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Proposed NFA Capital Requirement

  • #861
  • Jun 16, 2008 10:51am Jun 16, 2008 10:51am
personally I was a bit shocked when i saw the $20 million requirement... and how few firms might be able to meet it. I kinda like competition.

Can't some of the firms that won't be able to meet it just move offshore, to europe or somewhere else respectable?
  • #862
  • Jun 16, 2008 11:50am Jun 16, 2008 11:50am
$20 million is solid. FYI They are raising it $5 million every 120 days till they get to $20. I keep seeing people quote FXCM. Have anyone had any problems with them lately? I don't believe they have a live dealing desk any more. Correct me if I am wrong.
  • #863
  • Jun 16, 2008 12:05pm Jun 16, 2008 12:05pm
Quoting forextrader0
$20 million is solid. FYI They are raising it $5 million every 120 days till they get to $20. I keep seeing people quote FXCM. Have anyone had any problems with them lately? I don't believe they have a live dealing desk any more. Correct me if I am wrong.
I remember one guy who is a very big trader now, was very happy with FXCM when he was using it... however, he was a swing trader.
  • #864
  • Jun 16, 2008 12:07pm Jun 16, 2008 12:07pm
about capital requirements.. I really have no idea what they are actually. Can someone explain? Sorry if this is a really stupid question but... can the brokers use customer funds in their accounting of capital requirements?
  • #865
  • Jun 18, 2008 4:40pm Jun 18, 2008 4:40pm
Capital Requirements, for this discussion meaning net assets, for financial institutions are based on international standards by participating nations in the
Basel Accords. Participating nations are either members of the Basel Committee on Banking Supervision or are represented.

Member Countries are Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom and the United States and representatives from Luxembourg and Spain.

Currently the Basel II agreement is being implemented. Basel II is criticized by some for giving larger banks an unfair advantage.

The principle is that participating nations will adopt similar banking standards that will be implemented via their respective national regulatory bodies.
Regulatory Bodies are notoriously slow in catching up with changes in market behavior. FX has expanded wildly compared to other capital markets.

Therefore, in light of the Basel II agreement and a relatively unregulated FX market ; in comparison to retail levels of regulation for other asset classes, i.e., securities, it is a matter of course that regulation raising the bar for market entry for FX companies is coming down the pike.

It’s important to point out that FX companies must also be bonded in addition to the capital requirements. If I sold the bond I would prefer a higher level of net assets than lower.

At the CFTC websites you can find under market reports just how the various companies are capitalized. 500,000 is just a start. For many companies 5,000,000 will also be much lower than they are actually required to have on hand. Consider this, brokers can be counterparties to the trade and don't have to disclose it on a per transaction basis for the sum of 7,500,000 in net assets, that is license to clear one's trade desk books at the expense of blowing up the occasional client or two.

I encourage readers to look up FX companies that are only capitalized with a small amount over the 500,000. Ask yourself if you would really want to keep your money with those companies.

Personally, I would like to see regulation that offers more transparency between the market at my trades, in addition to additional capital requirements.

If one has ever considered the capital needed to effectively run a quality FX service one would realize that 500,000 is just a drop in the bucket when considering all the other costs involved (Compliance, back office, marketing, sales, customer service, etc.).
  • #866
  • Jun 18, 2008 11:36pm Jun 18, 2008 11:36pm
Thanks for that post, krigere. Best one to hit this thread in a very long time.

Please realize a simple fact that savior seems to ignore or is incapable of grasping. No one here has a problem with net cap requirements per se. Their importance is acknowledged by all.
The resentment comes, in part, from the capricious and indiscriminate manner in which they're implemented. 5M, 10M, and soon, 20M. These numbers make no sense and seem to be arrived at by spinning a wheel or rolling a pair of dice.

