The CFTC has released its latest Adjusted Net Capital report. With less than three months to go before the NFA raises capital requirements to $10 million the Capital issue is once again front and center in retail forex. How does you firm stack up? http://www.cftc.gov/marketreports/financialdataforfcms/index.htm
The following firms have net capital below $10 million
No change in capital for Advanced Markets, Bacera and Money Garden who are still way below the upcoming cap increase. Also, for the first time ACM is reporting net capital and their first number out of the box isn’t that great. One suspects they had no idea cap requirements were going up and it could very well be they have completely mistimed their entry into the U.S. market. ACM appears to have brought a knife to a gun fight… Typical of a Swiss firm isn’t it?
The following firms have net capital below $20 million
GFS Forex $10,909,000 MB Trading $11,165,000 IFX $13,010,000
ODL $13,053,000
Alpari $13,084,000
I Trade FX $16,097,000
FX Solutions $17,974,000
CMS Forex $17,931,000
PFG $19,862,000
The following firms have net capital above $20 million
Interbank FX $30,364,000
Gain Capital $61,918,000
GFT Forex $67,298,000
FXCM $70,792,000
Oanda $165,526,000
As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new law going into effect in less than three months.
Ignored
Forexsavior, who are you kidding? And I quote, "ACM appears to have brought a knife to a gun fight..." What exactly does that mean? From what I can see, you're worse than the hacks on CNBC looking for a 5 second sound byte. ACM is continuing to expand, and you'd be an idiot to think that they won't be able to meet the capital requirement. I mean, are you really suggesting ACM won't be able to come up with an extra 2.5 million to meet the upcoming requirement? How is it that might have "mistimed" their entry into the U.S. market? Really now, do you think they somehow forgot the capital requirement was going up in a few months? Come on, give me a break... It sure seems like you're the Fox News of amateur forex reporting. How about you talk about the firms who are really at risk, instead of batting around ridiculous speculation about well-established firms who are a measly amount of money away from the new requirements. If you'd like, for the record, I will put money on ACM meeting the new requirement - care to take that bet? Or maybe you should just stick to writing songs... and quit stirring up hype and confusion.
The Nine Lonely Whales Right off the bat I Trade comes out swinging in their response, denying that they had only 9 accounts with balances of $50,000 or more and insisting they had “substantially more” such accounts. They did not, however, deny the NFA’s statement that they had only 3,000 active customer accounts in total. The number of large accounts is of course an important part of this case. If I Trade only had 9 large accounts than surely they would notice any large transactions taking place amongst any of them. The NFA’s entire case rests upon the charge that I Trade did not take any action to report the suspicious transactions that were happening with the Olint accounts, among others.
The Vetting of David Smith I Trade FX then sticks in the knife with a great line in response to the NFA’s repeated references to David Smith acting as a Principal in the firm. “Respondents admit that David Smith was listed as a principle of I-Trade starting on March 27, 2007, but only after the NFA took six months to conduct its due diligence investigation of Smith prior to approving Smith as a principal of I-Trade…”
Ka-POW! I Trade is basically telling the NFA, “hey if this guy was so bad why the hell did you approve him to be a principal in the first place?” Gotta admire the moxie of I Trade as that takes some brass cajones to get up in NFA’s face like that.
However, I could not find any response from I Trade FX in regards to the NFA’s charge that David Smith funded I Trade FX with almost all its operating capital in 2007. So it appears that I Trade is conceding that their company was basically bankrolled by David Smith during his tenure as principal. That in my opinion is the real sin for I Trade FX, that their company was using an alleged con man’s money to inflate their net cap numbers throughout 2007.
David Smith’s Secret Bank Records As you’ll recall in an interview conducted by Jamaican Radio David Smith claimed that he would have given NFA his bank records had he had the time to do so before changing his story and stating he couldn’t turn them over for “legal reasons.” I Trade FX states for the record that they simply did not have the legal authority to compel David Smith to provide NFA with the documents when they asked about them. So the question for David Smith remains “why would you not turn over your bank records? What legal authority was preventing you from doing this?”
The Guts of the Complaint The main charge NFA is lodging in this complaint is that I Trade FX failed to notify authorities about suspicious activity going on in David Smith’s accounts, among others. Here is I Trade’s response regarding the Olint account activity:
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“Respondents lack knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph No. 8. Respondents’ deny that I-Trade failed to file any Suspicious Activity Reports that should have been filed.”
Deny, deny, deny. In plain English it seems I Trade FX is telling NFA “we aren’t going to admit these transactions were suspicious and we don’t believe we failed to file any Suspicious Activity Reports.”
