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It's official, brokers trade against you

  • #21
  • Jun 2, 2008 7:01am Jun 2, 2008 7:01am
Quoting motanu
If you have any doubts, this is the a section from the new Client Agreement at CMS called "NFA FOREX DEALER MEMBER DISCLOSURE":



THE FOREIGN CURRENCY TRADING YOU ARE ENTERING INTO IS NOT CONDUCTED ON AN EXCHANGE. CMS IS ACTING AS A COUNTERPARTY IN THESE TRANSACTIONS AND, THEREFORE, ACTS AS THE BUYER WHEN YOU SELL AND THE SELLER WHEN YOU BUY. AS A RESULT, CMS' INTERESTS MAY BE IN CONFLICT WITH YOURS. UNLESS OTHERWISE SPECIFIED IN YOUR WRITTEN AGREEMENT OR OTHER WRITTEN DOCUMENTS, CMS ESTABLISHES THE PRICES AT WHICH IT OFFERS TO TRADE WITH YOU. THE PRICES CMS OFFERS MIGHT NOT BE THE BEST PRICES AVAILABLE AND CMS MAY OFFER DIFFERENT PRICES TO DIFFERENT CUSTOMERS.
IF CMS ELECTS NOT TO COVER ITS OWN TRADING EXPOSURE, THEN YOU SHOULD BE AWARE THAT CMS MAY MAKE MORE MONEY IF THE MARKET GOES AGAINST YOU. ADDITIONALLY, SINCE CMS ACTS AS THE BUYER OR SELLER IN THE TRANSACTION, YOU SHOULD CAREFULLY EVALUATE ANY TRADE RECOMMENDATIONS YOU RECEIVE FROM CMS OR ANY OF ITS SOLICITORS.

At least they acknowledge it.

You need to learn more about the FX business my friend. Once you do, go and compare it to other investment markets.
  • #22
  • Jun 2, 2008 7:58am Jun 2, 2008 7:58am
Quote
Is it still possible to just hand over power of attorney to any other individual for an account, be it a normal bank account or a brokerage account, and have someone trade for you/have full access to an account /funds without any of this bigwig stuff?
Hrm, not sure if I can find a link to the exact wording... there's a few other threads on it tho. As it was, people are prohibited from accepting funds for trading or from exercising trading authority over someone else's account without being a "qualifying party." There's a list of such parties, but basically it comes down to NFA membership and perhaps an NASD license, or working for such institution. It specifically mentions "qualifying futures association" ... so that is definitely a requirement.

Quote
I'm not sure how far all these regulations apply outside of the USA, either, anyone have any idea how this stuff works with mixed nationalities etc?
Not entirely sure, so don't take it to the bank, but most of this stuff applies to the US and perhaps some of our territories only. If you're a US citizen or reside within the US, it applies to you. If you don't live in the US but trade at a US broker, the broker is bound by the same rules and it will probably be applied to you. If you live somewhere else and trade somewhere else then that nation's rules would apply to you, whatever they may be.

I think the big gray would come from being a non-US citizen, with a broker outside of the US, soliciting or accepting funds from US citizens. I don't know if, under those circumstances, it's even possible to get an NFA membership... but you could probably get a membership from whatever national futures oversight organization is local and make an argument for that (note: consult an attorney first).

Failing that, I don't know what recourse the US would really have against you, if any, but it's a significant enough risk that the smart choice is simply not accepting US-based funds if you've got any reason to worry.