You mention the fact Basel II is criticized for giving larger banks an unfair advantage. Of course it's criticized and rightly so. If the net cap was a floating number determined by something objective, rational, and measurable for each individual brokerage, that particular criticism would end.
  • #867
  • Jun 19, 2008 1:55am Jun 19, 2008 1:55am
can someone please clarify for me...

my understanding is that the American law-making system works 1 of 3 ways... that something is written into law for 1 of 3 reasons I mean:

1) lobbyists demand it

2) the American People (or local subset thereof) will be upset if something is not done about a certain issue (i.e. Politicians might have constituents who won't be happy if this certain issue is not resolved)

3) it is a huge crisis and government must act (like war or something)

so using process of elimination it seems to me that the only reason that the requirements were raised was due to #1... so this means that for sure some big brokers must have lobbied for it, right? forgive me if the answer is already posted somewhere in this thread.

when something is lobbied for, is there a list of the firms who lobbied for it? if so, does anyone know which brokers paid for this legislation to be introduced? btw. how does it work? If I am a firm who wants to buy a politician, I can't just give him money cause that would be illegal, right? But I thought there are also limits to how much a firm can donate to a campaign, and they are quite small, right? And paying for vacations and such is also frowned upon and looked at as bribery, so why exactly do Politicians listen to lobbyists if they can't gain much from it?
  • #868
  • Jun 19, 2008 7:39pm Jun 19, 2008 7:39pm
Quoting forextrader0
$20 million is solid. FYI They are raising it $5 million every 120 days till they get to $20. I keep seeing people quote FXCM. Have anyone had any problems with them lately? I don't believe they have a live dealing desk any more. Correct me if I am wrong.

you are wrong!!!
  • #869
  • Jun 20, 2008 6:41am Jun 20, 2008 6:41am
Quoting forextrader0
$20 million is solid. FYI They are raising it $5 million every 120 days till they get to $20. I keep seeing people quote FXCM. Have anyone had any problems with them lately? I don't believe they have a live dealing desk any more. Correct me if I am wrong.
You have no idea what you are talking about, and many people have had problems with FXCM. Their NFA record looks like used toilet paper.
  • #870
  • Jun 20, 2008 10:51am Jun 20, 2008 10:51am
Hi C,

Can you please clarify about both points? Do you have an account with FXCM? Have you lost $$$ with them?
  • #871
  • Jun 20, 2008 11:35am Jun 20, 2008 11:35am
Quoting ycomp
can someone please clarify for me...

my understanding is that the American law-making system works 1 of 3 ways... that something is written into law for 1 of 3 reasons I mean:

1) lobbyists demand it
This rule was proposed by the National Futures Association to the Congress last summer. It does not appear that is was inspired by any of the firms below. Although certainly the firms at the top of the list would appear to benefit the most from it (although the CFTC has no come out with their new rules so it is hard to say for certain who will benefit.) In any case, it is a done deal so buyer beware:

The following firms have net capital below $10 million

Advanced Markets $5,041,000
Bacera $5,370,000
MG Financial $5,886,000
CMC $7,089,000
Forex Club $7,562,000
Easy Forex $7,741,000
Hotspot $7,783,000
Friedberg Mercantile $8,053,000
MB Trading $8,381,000
Ikon $9,418,000

In particular you will notice that three firms are far below the upcoming increase to $10 million. Advanced Markets, Bacera and Money Garden. In fact, they are struggling just to meet the current $5 million net capital requirement with Advanced Markets a scant $41,000 above the current law! That kind of capitalization does not inspire much confidence and traders really need to beware doing business with them.