In another clever bit legal jujitsu I Trade FX bats down the charge that they didn’t respond to certain “Red Flags” with this answer:
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Respondents admit that NFA’s 2002 Interpretative Notice identifies the items listed in Paragraph No. 11 above as “Red Flags” and state in the affirmative that NFA’s 2002 Interpretative Notice provides that those “red flags” may alert employees to suspicious activity … that could cause further investigation….” (Emphasis added).
Translation: this rule you passed was vague and doesn’t require a firm to do jack squat.
That may be the case but doesn’t common sense tell you to report this stuff? Ah but common sense has no place in an American courtroom! Gotta love lawyers…
The next several pages delve into the specific accounts in question with I Trade admitting some things, denying other things and refusing to comment on the rest. But I’m skipping over this because it appears to me most of this legalese is “he said, she said” type stuff that can’t be proven until this case goes to trial. Also, it hurts my head. There is a reason I chose not to go to law school…
But this caught my eye at the end:
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Paragraph No. 28. Despite the highly suspicious activity in the Olint and TCI accounts and the Harris account, as alleged above, at no time did I-Trade file a SAR for any of these accounts contrary to the requirements of NFA Compliance Rule 2-9, the Notice, and I-Trade’s own AML Program.
ANSWER: Respondents are barred by federal regulations from disclosing to the subject of a SAR that a SAR had been filed against the customer, and because this Answer will be publicly disclosed by the NFA on its website, the Respondents respectfully decline to admit or deny the allegation in Paragraph 28, and are prevented from asserting affirmative statements in their defense, and respectfully suggest that NFA’s publication of its Complaint in this matter may have been in violation of the confidentially (sic) provisions of the applicable federal law.
Brilliant! I Trade FX is accusing NFA of possibly violating federal law! Again, I’m not a lawyer and I have no way of judging whether or not this is a legitimate line of defense, but once again I Trade is really taking it to NFA and from that perspective it does make for good entertainment. Could this be the reason NFA delayed posting I Trade FX’s answer? Well, if it is it appears their legal counsel rubbished this line of defense in the end by brazenly publishing the ANSWER last week.
So now what? Well, I think this case will probably be decided by events on the ground. There are still far too many questions surrounding Olint and David Smith. If the Feds can’t prove any financial wrong doing my guess is I Trade FX and NFA will settle the matter a few months from now. But if the Feds find some really nasty stuff on David Smith I can’t imagine NFA will give I Trade FX a slap on the wrist.
Lucky for I Trade FX they are not a public company or else their stock would be in the toilet. In the meantime, I am cautioning traders to take a wait and see attitude towards this besieged and embattled firm.
What is funny that a well capitalized broker who have more money than any other US broker have just shut down, and that is "CMC". And will probably operate out of other offices that they have all over the world. But does that mean that FXCM will shut down and move to one its other offices??? GainCapital??? GFT???
We will just have to wait and see if these well funded brokers would take jobs overseas for cheap labor....Or will just try to escape the NFA's oversight.
CMC has very little US business and most of their business is done in London amongst other non-us countries. They are saying that they will not get the return needed on locking up 20M. FXCM, Gain, GFT, Oanda aren't going anywhere that I can promise you.
The CFTC has released its latest Adjusted Net Capital report. With less than two months to go before the NFA raises capital requirements to $10 million the Capital issue is once again front and center in retail forex. How does you firm stack up? http://www.cftc.gov/marketreports/financialdataforfcms/index.htm
The following firms have net capital below $10 million
No change in capital for Bacera and Money Garden (although Advanced Markets saw a small uptick while Forex Club saw a small downtick.) Also, ACM is still reporting net capital below 10 million. One suspects they had no idea cap requirements were going up and it could very well be they have completely mistimed their entry into the U.S. market. ACM appears to have brought a knife to a gun fight… Typical of a Swiss firm isn’t it?
The following firms have net capital below $20 million
ODL $10,500,000
GFS Forex $11,296,000
MB Trading $12,201,000 Alpari $12,810,000
IFX $14,941,000 I Trade FX $16,214,000
CMS Forex $17,996,000
FX Solutions $18,887,000
The following firms have net capital above $20 million
PFG $21,695,000
Interbank FX $33,341,000 Gain Capital $67,077,000
GFT Forex $69,497,000
FXCM $78,503,000 Oanda $164,523,000
As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new law going into effect in less than two months.
Forexsavior, you are a joke. Since you're still repeating yourself, I'll repeat what I said before: Quoting you: "ACM appears to have brought a knife to a gun fight..." What exactly does that mean? From what I can see, you're worse than the hacks on CNBC looking for a 5 second sound byte. ACM is continuing to expand, and you'd be an idiot to think that they won't be able to meet the capital requirement. I mean, are you really suggesting ACM won't be able to come up with an extra 2.5 million to meet the upcoming requirement? How is it that might have "mistimed" their entry into the U.S. market? Really now, do you think they somehow forgot the capital requirement was going up in a few months? Come on, give me a break... It sure seems like you're the Fox News of amateur forex reporting. How about you talk about the firms who are really at risk, instead of batting around ridiculous speculation about well-established firms who are a measly amount of money away from the new requirements. If you'd like, for the record, I will put money on ACM meeting the new requirement - care to take that bet? Or maybe you should just stick to writing songs... and quit stirring up hype and confusion.
