quote
Advanced Markets $5,100,000
Bacera $5,500,000
Money Garden $6,600,000
Easy Forex $7,200,000
MB Trading $7,700,000
Hotspot $7,700,000
Forex Club $7,900,000
Friedberg Mercantile $8,000,000
CMC $8,300,000
Alpari $8,800,000
Ikon $8,800,000


Now obviously some of these firms can come up with the money as several have large parent companies who are loaded (CMC and Hotspot for example.) But just as past dead pool members were unable to meet the former $5,000,000 mark so too is it likely that some Autumn Equinox Pool members will be unable to meet the upcoming $10,000,000 mark which is set to go into effect at the end of September should the legislation become law before Memorial Day as expected. Which firms may fold as a result? No one can say for sure. But I certainly would not want to be a trader at Bacera, Advanced Markets or Money Garden right now.

Since the worst of the forex dregs were purged in the last dead pool the likelihood of any of these firms going belly up like One World Capital is slim. That’s the good news. The bad news is firms that know they are going out of business have a strong incentive to really screw over their customers and give them the worst execution possible as they try to grab some traveling money before they have to hit the road. This is why I’m recommending that traders avoid opening new accounts or depositing any additional funds with Advanced Markets, Bacera and MG Financial until they clearly demonstrate they can meet the new capital requirement.

I suspect the remaining firms will have enough capital to meet the $10 million requirement but traders who have accounts with these firms should be sure to speak with them and discuss the firm’s long term strategy for dealing with the full $20 million requirement. There is going to be a lot of mergers in the industry in the next twelve months and traders are likely to suffer in the chaos as customer service gets chopped up and dealing desks start really squeezing traders in their last dying days. Know in advance what you are in for and be sure to do your due diligence now more than ever.
  • #783
  • May 18, 2008 6:38pm May 18, 2008 6:38pm
Autum Equinox pool... thats cute...
  • #784
  • May 19, 2008 12:15pm May 19, 2008 12:15pm
Since starting up this thread many former forex firms are now pushing up the daisies, dead parrot style: http://www.youtube.com/watch?v=e6Lq771TVm4

Indeed, these firms have passed on. They have ceased to be. They have expired and gone to meet their maker. They’re stiff. Bereft of life they rest in peace. They have kicked the bucket and joined the bleedin’ choir invisible. These are ex-forex firms:

Rest in Peace
-The following firms are no longer functioning as independent registered forex dealers.

  1. United Global Markets (Died May 2007. Cause: Undercapitalization)
  2. Forward Forex (Died June 2007. Cause: Busted for Fraud)
  3. Worldwide Forex (Died June 2007. Cause: Busted for Fraud)
  4. Cal Financial Corporation (Died March 2007. Cause: Undercapitalization)
  5. Nations LLC (Died July 2007. Cause: Undercapitalization)
  6. FX Option1 Inc (Died June 2007. Cause: Busted for Fraud)
  7. Trend Commodities (Died June 2007. Cause: Undercapitalization)
  8. Performance Capital (Died June 2007. Cause: Buyout)
  9. FiniFX (Died July 2007. Cause: Undercapitalization)
  10. CFG Forex (Died February 2007. Cause: Undercapitalization)
  11. Tradex Swiss AG (Died August 2007. Cause: Busted for Fraud)
  12. Spencer Financial (Died June 2007. Cause: Undercapitalization)
  13. One World Capital (Died November 2007. Cause: Undercapitalization)
  14. ANTC (Died August 2007. Cause: Buyout)
  15. Royal Forex (Died August 2007. Cause: Buyout)
  16. Northfinance (Died May 2008. Cause: Buyout)
  17. VelocityFX (Died December 2007. Cause: Undercapitalization)
  18. Direct Forex (Died December 2007. Cause: Buyout)
  19. E-FX (Died November 2007. Cause: Undercapitalization)
  20. Solid Gold (Died December 2007. Cause: Undercapitalization)
  21. FXLQ (Died December 2007. Cause: Busted for Fraud)
  22. SNC Investments (Died December 2007. Cause: Undercapitalization)
  23. WestCap FX (Died April 2008. Cause: Autopsy not Complete)
  24. AleccohFX (Died February 2008. Cause: Busted for Fraud)
  25. Finex (Died sometime in 2007. Cause: Busted for Fraud)


That’s twenty five firms by my count that have been closed or bought out on the Savior’s watch. Thousands of traders have lost millions of dollars as a result of the chaos in the forex industry the past year and a half. Don’t allow yourself to be the next victim. Be sure to trade with a well capitalized firm and make sure they are prepared for the coming capital requirement increase to $20 million.