The following firms have net capital below $20 million

GFS Forex $11,376,000
Alpari $11, 766,000
IFX $12,362,000
ODL $12,995,000
CMS Forex $14,085,000
I Trade FX $16,054,000
FX Solutions $17,628,000
PFG $19,369,000

The following firms have net capital above $20 million

Interbank FX $21,367,000
GFT Forex $64,288,000
Gain Capital $66,314,000
FXCM $73,603,000
Rosenthal Collins $76,571,000
Oanda $163,136,000
  • #872
  • Jun 20, 2008 11:40am Jun 20, 2008 11:40am
Quoting forexsavior
This rule was proposed by the National Futures Association to the Congress last summer. It does not appear that is was inspired by any of the firms below. Although certainly the firms at the top of the list would appear to benefit the most from it (although the CFTC has no come out with their new rules so it is hard to say for certain who will benefit.) In any case, it is a done deal so buyer beware:

The following firms have net capital below $10 million

Advanced Markets $5,041,000
Bacera $5,370,000
MG Financial $5,886,000
CMC $7,089,000
Forex Club $7,562,000
Easy Forex $7,741,000
Hotspot $7,783,000
Friedberg Mercantile $8,053,000
MB Trading $8,381,000
Ikon $9,418,000

In particular you will notice that three firms are far below the upcoming increase to $10 million. Advanced Markets, Bacera and Money Garden. In fact, they are struggling just to meet the current $5 million net capital requirement with Advanced Markets a scant $41,000 above the current law! That kind of capitalization does not inspire much confidence and traders really need to beware doing business with them.

The following firms have net capital below $20 million

GFS Forex $11,376,000
Alpari $11, 766,000
IFX $12,362,000
ODL $12,995,000
CMS Forex $14,085,000
I Trade FX $16,054,000
FX Solutions $17,628,000
PFG $19,369,000

The following firms have net capital above $20 million

Interbank FX $21,367,000
GFT Forex $64,288,000
Gain Capital $66,314,000
FXCM $73,603,000
Rosenthal Collins $76,571,000
Oanda $163,136,000
ok I form my understanding of US legislative process as a foreigner watching CNN.. didn't realize that associations can propose laws for consideration.
  • #873
  • Jun 20, 2008 11:41am Jun 20, 2008 11:41am
Quoting forextrader0
Hi C,

Can you please clarify about both points? Do you have an account with FXCM? Have you lost $$$ with them?

1)The new capital requirement doesnt make any sense and it was a made up number without any serious calculation or honest intention.

2)I dont need to have an account with FXCM to know that they suck. I dont need to go to Iraq to know its dangerous, and I dont need to get my arm cut off to know it hurts.

People who traded with FXCM complain. Mannnnyyy people have complained.

3)http://www.nfa.futures.org/BasicNet/...tityid=0308179

Here is their record with the NFA.

I rest my case
  • #874
  • Jun 20, 2008 11:42am Jun 20, 2008 11:42am
is that rosenthal collins amount only for their fx operations? or includes futures as well?
  • #875
  • Jun 20, 2008 11:44am Jun 20, 2008 11:44am
Quoting ycomp
is that rosenthal collins amount only for their fx operations? or includes futures as well?
Rosenthal Collins includes their futures money as well.
  • #876
  • Jun 20, 2008 12:50pm Jun 20, 2008 12:50pm
Quoting forexsavior
Rosenthal Collins includes their futures money as well.
how separate is RCG futures from RCG forex. can RCG forex go bad and effect negatively forex account holders without having any effect on RCG futures? can one sink without the other?
  • #877
  • Jun 21, 2008 3:46am Jun 21, 2008 3:46am
I received this email from Tradeview.
Any comment is welcome.

"... To keep up with the trader’s increased demands on the Metatrader software, we founded our partnership with Ikon GM to satisfy our need for aggressive technical restructuring. Supporting 24 hour-a-day trading requires intensive support. By joining Ikon GM, we are able to eliminate 3rd party solutions by utilizing their in-house technology company which specializes in network trading, and utilizing the latest market innovations. For our clients, this means we have direct control over our platform, and the ability to develop and test more advanced solutions in response to ongoing demands.

By combining forces, Tradeview will continue to improve upon the promise we make to our clients: Providing optimum support, execution, and trading solutions that are unrivaled in the industry.