The CFTC has released its latest Adjusted Net Capital report. With less than two months to go before the NFA raises capital requirements to $10 million the Capital issue is once again front and center in retail forex. How does you firm stack up? http://www.cftc.gov/marketreports/financialdataforfcms/index.htm
The following firms have net capital below $10 million
No change in capital for Bacera and Money Garden (although Advanced Markets saw a small uptick while Forex Club saw a small downtick.) Also, ACM is still reporting net capital below 10 million. One suspects they had no idea cap requirements were going up and it could very well be they have completely mistimed their entry into the U.S. market. ACM appears to have brought a knife to a gun fight… Typical of a Swiss firm isn’t it?
The following firms have net capital below $20 million
ODL $10,500,000
GFS Forex $11,296,000
MB Trading $12,201,000 Alpari $12,810,000
IFX $14,941,000 I Trade FX $16,214,000
CMS Forex $17,996,000
FX Solutions $18,887,000
The following firms have net capital above $20 million
PFG $21,695,000
Interbank FX $33,341,000
Gain Capital $67,077,000
GFT Forex $69,497,000
FXCM $78,503,000
Oanda $164,523,000
As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new law going into effect in less than two months.
Ignored
Just to let you all know. The word I've heard is that a $20 million net cap requirement will be in place very soon after the $10 mil requirements. The CFTC is looking to create a market of only 10 or so huge institutions within the next couple of years to support all forex market activity in the US. These retail brokers that were listed here are all on that list, but lead by massive investment bank institutions of dbFX, CitiFX Pro, Goldman-Sachs, and UBS(the last two which soon will delve into the retail fx market).
By the way, this may have already been mentioned... just don't want to go through all the posts.
Lot of news in retail forex the past few weeks. In the U.S. both CMC and Bacera are closing their doors. And in Europe mega forex broker Saxo Bank has run into some serious trouble.
Saxo is one of the largest firms in the currency trading world. Over the summer they spent millions of dollars sponsoring the eventual winner of the Tour De France. It now appears in hindsight that this money was woefully squandered. News reports out of Denmark are saying that Saxo has had to make hundreds of employees redundant amidst the global financial meltdown. Saxo has not come forward with details but it appears the situation is quite serious: http://borsen.dk/finans/nyhed/140626/
To make matters worse they have had to suspend a senior manager who was the prior head of Swiss broker Synthesis Bank.
Saxo suspend boss | Denmark's fastest growing bank and sponsor of Bjarne Riis' cycling team, on Thursday suspended one of its top executives Charles-Henri Sabet, head of global trading and member of senior executive management. The bank would not say specify the reason for the suspension, but it is currently launching an internal investigation in connection with the Swiss financial authorities, reports DR. Last year the financial institution bought the Swiss Synthesis Bank, founded and owned by Sabet, as part of its global expansion for online investments. (kr)
Oh boy, yet another Swiss broker finds itself under government scrutiny. How many times must I tell the trading public (and retail brokers themselves) beware Swiss forex brokers!
This news following on top of the news that CMC closed its U.S. office and itself has had to make employees redundant around the world would seem to indicate that firms that are involved in the CFD business are really catching a lot of fallout from the financial panic of 08’. Developing…
Saxo Bank sacks up to 340Between 320 and 340 employees of Saxo Bank are to be let go according to a new streamlining plan.The Danish investment bank Saxo Bank is to axe between 320 and 340 employees according to a new plan designed to streamline the organisation. When the bank\\\'s two new managing directors Eric Rylberg and Karsten Poulsen were put in place at the beginning of August, the bank\\\'s founders gave them the primary job of determining whether efficiency could be improved. \\"Again this year, Saxo Bank has provided good results - but the bank has grown quickly in many areas. That normally results in a certain inefficiency - and that has also happened here. It\\\'s a well-known phenomenon for a company in its entrepreneurial phase. Now it\\\'s a question of putting the bank into a new phase in which growth is managed and methods are more systematic,\\" Director Eric Rylberg tells Ritzau. The streamlining plan includes outsourcing, better use of technology, a simpler organisation and management structure, between 320 and 340 fewer employees in Denmark and some 50 fewer abroad - primarily in Great Britain. Saxo Bank\\\'s founders and CEOs Kim Fournais and Lars Seier Christensen regret the layoffs but say that the move is right for the company. \\"Some people will criticise the fact that despite increased profits we lay off so many employees. But we have determined that we can be more efficient. We regret having to say farewell to employees, but it\\\'s best for the company that we undergo this phase change now,\\" the two say in a statement. CSC - Saxo untouchedThe efficiency drive will not, however, affect Saxo Bank\\\'s sponsorship of the Team CSC Saxo Bank cycling team, which is managed by the former Danish cycling icon Bjarne Riis. \\"\\"There are no savings in our marketing. And Riis Cycling is only a third of our overall marketing budget,\\" says Kasper Elbjørn. Bjarne Riis and Saxo Bank agreed a three-year sponsorship of the Danish cycling team earlier this year. Until the New Year, the team\\\'s name remains Team CSC Saxo Bank, but from 2009 it will be called Team Saxo Bank.