  • #785
  • May 20, 2008 12:33pm May 20, 2008 12:33pm
While we await the President’s veto I thought I would pass along one of the funniest forex related websites I have seen in a while. It is called Caveman Forex.
http://www.cavemanforex.com/home.html

The troglodyte running this website claims to be selling a winning “formula” guaranteed to make traders rich. Says Caveman Forex, “Due to the nature of the Cavemanforex formula, the success rate of these trades ranges from 60% to 70%. This ultimately gives me a profit ranging from 200 to 500 pips, sometimes more.... EVERY WEEK!”

Uh huh.

And get this. He’s only selling this secret formula for $89! As Don Corleone once said to the Turk “Why do you come to me? Why do I deserve this generosity?”

I’ll tell you why, because it ain’t generosity. You’re more likely to earn money betting on Eight Belles to win the Triple Crown this year than you are trading the forex market based off signals given to you by the cast from the opening scene of 2001: A Space Odyssey.

But I give Caveman Forex points for showmanship that’s for sure!
  • #786
  • May 21, 2008 11:49am May 21, 2008 11:49am
President Bush will officially veto the farm bill today per Reuters:

Quote
WASHINGTON (Reuters) - President George W. Bush is expected to veto the "bloated" $280 billion farm bill on Wednesday, a White House spokeswoman said.
Spokeswoman Dana Perino said the five-year bill was "bad for American taxpayers." Farm leaders in Congress say they can override the veto and enact the five-year bill as law.

Congress may initiate an override vote as early as this evening. We are nearing the end game now.
  • #787
  • May 21, 2008 10:23pm May 21, 2008 10:23pm
Oops:

http://www.msnbc.msn.com/id/24759576/

"Action stalled, however, after the discovery that Congress had omitted a 34-page section of the bill when lawmakers sent the massive measure to the White House. That means Bush vetoed a different bill from the one Congress passed, leaving leaders scrambling to figure out whether it could become law."
  • #788
  • May 21, 2008 10:41pm May 21, 2008 10:41pm
Quoting forexfun
Oops:

http://www.msnbc.msn.com/id/24759576/

"Action stalled, however, after the discovery that Congress had omitted a 34-page section of the bill when lawmakers sent the massive measure to the White House. That means Bush vetoed a different bill from the one Congress passed, leaving leaders scrambling to figure out whether it could become law."
A mere technicality.
  • #789
  • May 21, 2008 11:02pm May 21, 2008 11:02pm
Quoting forexsavior
We are nearing the end game now.
...the enigmatic Mr. Savior exclaimed in glee.

"end game"
Interesting turn of phrase.
  • #790
  • May 22, 2008 11:28am May 22, 2008 11:28am
So many scandals, so little time. Late last year Felix Homogratus the infamous “Forex Bastard” of forexpeacearmy.com fame got swept up in an international sting operation conducted by the Department of Homeland Security. (See Complaint Document: http://www.pipwizard.com/pdf/marriag...-complaint.pdf )

Apparently forex bastard was dating and harboring a Russian vixen (photo here: http://www.latimes.com/news/local/la...tory?track=rss) who had participated in marital fraud. This Monday Yuliya Mikhailovna Kalinina started serving a four month “home detention” sentence and will likely face deportation according to the San Jose Mercury News: http://www.mercurynews.com/news/ci_9113354

Quote
SoCal woman who posted online marriage ad sentenced
The Associated Press
Article Launched: 04/30/2008 08:46:28 PM PDT

LOS ANGELES—A Russian woman who was found guilty of marriage fraud for paying a man to get a green card has been sentenced to four months in prison.

The U.S. Attorney's office says Yuliya Mikhailovna Kalinina, who was also found guilty of one charge of aiding and abetting, was ordered Wednesday to serve four months home detention and begin her prison sentence on May 19.

Kalinina, who faced up to five years in federal prison, could be deported after she is released because she is a convicted felon.

Benjamin Adams, the man who responded to Kalinina's online ad offering prospective husbands up to $15,000 to marry her, was sentenced April 7 to two months in prison for marriage fraud and making a false statement.

Kalinina testified during her trial that she didn't know "green card marriages" were illegal.

It is one of the most bizarre stories I have covered to date. Ms. Kalinina put up an ad on Craig’s List stating she was willing to pay $300 a month and a total of $15,000 to marry someone to get that golden ticket to America. CNN ran a story on it at the time:
http://www.cnn.com/2007/US/law/12/07/green.card.ap/index.html#cnnSTCVideo

Sure enough there was some down on his luck bloke out there foolish enough to take her up on her offer. That Wally Brain would be Benjamin Adams. Kalinina's live-in boyfriend, Dmitri Chavkerov, an Internet-ordained minister, wed the two defendants.