We are here to answer any questions about the transition and we’ll do our best to ensure that the process is as seamless as possible.

To alleviate any confusion about the transition, we want to clarify your options:

For those of you who would like your account changed immediately, please fill out the ‘Positive Consent Form’, and your account will be transferred over within 24 hours and you will have the same set up on the Metatrader platform however you will be sent a different IP address.

If you would like us to handle the process for you, on the 27th of this month your account will automatically be transferred.

Please be advised that you are not required to accept the proposed transfer, and may instead instruct RCG to liquidate your account. Also, if you are no longer interested in utilizing the Metatrader software, RCG has a variety of both Forex and Futures platforms available to you. Contact your Tradeview representative for information about these options.

Again, we are here to help in any way that we can, so please do not hesitate to contact us. Office hours are Monday to Friday 8:30 A.M. till 9:00 P.M.

-The Tradeview Team"

Quoting forexsavior
Rosenthal Collins includes their futures money as well.
  • #878
  • Jun 23, 2008 11:54am Jun 23, 2008 11:54am
Quoting autotrade-fx
I received this email from Tradeview.
Any comment is welcome.

"... To keep up with the trader’s increased demands on the Metatrader software, we founded our partnership with Ikon GM to satisfy our need for aggressive technical restructuring. Supporting 24 hour-a-day trading requires intensive support. By joining Ikon GM, we are able to eliminate 3rd party solutions by utilizing their in-house technology company which specializes in network trading, and utilizing the latest market innovations. For our clients, this means we have direct control over our platform, and the ability to develop and test more advanced solutions in response to ongoing demands.

By combining forces, Tradeview will continue to improve upon the promise we make to our clients: Providing optimum support, execution, and trading solutions that are unrivaled in the industry.

We are here to answer any questions about the transition and we’ll do our best to ensure that the process is as seamless as possible.

To alleviate any confusion about the transition, we want to clarify your options:

For those of you who would like your account changed immediately, please fill out the ‘Positive Consent Form’, and your account will be transferred over within 24 hours and you will have the same set up on the Metatrader platform however you will be sent a different IP address.

If you would like us to handle the process for you, on the 27th of this month your account will automatically be transferred.

Please be advised that you are not required to accept the proposed transfer, and may instead instruct RCG to liquidate your account. Also, if you are no longer interested in utilizing the Metatrader software, RCG has a variety of both Forex and Futures platforms available to you. Contact your Tradeview representative for information about these options.

Again, we are here to help in any way that we can, so please do not hesitate to contact us. Office hours are Monday to Friday 8:30 A.M. till 9:00 P.M.

-The Tradeview Team"
There so much technical BS in this statement it is hard to say exactly what RCG is doing. It appears RCG is now referring customers to IKon? Key question is where is the money going?
  • #879
  • Jun 23, 2008 3:28pm Jun 23, 2008 3:28pm
No Mas! No Mas! Like a bloody and battered Roberto Duran the folks over at Rosenthal Collins are giving up on MT4. This weekend they dropped a bombshell on their clients:
http://www.forexfactory.com/showthread.php?t=92624

Quote
Dear Valued Client,

From day one, Tradeview has worked to offer clients optimum trading solutions, by offering the familiar Metatrader 4 platform with sophisticated enhancements to the software. Our dedication has been to provide the latest trading technology by offering clients an unprecedented link to the biggest liquidity pools in the world. In doing so, we cultivated a new kind of FCM - one with a focus on innovation, and a relentless devotion to the best technology.

By creating our systems with this focus, we gained the ability to make fast changes in the most robust 24 hour market in the world. Every Tradeview client can rest assured that they will have access to the best possible solutions as soon as they become available.

We founded our partnership with Ikon GM based on our need for aggressive technical restructuring. Supporting 24 hour-a-day trading requires intensive support, and most FCMs are forced to outsource their technology needs. By joining Ikon GM, we are able to eliminate 3rd party solutions by utilizing their in-house technology company which specializes in network trading, and utilizing the latest market innovations. For our clients, this means we have direct control over our platform, and the ability to develop and test more advanced solutions in response to ongoing demand.

