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Proposed NFA Capital Requirement

  • #1,081
  • Jan 29, 2009 2:43am Jan 29, 2009 2:43am
Savior,

Only problem with these numbers are they are dated back in October 2008...where are the latest data?


Quoting forexsavior
The CFTC has just released their latest net capital figures. With the $15 million dollar deadline just days away who will make the cut and who will not?
http://www.cftc.gov/marketreports/fi...fcms/index.htm

The following firms have net capital below $15 million

Advanced Markets $10,195,000
Hotspot $10,527,000
[size=3][FONT=Times...
In Charts We Trust!
  • #1,082
  • Jan 29, 2009 2:45am Jan 29, 2009 2:45am
Ok never mind ignore the post below...I see how its done...CFTC reports results for previous month...so Dec's will be out shortly...got it...that's what you were referring to..my fault...


Quoting X.Oden
Savior,

Only problem with these numbers are they are dated back in October 2008...where are the latest data?
In Charts We Trust!
  • #1,083
  • Jan 29, 2009 12:00pm Jan 29, 2009 12:00pm
Last year Rosenthal Collins bought MG Forex just as the first capital requirement was set to kick in. RCG then announced that MG Forex was a subsidiary of Rosenthal Collins Securities, which is regulated by FINRA, not the NFA. Thus MG Forex was able to avoid the $20 million capital requirement since FINRA members need only $250,000 in capital.

That was then.

Last week FINRA released a proposal capping the margin level that forex brokers can offer at 1.5 to 1. Essentially, FINRA is saying you can’t trade forex on margin.

http://www.finra.org/Industry/Regulation/Notices/2009/P117744

The rule will not effect NFA registered forex brokers. But for those forex brokers with FINRA licenses the party appears to be over. Why is FINRA doing this?

Quote
FINRA has observed a potential migration of retail forex activity from the FCM channel to Broker Dealers…


Hmmm, couldn’t be that forex dealers who didn’t have the capital to keep their NFA licenses were suddenly showing up to get a broker dealer license on the cheap? Well, if that was the case consider that escape hatch to be boarded up.

What will MG Forex do now?
  • #1,084
  • Jan 29, 2009 8:38pm Jan 29, 2009 8:38pm
Are you serious with this post? you really think that RCG does have some kind of plan?

i would assume that MG would just push all of its business through RCG if they are not already.

that takes care of that... lets talk about hedging or something... at least people care about that (no matter how stupid)
  • #1,085
  • Jan 30, 2009 7:55am Jan 30, 2009 7:55am
What Forexsavior talks about is very important to traders, unless you like loosing your account. As far as RCG goes, i think they are schemers, and i looked at that, and came up with that impression a year ago. If something smells funny, it probably stinks. If they were honest, they would have brought MG in under their license, but they tried to be cheap.
  • #1,086
  • Jan 30, 2009 11:47am Jan 30, 2009 11:47am
Yet another small forex dealer is getting out of the U.S. market. HotSpot FXr is closing down their retail fx business and selling their customers to FXCM. This would be the third forex dealer that FXCM has feasted on this month.

http://www.forexfactory.com/news.php?do=news&id=150046

The consolidation of the retail fx industry in the U.S. has dramatically accelerated in the last few weeks with ACM, ODL and now HotSpot departing.

HotSpot’s case is particularly interesting. They are owned by Knight Capital which certainly has plenty of cash to meet the $20 million requirement. But apparently their retail business isn’t large enough to justify their continuing operation.

Again, this is why a firm’s net capital number is so important. Many thought that because HotSpot was owned by Knight they didn’t need to report a lot of capital. But it turns out that Knight was not willing to fork over the money needed to keep Hotspot FXr a going concern. At the end of the day, HotSpot’s net capital number was a spot on indicator of the firm’s viability. Taking nothing else into consideration, their number gave off the impression of a firm struggling to stay afloat. So in the end is it really a surprise that their retail business sank to the bottom of the ocean?

Once again, traders should be aware of the risks you take by trading with a forex broker with net capital below $20 million. As we are seeing smaller forex brokers are liable to close up shop giving their customers very little notice. Here today, gone tomorrow.

Or in HotSpot’s case, gone in two weeks time…
  • #1,087
  • Feb 2, 2009 5:04pm Feb 2, 2009 5:04pm
As we await the next CFTC Net Capital Report I thought I’d post some of the best trader thread titles I’ve seen on the Net’. Many an angry trader loves to lash out at their broker or adviser and there are some pretty humorous, if not over the top, thread titles detailing the woes and eccentricities of the retail fx trading public. Here are some of my favorites:

1. "GFT Forex – Nazi Paradise"
http://www.elitetrader.com/vb/showthread.php?s=&postid=2277584#post2277584

Apparently, the creator of this thread, “IShopAtPublix” has never heard of “Godwin’s Law,” which states that invoking Hitler or the Nazis in an analogy serves to discredit the person who is injecting Der Fuhrer into the conversation. So why was this trader calling out GFT for being jackbooted storm troopers? Because they asked him for a photocopy of his credit card…

“Vee Hav Vays of Making you Talk!”


2. "FX Open Scam Scum"
http://www.forexfactory.com/showthread.php?p=2443874#post2443874

Months ago I wrote about a broker war between FX Open and Poltek FX. http://www.fxstreet.com/forum/showpost.php?p=11956&postcount=140

Sadly, a tentative cease fire has appeared thus robbing the trading public of one of the most entertaining flame wars on the Internet.