Who is Dmitri Chavkerov? According to EuroMoney Dmitri Chavkerov is none other than Forex Bastard:
http://www.euromoneyfix.com/Article.aspx?ArticleID=1853868

Dmitri you magnificent bastard! Not only are you a forex bastard, but you’re an ordained minister too?! What a true Renaissance man…

Nice of you to also take Yuliya off Benjamin Adams’ hands and put her up in your swinging pad, where I assume she is now serving her four month “home detention” prison sentence? Now that’s an easy piece of prison time with built in conjugal visitation rights included!

So is this the end of the notorious forexpeacearmy? According to a thread at Elite Trader titled “Felix Sells Out” MB Trading has cut its ties to Forex Bastard and torn up their IB agreement with him: http://www.elitetrader.com/vb/showthread.php?s=&threadid=103056&perpage=6&pagenumber=4

But Forex Bastard is nothing if not resilient. Over the years he has hosted a slew of forex related websites and changed his name more often than Prince:

Forexbastard.com
Forexpeacearmy.com
Kingofforexsignal.com
Forexfreedom.com

But it will be hard for the Bastard to re-invent himself in light of this story. Google Forex Bastard and Dmitri Chavkerov and you’ll find a bucketful of blogs designed to bring down the Bastard, most notably: http://forexbastards.blogspot.com/ which makes some hair raising allegations that imply that the Bastard is not just running his own little websites but also pulling the strings behind a whole host of actual forex dealers.

Such is the nefarious influence of Forex Bastard that he has spawned a whole series of paranoid blogs that insist he is some kind of one man Freemason Society (or Stonecutter Society if you prefer:
Inserted Video
).

If that isn’t enough to warn you off from forexpeacearmy there is this very insightful video by a trader who demonstrates how the reviews at forexpeacearmy are bogus and not worth the pixels they are printed on: http://www.youtube.com/watch?v=XWmyYDJn5P0

It’s a mad, mad, mad forex world we live in. Thank heavens all these guys have to get licenses in the next few months. This insanity has got to stop.
  • #791
  • May 22, 2008 11:48am May 22, 2008 11:48am
WASHINGTON (CNN) -- Lawmakers scrambled Thursday to fix a clerical error that derailed an effort to override President Bush's veto of a $300 billion farm bill.
http://i.l.cnn.net/cnn/2008/POLITICS...tractor.gi.jpg Congress may have to revote on a $300 billion farm bill due to what Democrats called a clerical error.


http://i.l.cnn.net/cnn/.element/img/...er_wire_BL.gif


The House of Representatives voted 316-108 Wednesday to override the president's veto, but shortly after the vote, lawmakers learned that a "not particularly controversial" section of the bill was accidentally omitted from the version that Congress sent to the White House, said House Majority Leader Steny Hoyer, D-Maryland.
The discovery prompted concerns from Hoyer's Republican counterpart that the override vote was improper.
"What's happened here raises serious constitutional questions -- very serious," said Minority Leader John Boehner, R-Ohio. "I don't see how we can proceed with the override as it occurred."
Hoyer suggested that the section left out of the original bill -- authorizing trade and food aid -- could be approved by both houses of Congress and sent back to Bush, "either to be signed by him or vetoed by him, and we would consider it in that context."
But late Wednesday, a Democratic leadership aide said the House likely will hold an entirely new vote on the complete farm bill, move it to the Senate for a quick vote and send it to the White House -- where Bush is likely to let it die without his signature during the Memorial Day recess.
Democrats said the matter stemmed from a clerical error. But Republicans pounced on what they called a "fiasco," which they said would require a temporary extension of the current farm bill.
Don't Miss

 

  1. <LI _extended="true">Congress sends popular farm bill to Bush <LI _extended="true">Farm bill has goodies for almost everyone
  2. White House threatens veto of farm bill

Democratic leaders "knew well in advance that Title III was not in the bill, and they moved forward with the veto override vote anyway -- and with little consideration to the outstanding constitutional questions," Antonia Ferrier, a spokeswoman for GOP Whip Roy Blunt of Missouri, said in a statement.
Wednesday's vote was far more than the two-thirds majority needed to override the veto.
Congress has passed one bill over Bush's objections -- a $23 billion water-project legislation that the president vetoed in 2007.
Two-thirds of the $300 billion in spending for the farm bill would go for nutrition programs such as food stamps. Another $40 billion would go toward farm subsidies, and $30 billion is allocated for payments to farms to keep land idle and other environmental programs.
After vetoing the farm bill, Bush said it "continues subsidies for the wealthy and increases farm-bill spending by more than $20 billion, while using budget gimmicks to hide much of the increase."
The president said it would hurt efforts to improve American farmers' access to overseas markets

