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Proposed NFA Capital Requirement

  • #1,021
  • Dec 8, 2008 9:59am Dec 8, 2008 9:59am
Do you remeber back in the day, like 2004 when they, FXCM supposedly got nailed by the NFA for taking advantage of traders. It was something like $100,000 fine. Anyone know the exact story? It caused a big stink at the time.
  • #1,022
  • Dec 8, 2008 11:54am Dec 8, 2008 11:54am
The U.S. retail forex industry appears to be soaring over the new capital requirements by leaps and bounds. October showed an across the board increase in virtually every dealer’s net capital. Still, for some firms it is a long way to $20 million. And while small firms like ACM and Advanced Markets were able to meet the first barrier the Savior will be watching closely to see if they can keep it up.

http://www.cftc.gov/marketreports/fi...fcms/index.htm

The following firms have net capital below $15 million

Advanced Markets $10,163,000
Hotspot $10,559,000
Easy Forex $10,891,000
ACM $11,855,000
GFS Forex $12,503,000
MB Trading $14,522,000

The following firms have net capital below $20 million


Ikon $15,033,000
Forex Club $16,489,000
Alpari $18,212,000
I Trade FX $18,411,000
ODL $19,991,000

The following firms have net capital above $20 million

PFG $21,809,000
CMS Forex $25,162,000
Interbank FX $40,892,000
FX Solutions $43,570,000
GFT Forex $76,980,000
Gain Capital $96,371,000
FXCM $122,924,000
Oanda $170,982,000

As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new $20 million capital requirement going into effect in the months ahead.
  • #1,023
  • Dec 8, 2008 12:35pm Dec 8, 2008 12:35pm
Quoting forextrader0
Do you remeber back in the day, like 2004 when they, FXCM supposedly got nailed by the NFA for taking advantage of traders. It was something like $100,000 fine. Anyone know the exact story? It caused a big stink at the time.
Hm, that's odd. I felt sure savior would fill us in on all the gory details.

Apparently he has the dirt on every broker except FXCM.

Oh, that's right...FXCM exceeds the required net cap. That automatically means their honesty and integrity are beyond reproach.
  • #1,024
  • Edited 1:20pm Dec 8, 2008 1:07pm | Edited 1:20pm
Quoting forextrader0
Do you remeber back in the day, like 2004 when they, FXCM supposedly got nailed by the NFA for taking advantage of traders. It was something like $100,000 fine. Anyone know the exact story? It caused a big stink at the time.
It is no secret. Go to the NFA web site and look it up. FXCM along with other brokers were fined during 2007 for advertising practices. Their fine was more than $100,000. The 100 grand was the amount that Gain, Interbank FX and some others paid for using "misleading and deceptive promotional material and/or deficient promotional material". FXCM's fine was higher because their anti-money laundering program was not in compliance. Which was added to the regulatory action.

Just noticed you were talking about 2004. That CFTC case against Gibraltar Monetary Corporation and FXCM as principle is also listed on the NFA web site. I don't think it resulted in a $100,000 fine.
  • #1,025
  • Dec 8, 2008 3:38pm Dec 8, 2008 3:38pm
As I have said before I focus on firms that are less capitalized due to the bad history of insolvency amongst this subgroup. If you look at the big players:

The following firms have net capital above $20 million
1. PFG $21,809,000
2. CMS Forex $25,162,000
3. Interbank FX $40,892,000
4. FX Solutions $43,570,000
5. GFT Forex $76,980,000
6. Gain Capital $96,371,000
7. FXCM $122,924,000
8. Oanda $170,982,000

Of the 8 firms listed here five of them have been fined by the NFA for various advertising violations which the NFA dubs as "fraud." That's pretty standard amongst financial brokers of all stripes. If any of these firms had serious net capital violations rest assured the Savior would be on the case. But none of these firms have ever been at risk themselves in the course of their dealings with the NFA. In short, the Savior is concerned about whether or not a forex dealer is at risk for going under. None of these firms are even closely related to that category hence they get a pass from the Savior.
  • #1,026
  • Dec 9, 2008 11:01am Dec 9, 2008 11:01am
Quoting forexsavior
As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new $20 million capital requirement going into effect in the months ahead.
Is $20 million going to be the minimum net capital requirement for forex platforms registered with CFTC?
  • #1,027
  • Dec 11, 2008 6:21am Dec 11, 2008 6:21am
Quoting forexsavior
The U.S. retail forex industry appears to be soaring over the new capital requirements by leaps and bounds. October showed an across the board increase in virtually every dealer’s net capital. Still, for some firms it is a long way to $20 million. And while small firms like ACM and Advanced Markets were able to meet the first barrier the Savior will be watching closely to see if they can keep it up.