Saxo is reporting record revenues for September, which makes the mass redundancies all the more curious. That the mass redundancies are also happening at the same time as the credit crisis adds to the curiosity factor. Developing…
FOREX.com is a division of GAIN Capital Group, LLC. Gain Capital $67,077,000.
Ignored
You have have to keep in mind thats only adjusted net capital. So there are companies out there that have more in the bank but show less in their Adjusted net capital report.
hey forex savior can you tell us anything about Lehman Brothers stake in FXCM? and what that means for them?
Im suprised that you havent brought this up yet! i am very curious about what is going on. did barclays pick that up or are FXCM buying them out of their stake?
I have a couple of questions that I am too lazy to research. Does the money counted in adjusted net capital have to be in cash or treasuries? If they need to keep the balance in cash, where do they keep the money? How could bank failures effect this?
If they can invest the money in other assets, how has the collapse of some stocks and bonds effected these funds?
hey forex savior can you tell us anything about Lehman Brothers stake in FXCM? and what that means for them?
Im suprised that you havent brought this up yet! i am very curious about what is going on. did barclays pick that up or are FXCM buying them out of their stake?
or is there more to this than that?
Ignored
It appears that the shares that Lehman Brothers owned in FXCM were the very same shares that were previously owned by Refco. These shares are now being bid on by some new players. No telling who the new owner of the shares will be, but doesn't appear it has had any effect on FXCM to date.
I have a couple of questions that I am too lazy to research. Does the money counted in adjusted net capital have to be in cash or treasuries? If they need to keep the balance in cash, where do they keep the money? How could bank failures effect this?
If they can invest the money in other assets, how has the collapse of some stocks and bonds effected these funds?
Ignored
The money can be either cash or treasuries. So long as a firm can demonstrate to regulators that they possess the money and have direct access to it. Remember that for months FXLQ was using a bond as proof they had adequate net capital and NFA took that at face value.
Last week Bacera officially closed their U.S. office and are no longer servicing U.S. customers. It was always a long shot that they would be able to meet the increased capital requirement to $20 million so this closure comes as no surprise.
But they still plan on doing business outside the NFA’s purview and are accepting customers from outside the United States. Bacera has several offices in China and most of their customers are Chinese. Will this become a trend with firms that can’t meet the upcoming adjusted net capital increase?
Here are the remaining firms that are still reporting Adjusted Net Capital below $10 million. If these firms are unable to increase their adjusted net capital to $10 million by the end of the month they too will have to close up shop in the U.S. Most of them should be able to do so as some, like HotSpot, have huge parent companies with ample financial reserves. But others like MG and Forex Club are in a very tough position.
Rosenthal Collins acquires MG Financial By James P. Miller | Tribune staff reporter 11:34 AM CDT, October 15, 2008 Rosenthal Collins Group LLC, the Chicago futures clearing firm, said Wednesday that it has acquired New York-based MG Financial LLC, a provider of online trading services in the foreign exchange market.
The two closely held concerns didn't disclose terms of the acquisition, beyond saying that it involved "an exchange of equity interests."
Rosenthal President Maureen Downs noted that the futures brokerage and clearing company embarked late last year on a growth initiative focused on capitalizing on the growing demand for futures and options, and building its presence in offshore markets such as Europe, South America, the Middle East and Asia. "We have made great progress in the past year," the executive said, "and today's transaction with MG tekes us to a whole new level with an unparalleled futures and foreign-exchange offering throughout key Asian markets and all of these regions."
MG Financial, which was founded in 1992 and began offering online trading services in 1997, has an extensive client base in Asia, particularly among Chinese-speaking clients outside of China because of regulatory restrictions that are in force on the mainland of China, Rosenthal said; all MG traders are required to speak at least two languages fluently, Rosenthal said, and the New York firm's polyglot group of traders contains people who speak languages such as Mandarin Chinese, Japanese, Russian, Arabic, German and Spanish.
Money Garden clearly could not survive on its own judging from their latest net capital number which is barely above $5 million. Expect more such buyouts in the next 12 months as the field winnows.
Proposed NFA Capital Requirement