  • #792
  • May 22, 2008 11:52am May 22, 2008 11:52am
Quoting fxtrader42
WASHINGTON (CNN) -- Lawmakers scrambled Thursday to fix a clerical error that derailed an effort to override President Bush's veto of a $300 billion farm bill.
Ugh.
  • #793
  • May 23, 2008 11:16am May 23, 2008 11:16am
The veto was overridden and the CFTC is now at work implementing the new law passed by Congress. CFTC has just issued a press release touting what the new law does:
http://www.cftc.gov/newsroom/generalpressreleases/2008/pr5501-08.html
Quote
• Enhances agency authority over off-exchange retail foreign currency fraud by:

1. Clarifying that the CFTC’s anti-fraud authority applies to certain retail off-exchange foreign currency transactions (also known as the “Zelener” fix)

2. Creating a new registration category for retail foreign exchange dealers and requiring registration for those who solicit orders, exercise discretionary trading authority, and operate commodity pools with respect to off-exchange retail foreign currency transactions

3. Imposing minimum capital requirements for futures commission merchants and retail foreign exchange dealers that act as counterparties in such transactions.


And so it begins. The following firms do not currently meet the upcoming capital requirement increase to $10 million which will take effect 120 days from today:

Advanced Markets $5,100,000
Bacera $5,500,000
Money Garden $6,600,000
Easy Forex $7,200,000
MB Trading $7,700,000
Hotspot $7,700,000
Forex Club $7,900,000
Friedberg Mercantile $8,000,000
CMC $8,300,000
Alpari $8,800,000
Ikon $8,800,000
  • #794
  • May 23, 2008 12:43pm May 23, 2008 12:43pm
I am getting late to this party but what effects, other then less brokers, will we see? How is this going to effect how we trade, or if our trading is reported for taxing purposes?

Rusty
  • #795
  • May 23, 2008 4:44pm May 23, 2008 4:44pm
Quoting rusty105
I am getting late to this party but what effects, other then less brokers, will we see? How is this going to effect how we trade, or if our trading is reported for taxing purposes?

Rusty
The CFTC is going to be creating a whole new series of rules and regulation in the next few months. It could have a major effect on the way you trade for example if they alter margin requirements. We'll have to wait and see.
  • #796
  • May 24, 2008 4:33pm May 24, 2008 4:33pm
I have also heard rumors about requiring that all FCMs to do a certain percentage of their business on exchange which will make the traditional FDM obsolete because the nature of spot FX is off exchange. Has anyone heard anything like this?
  • #797
  • May 28, 2008 11:47am May 28, 2008 11:47am
Quoting Voldemort
I have also heard rumors about requiring that all FCMs to do a certain percentage of their business on exchange which will make the traditional FDM obsolete because the nature of spot FX is off exchange. Has anyone heard anything like this?
I think that has to do with new category. If you still want to be a fcm you need to do a certain percentage on exchange.
  • #798
  • May 28, 2008 12:09pm May 28, 2008 12:09pm
One of the fastest growing markets for retail fx trading is in China. The only problem for forex dealers is that currency trading in China is illegal. The Chinese Government routinely rounds up underground forex dealers and introducing brokers but just as with the old prohibition laws the trading public seems to just ignore their communist masters and keep on drinking that moonshine.

But currency bootleggers beware: if you get caught you may wind up in a stank Chinese prison sewing sneakers together for Nike or stitching hula shirts together for Wal*Mart.

Such are the fates now of dozens of former introducing brokers for Northfinance and Forex.CH after a series of raids in mainland China.

Of course, no one should be surprised that Northfinance has once again gotten into legal trouble. They have long been an industry rogue and their recent purchase by FX Pro has done little to rein them in. But this does not bode well for Forex.CH, which is a Swiss based broker already reeling from the new banking laws in Switzerland that may put them out of business. It is going to be a lot harder for them to meet Swiss capital requirements now that their boys in China have been pinched:

http://forex.hexun.com/2008-05-12/105899725.html
http://news.sina.com.cn/s/l/2008-05-...15591165.shtml

Since most people can’t read Chinese I’ll summarize below:
Quote
On May 12, Shanghai police arrested a Russian citizen, who was the chief representative of North Finance, in addition to personnel from Northfinance’s IB, marketing, operations and accounting departments. According to Northfinance’s Russian flunky, there were more than 40 IBs working for NorthFinance, and each IB had to bring in more than 20 accounts to maintain their IB status. NorthFinance took RMB as client deposits, and all the money went directly to the flunky’s personal account, over 20 million RMB is now sitting in his frozen account.