http://www.cftc.gov/marketreports/fi...fcms/index.htm...
Forexsaviour, you are a pathetic JOKE , you go around like the big saviour, bad mouthing brokers whom you seem to not have an affinity with, or a bill under the table from , what is your problem? ACM could very easily have continued their successfull history without entering into the US, what, you think that you only get US clients by being based there? If they were a scam outfit they would have opened in Cyprus or the Seyshells like so many other muggers, no, they chose the hard road because they are a professional FX outfit, you honestly believe that they would be so stupid as to not know what lay ahead??? If you would bother to look at their weblink to their administrators, so many of them have a history of working on Wall Street, so, ergo Forexsaviour, they are informed. After all your bad mouthing, you think that you could stand up and admit, like an honest human being that you were way off the mark?
And yes, I am a client of ACM, and you have noooo idea of the lengths I went to when carrying out my due diligence before hand.
  • #1,028
  • Dec 11, 2008 7:24am Dec 11, 2008 7:24am
Quoting forexsavior
There is a great deal of uncertainty in the Swiss Forex Dealer community right now. There is no way of knowing which firms are here to stay and which firms are collecting coins in preparation for their crossing of the river Styx. I have emailed all the major Swiss firms to try and find out if each firm plans on getting a banking license. The responses (or lack thereof) have been quite illuminating.

As such I'm starting a Swiss Dealer Dead Pool to keep the trading public updated and informed about what is going on in Switzerland.

[b]Firms that...
I researched this broker just for the fun of it, there is no way I would ever consider top open with an offshore pirate!

Ok, so their website claims they are SWISS but registered in Seychelles. Their website also claims that their Global HQ is in Zürich, they even give the address and a pretty picture of an impressive building. So, anyone who researches brokers based in Switzerland should know to go to www.zefix.ch, there you will find all businesses registered in the country. OOOOPS, no Masterforex, or Beaverhead their owner, registered. OK, could be a mistake (from the Swiss ?!!!) so I contacted the Zürich Chamber of Commerce, who gladly helped me get to the bottom of this. This was their reply. "

They should, by their website claims, be registered with us, but are not. They claim that the office is not open to the public for "secrecy reasons". If we look at the postal address, they are not actually at the place they claim to be, a control with the building owners confirmed this. Finally, their IP, Masterforex.org resolves to 88.85.79.7, this number is located in Utrecht, Holland. Perhaps there is a mistake on the website?"

Na Mate, the "mistake" would be to open with them, I mean, talk about transparency!
  • #1,029
  • Dec 11, 2008 7:42am Dec 11, 2008 7:42am
Quoting Aussie
Forexsaviour, you are a pathetic JOKE , you go around like the big saviour, bad mouthing brokers whom you seem to not have an affinity with, or a bill under the table from , what is your problem? ACM could very easily have continued their successfull history without entering into the US, what, you think that you only get US clients by being based there? If they were a scam outfit they would have opened in Cyprus or the Seyshells like so many other muggers, no, they chose the hard road because they are a professional FX outfit, you...
Dude, you might as well put their banner at the end of your little speech. Its understood that they have the money, but no client of theirs would get mad the way you go mad. What I look forward to is to see if FX companies will survive when the world market is hurt and people stop trading. What do you do then???

Who will survive???
  • #1,030
  • Dec 11, 2008 8:46am Dec 11, 2008 8:46am
Aussie I agree with you that forexsavior is pathetic, but regarding this comment:

Quote
If they were a scam outfit they would have opened in Cyprus or the Seyshells like so many other muggers

Back then you could compare Seychelles to Cyprus, but not anymore.

Cyprus is now a EU country and has to comply with MiFID regulations. Also a broker regulated in Cyprus under the MiFID rules can get approved by the FSA and deal with UK customers as a regular UK based and regulated FSA broker would.
  • #1,031
  • Dec 11, 2008 8:50am Dec 11, 2008 8:50am
Na mate, let me explain to you something that may never have crossed your mind. I work very hard for my money...very hard, and unlike many people here I have come a long way form being the son of a Sydney bus driver. I, like my father before me, am a very proud person, I won't do anything half hartedly. When I decided to try FX out I carried out very extensive due diligence, far more than the average "dude" as you put it. I work damn hard for my money and I am not prepared to just throw it at the first broker that promisses the stars and delivers zilch! I am proud of whom I chose, for me it was a professional decission that I took, a decission to how best increase the investment I placed. So yes, perhaps I should get paid by them for speaking as I do, but don't accuse them of posting this, just ave'a laugh at a proud mans rantings!
  • #1,032
  • Dec 11, 2008 9:13am Dec 11, 2008 9:13am
Quoting briand
Aussie I agree with you that forexsavior is pathetic, but regarding this comment:



Back then you could compare Seychelles to Cyprus, but not anymore.