In addition to maintaining the best trading solutions, Ikon GM has a distinguished regulatory history. Since the firm?s original inception in 1999, Ikon Global Markets has maintained an exceptional record, which is an ethical priority we share.

By combining forces, Tradeview will continue to improve upon the promise we make to our clients: Providing optimum support, execution, and trading solutions that are unrivaled in the industry. If you have any further questions, feel free to contact us at our RCG office or our new office at Ikon Global Markets.

RCG Office: 212-437-1870
Ikon Office: 212-482-8275

Regards,

The Tradeview Team


Anyone who spends time on the bulletin boards has gotten to know Tradeview Forex as they have spent gobs of money advertising their wares. Yet it appears they were never able to get MT4 to work proficiently and as such are simply walking away for the whole failed experiment. One Tradeview customer on the forex factory thread referenced above states:

Quote
Well, considering what it has been like trading with Tradeview's MT4 platform all last week, a change for the better was needed. There have been numerous outtages to put up with and not to mention requotes during normal market conditions, invalid price messages, and not to mention when you enter an order the order does not go through and instead an "order accepted" message pops up and with no confirmed order. The message would sit there forever so one would have to cancel it and try again, but then one would get trade text is busy message. To circumvent around that you would have to close down the platform and re-open it and try all over again. That would cost you seconds and many pips. One night I could not close any orders and had to phone them in to close. The IT department has had their hands full rebooting the server and trying to fix the problems.

Tradeview says there were numerous problems related to hard coding from their 3rd party vendor for the STP technology. Problems that they could not get support for to fix.


While Tradeview should be commended for knowing when to call it quits I must take issue with this notion that Ikon has a "distinguished regulatory history."

Last fall Ikon merged with Royal Forex Trading, which had a poor regulatory record and was sanctioned by the NFA right before they gave up their FCM license due to the fact they did not have the necessary capital to stay in business.

Second, both of Ikon's principals were former principals of Coes FX. Right after they left Coes FX became the subject of numerous regulatory actions by both the NFA and CFTC resulting in a quarter million dollar fraud settlement and the closure of the firm.
http://www.cftc.gov/newsroom/enforcementpressreleases/2006/pr5215-06.html

Third, sources have informed me that many of the clients that Ikon will be receiving from Tradeview were formerly the clients of One World Capital. One World was the poster child for undercapitalization and blew up last year just as the $5 million capital requirement was kicking in.

In short, Ikon seems to stick its fingers in an awful lot of cookie jars and it they aren't careful they may get their pudgy little digits stuck in one soon.

Finally, they are $10 million below the $20 million capital requirement set to kick in next spring.

So to those MT4 traders out there who chose Tradeview Forex because they were well capitalized I say buyer beware. Ikon is not Rosenthal Collins. It may be time for you to shop around again...
  • #880
  • Jun 24, 2008 7:42am Jun 24, 2008 7:42am
Guys its more than that.

See part of the story here:
www.easy-forex-warning.com

The information presented in this website is based on a book that is due to be published. The book is backed-up by dozens of taped discussions that were transcribed after being tapped during the years 2005-2007 with Easy-Forex personal and customers.

The website starts by explaining how Forex companies makes money and why some of them have conflict of interest with their customers. It then explains how easy-forex rewards their agents- this is something crazy.

Next it brings transcripts of 3 discussions:

The first is with a former easy-forex agent that opens his hart.

The second of an easy-forex agent talking to a customer: This discussion shows how this agent is trying to deceit a one of his client.

The third transcript is with one victim of this agent.

The scams that was uncovered took place in Easy-Forex Israel. Yet, it is very much possible that the outraging rewarding method of Easy-Forex to their agent (called "net deposit") took place also in other places in the world.
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