On May 22, Shenzhen police arrested 13 people, all of whom were referral agents for GFX Capital Markets. From 2004 to 2007, they introduced a total of 184 clients to GFX. Forex.CH rebated $40 USD for every transaction, and clients had to pay an extra 80-100 RMB per trade. According to the prosecutor, clients made money in the beginning, but they all lost in the end. The referral agents avoided detection all these years by masquerading as a software company selling FX market analysis.
As I said before, China doesn’t play around. If they’re lucky these agents will be sent to a prison factory to spray lead paint on cheap Hannah Montana dolls but if they’re unlucky, well… take a read through Alexander Solzhenitsyn’s Gulag Archipelago and you’ll get the picture.

Now, knowing the manner that companies like GFX and Northfinance do business and knowing that they have been unregulated for many years why on earth would anyone open an account with such an outfit?
  • #799
  • May 30, 2008 12:03pm May 30, 2008 12:03pm
Having a rough day trading? Well, things could always be worse. You could have an account at one of the bankrupt forex firms described below. Perhaps the worst thing about having an account locked up in bankruptcy is the uncertainty and the legalese that gets spit in your face by court ordered receivers, (although in the case of Aleccoh FX all you get is some ass clown appearing once a month on a bulletin board hiding behind a mug shot of George Soros.)

Here is the latest correspondence from the court appointed receiver at FXLQ:

Quote

Robb Evans & Associates LLC
Receiver of Forex Liquidity LLC

Notice to Customers and Creditors of Forex Liquidity LLC

May 28, 2008

The Receiver has communicated with many of you that it intended to file a motion this week with the United States District Court seeking approval of an interim distribution.

In the last few days certain unexpected events have taken place that will cause a delay in the Receiver’s motion. Those events involve creditor and other related issues which may or may not impact the ultimate distribution proposal to be made by the Receiver. The Receiver is not currently able to disclose the nature of what has transpired, but hopes to have these issues resolved very soon.

If these issues can be resolved, the Receiver should be in a position to make a distribution recommendation to the Court by mid-June.


There is a lot of hedging in those three paragraphs. A lot of “if’s, should’s, unexpected’s, may’s, and hope’s” tossed in, which makes it far more likely that the customers stuck at FXLQ aren’t going to get all of their money back.

Of course his Holiness, Aleccoh FX, can’t be bothered to communicate in such a professional manner. He continues to hide behind a .jpg of George Soros and in his latest bloviation to the masses states: http://www.forex-tsd.com/212268-post1815.html
Quote
Good Day All

I am sorry for the delay in briefing you all but please be sure that my lawyers and I are following through this matter daily and recently by the hour.

Here is a small brief :

After many tractations and stallings by the -----------.SA staff and by its president, all the funds of the privatly owned account of its president has been frozen.

The good thing is that unofficialy the aleccohfx account holder's funds are there.

I of course refused to drop the criminal charges against these scammers unless they return the funds to each and every investor to the last penny.

As it seems, they are sending emails to the account holders giving them the choice to either continue trading with them or withdraw their funds.

I couldn't emphasize enough to send an immediate withdrawal of your funds to this email because i do not trust these people a bit , and if you read the postings on this thread, you will know why.

Please report back to [color=#0000ff][email protected] if you have received your funds in order to inform my lawyers and the judge in charge of the case.

I must remind you that eventhough they bankrupted aleccohfx and -------.SA, we made sure that our criminal case was against physical persons and not moral persons, in clear, we are prosecuting mr --- --- and not the company , and the judge accepted this prosecution and acted upon this by freezing mr ----- funds.

It seems that the justice is putting the heat on them as we speak , and this is why they are trying to get out of this mess they put themselves and aleccohfx investors into.

I hope this will bring an end to this story very soon and it is not another stalling technique by these crooks.

Goodspeed[/color]
__________________
Good Day

aleccoh


Such is life in the world of the undercapitalized. Let’s hope the new laws in the U.S. and Switzerland close the book on these all too common “bankruptcies.”
  • #800
  • Jun 2, 2008 8:11pm Jun 2, 2008 8:11pm
Savior,
I have heard rumors of a new document detailing the effects of the farm bill. I cant seem to get my hands on it though. do you know anything about this or have you heard these rumors?
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