Cyprus is now a EU country and has to comply with MiFID regulations. Also a broker regulated in Cyprus under the MiFID rules can get approved by the FSA and deal with UK customers as a regular UK based and regulated FSA broker would.
Briand, thank you for that, I stand corrected!
  • #1,033
  • Dec 11, 2008 11:54am Dec 11, 2008 11:54am
The National Futures Association has passed some new rules that all traders should be aware of ASAP:

http://www.nfa.futures.org/news/PDF/CFTC/CR2_43_ForexPriceAdj_112408.pdf

Quote
A Forex Dealer Member may not cancel an executed customer order or adjust a customer account in a manner that would have the direct or indirect effect of changing the price of an executed order…


Translation- No more “adjustments,” unless these adjustments meet strict NFA standards.

Quote
Forex Dealer Members may not carry offsetting positions in a customer account but must offset them on a first-in, first-out basis.


Translation- no more hedging of the same position.

These are profound changes. How many times have traders complained about profits being “removed” from their accounts? Well, if you trade with a NFA registered firm those days appear to be over. The hedging prohibition may upset some traders but truth be told there is little logic behind holding the opposite positions in the same currency pair. Still, you would think traders would be allowed to trade as they see fit without the nanny state running around dictating what positions you are allowed to hold.

In any case the evolution of FX trading continues…
  • #1,034
  • Dec 11, 2008 12:31pm Dec 11, 2008 12:31pm
Both are great rules. No changing the trade after execution and no hedging.


Hopefully this translates into less Bit*&^ng on the forums.

I do find it kind of sad that the NFA has to implement a rule banning hedging, this is going to cut into the profits of the dealers that offer services to dumb traders.
Keep it simple stoopid....
  • #1,035
  • Dec 11, 2008 8:34pm Dec 11, 2008 8:34pm
  •  onu
  • | Joined Feb 2006 | Status: superior senior member | 746 Posts
Quoting forexsavior
The National Futures Association has passed some new rules that all traders should be aware of ASAP:

http://www.nfa.futures.org/news/PDF/CFTC/CR2_43_ForexPriceAdj_112408.pdf



Translation- No more “adjustments,” unless these adjustments meet strict NFA standards.



Translation-......

..."The hedging prohibition may upset some traders but truth be told there is little logic behind holding the opposite positions in the same currency pair. "

Sorry, but you have realy ZERO clue about trading strategy/hedging/MM etc ....
  • #1,036
  • Dec 12, 2008 4:10am Dec 12, 2008 4:10am
Quoting onu
..."The hedging prohibition may upset some traders but truth be told there is little logic behind holding the opposite positions in the same currency pair. "

Sorry, but you have realy ZERO clue about trading strategy/hedging/MM etc ....
Agree. Hedging and being stopped out do NOT produce the same final result. The hedging prohibition probably stands for the interests of BIG players that will certainly continue to hedge through more than one broker while the poor small retail traders will be forced to fight even harder not to see their accounts slowly bleed. What is the problem with hedging if it is a decision of the client?
  • #1,037
  • Dec 12, 2008 10:01am Dec 12, 2008 10:01am
Quoting Kurka Fund
Both are great rules. No changing the trade after execution and no hedging.


Hopefully this translates into less Bit*&^ng on the forums.

I do find it kind of sad that the NFA has to implement a rule banning hedging, this is going to cut into the profits of the dealers that offer services to dumb traders.

You just right!
  • #1,038
  • Dec 12, 2008 10:53am Dec 12, 2008 10:53am
  •  onu
  • | Joined Feb 2006 | Status: superior senior member | 746 Posts
yeah, hedging is something for smart traders only
  • #1,039
  • Dec 12, 2008 11:16am Dec 12, 2008 11:16am
Quoting onu
yeah, hedging is something for smart traders only
Somewhat similar to the James Randi challenge to anyone who can provide evidence of paranormal or psychic activity, I have also openly challenged anyone to prove that there is any difference between hedged in the market or flat. The main difference in this challenge is that I am not going to give you a million dollars, I promise you nothing but an open mind. Obviously I am not a smart enough trader to figure these things out for myself so I need someone to explain it to me.
I am intrigued to see if anyone can step up and prove me wrong.
  • #1,040
  • Dec 12, 2008 12:25pm Dec 12, 2008 12:25pm
Quoting onu
yeah, hedging is something for smart traders only
Yeah, they are too smart to accept their mistakes, because closing a losing position always hurts.

The really smart one here is the broker providing such service, that they take advantage of those weak minds and profit.

Wake up or die hard.

Have a clean weekend,
Cheers.
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