Quote
Gets off topic, doesn't it...but imho far more interesting than the same old "brokers trade against you" stuff..they can do what they want as long as their quote is close enough to the other 4 feeds I am watching..
Indeed. Not exactly big news.
  • #23
  • Jun 2, 2008 8:14am Jun 2, 2008 8:14am
Some companies are sending emails and some have put an acknowledement page in their application. I am curious about FXSol as well because the book 99.5% of their business; I wonder if they will email new clients. This ruling came long before the Farm Bill by the NFA for FDM's. Banks do not have to abide to this ruling.
  • #24
  • Jun 2, 2008 8:46am Jun 2, 2008 8:46am
Its the same in europe, every broker has to state possible 'Conflicts of interest' and he has to provide a statement on his 'Best execution policy'.
  • #25
  • Jun 2, 2008 3:14pm Jun 2, 2008 3:14pm
Quoting shrike
Its the same in europe, every broker has to state possible 'Conflicts of interest' and he has to provide a statement on his 'Best execution policy'.
Hello shrike, It was just a matter of time when all those "hardball" firms that screamed, that we are "The True ECN" and the rest of the firms are just "bucketshops" Now, they all equal i guess. I always buy and sell to a dealer, which brings transactions out on the market using its name, but not mine. This is nature of Forex Market. I didn't say it's bad, but now all dealers have a "bucketshop disclosure"!
  • #26
  • Jun 2, 2008 8:04pm Jun 2, 2008 8:04pm
I dont understand why you all think that these ecn brokers arent holding risk on your trades. its the same bucket shop model just with a facelift. I really doubt that alot of these firms have the banking realtionships to truely pass the business through. It takes years and years to build these relationships not to mention the credit lines.

Banks will take smaller incriments if the realtionship is valuable enought to them. I have been speaking to a couple of my friends that are in the industry and was told that there are a couple Large retail operations that are really struggling with this.

I think that we are in for some wholesale changes. it is going to be really interesting to see what happens in the next couple of months.
  • #27
  • Jun 2, 2008 8:13pm Jun 2, 2008 8:13pm
Quoting Voldemort
I dont understand why you all think that these ecn brokers arent holding risk on your trades. its the same bucket shop model just with a facelift. I really doubt that alot of these firms have the banking realtionships to truely pass the business through. It takes years and years to build these relationships not to mention the credit lines.
Please do more research before you spew off such nonsense.
  • #28
  • Jun 3, 2008 12:39am Jun 3, 2008 12:39am
wich brokers is true ECN ?
the all claim true ECn executions and so on..

can we have a list ?
StopLoss is for none belivers... Trust the Gurus..
  • #29
  • Jun 3, 2008 6:09am Jun 3, 2008 6:09am
Quoting motanu
THE PRICES CMS OFFERS MIGHT NOT BE THE BEST PRICES AVAILABLE AND CMS MAY OFFER DIFFERENT PRICES TO DIFFERENT CUSTOMERS.
.
NOW I understand why (at Oanda) some account have instant executions and no slippage and some accounts have requotes,slippage,disconnections
  • #30
  • Jun 3, 2008 6:13am Jun 3, 2008 6:13am
Quoting Voldemort
I dont understand why you all think that these ecn brokers arent holding risk on your trades. its the same bucket shop model just with a facelift. I really doubt that alot of these firms have the banking realtionships to truely pass the business through. It takes years and years to build these relationships not to mention the credit lines.
That is totally not true... it takes money to establish a credit line and flow to get good rates. If some retail shops are having trouble it is because they have none of both. I dont know if all ECN models are passing through all their business but I am sure they have solid banking relationships and that they if they dont pass through they would have to to manage risk.
  • #31
  • Jun 3, 2008 6:18am Jun 3, 2008 6:18am
Quoting lillelise
wich brokers is true ECN ?
the all claim true ECn executions and so on..

can we have a list ?
Try hotspofx.But to open the account you'll need more that the rest (small change) from the supermarket...
  • #32
  • Jun 3, 2008 1:38pm Jun 3, 2008 1:38pm
Quoting ILclitoride
Try hotspofx.But to open the account you'll need more that the rest (small change) from the supermarket...
ok so we got Hotspotfx any others..?
StopLoss is for none belivers... Trust the Gurus..
  • #33
  • Jun 4, 2008 11:48am Jun 4, 2008 11:48am
Quoting lillelise
ok so we got Hotspotfx any others..?
Interactive Brokers.Cheap,very big,trade more that forex,futures...
  • #34
  • Last Post: Jun 9, 2008 2:05am Jun 9, 2008 2:05am
Quoting lillelise
ok so we got Hotspotfx any others..?
How about looking into MB Trading.

Could someone care to give further information on them for anyone else who might be interested?



Also, has Oanda sent a disclosure to anyone with an account there that is similar to the ones being sent by other brokers mentioned earlier in this thread?
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