Hot on the heels of this truce comes another “Peace in our Time” declaration as thread creator “Maxey” announces that he has gotten his long awaited payout of $70,000 from FX Open thus bringing a close to the volatile “Scam Scum” thread at Forex Factory.


3. "Felix with a Criminal Record (Forex Peace Army Under Government Investigation)"
http://www.trade2win.com/boards/forex-discussion/37980-felix-criminal-record-forexpeacearmy-under-governmental-investigations-5.html#post622628

The last year and a half has seen Felix Homogratus’ Peace Army under heavy scrutiny on various fly by night blogs and all over the bulletin boards. This is but one of the innumerable threads where the Peace Army does battle against its critics. In this one “Tom Harris” can be found ranting about the Peace Army being under government investigation. Mind you, no proof of such an investigation is ever presented but we are reminded that Forex Bastard’s girlfriend was thrown in the clink a year ago.

If you like the “paranoid style” this thread is for you.


4. "Patrict Sim’s (ExpertForextrader) Failed Arbitrage Strategy – Professional Scammer"
http://www.talkgold.com/forum/r245100-.html

TalkGold is one of my favorite forums and has more threads than you can shake a stick at. Granted, many of the threads are from shameless marketers selling every forex related product under the sun, but that’s what makes the forum so interesting. It is a total free for all and gives traders a wonderful bird’s eye view of the utter chaos that is the retail forex market.

In this thread a trader by the name of “patricksimbastard” excoriates the real Patrick Sim whose trading signals “patricksimbastard” doesn’t seem to care for:

Quote
Please be informed that “expertforextrader” is a scammer. He is based in singapore and he has been soliciting funds from investors with his failed bogus strategy. I'm a one of his victims. Here are his deeds and all the amounts discussed were in SGD. All these were under the pretense of using his so called arbitrage forex strategy which serve to fail.

"Expertforextrader" is no expert but a professional clown. He is a 58year old (as of 2009) BANKRUPT man who went bankrupt because mere credit card banks initiated by the bank of amt $20,000. He used to be a former Singapore Airlines Co-Pilot and was sacked as a result of his neglience in flight as just like his attitudes towards his boo hoo forex stategies.

I like the “professional clown” appellate. So does patricksimbastard have a case? Don’t know, but whenever I see someone claiming to have a “Holy Grail” forex trading system as Patrick Sim claims to have I make it my business to stay as far away from such “experts” as I can. Patricksimbastard should have done the same.

5. "Oanda- Add Your Scam Screens Here"
http://www.elitetrader.com/vb/showthread.php?s=&threadid=126381

81 pages and still going strong. What has Oanda done to deserve such disrespect? Well, nothing. At least nothing out of the ordinary. Bad fills are a dime a dozen in retail forex, especially if the broker you trade with is a market maker taking the other side of the trade. Yet that doesn’t stop traders like “forestgril” from declaring jihad after they get a bad fill and taking to the bulletin boards to declare a fatwa on their broker. Another poster on this thread sums up “Forestgril’s” situation perfectly:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=126381&perpage=6&pagenumber=2

Quote
Why are you still using Oanda if they are costing you money? You have been pissing and moaning about them since the beginning of March with their executions and phantom prices, etc.
Quote
Why do you still use them? Why have you not found a "better" broker for your trading style rather than stay with the same group that causes you such fits? If you come back here next month at NFP with the same complaints than you have no one to blame but yourself. It only takes a week (at most) to set up an account somewhere else.

Ah but nothing beats blaming your lousy trading on those rascally brokers does it? In any case Forestgril will not be denied:

Quote
I will switch to another broker, but first I will beat them and get my lost money back. It is unreasonable, but I want them to see, that all in all - my account was not profitable to them.
Quote

For my satisfaction - I will get from them twice the sum, that I have lost, and then - get out.

Well, the best of luck to you Forestgril. You have your work cut out for you; as do all the disgruntled traders of fx world.
  • #1,088
  • Feb 3, 2009 12:39pm Feb 3, 2009 12:39pm
Sources are telling Jamaican media outlets that David Smith’s infamous investment scheme has only $10 million in local cash on hand. In short, it has become clear that David Smith is the Bernie Madoff of Jamaica, with the exception that Smith’s Ponzi Scheme is doing far more damage to the local economy:

http://www.sunheraldja.com/article/show/2177

Quote
Although banker/client confidentiality prevents the Michael Lee Chin controlled National Commercial Bank of Jamaica (NCBJ) from disclosing details of its relationship with clients, highly placed sources say that the David Smith, led Olint Corporation only has US$3 million in its local accounts and about $7 million in those in the Turks and Caicos Islands.
Quote

Speculation has been rife as to how much money is in the company’s local accounts, since NCBJ got the go ahead from the Privy Council to close the renegade foreign exchange dealer’s accounts. Olint reportedly owes cash strapped investors some US$100 million. The company’s inability or unwillingness to pay investors since the end of the year 2007 has been having a negative impact on the construction and real estate, automobile as well as retail sectors.




Meanwhile, the NFA has yet to issue a ruling in regards to its complaint against I Trade FX:
http://www.fxstreet.com/forum/showpost.php?p=13665&postcount=177

Smith was a formal principal at I Trade FX and while the NFA is not investigating Smith himself a ruling by the NFA could help clear up exactly what Smith has been doing with his customer’s funds all these years.

Hopefully, regulators have this case at the top of their “to do” list. It is far too important for them not to.
  • #1,089
  • Feb 3, 2009 1:38pm Feb 3, 2009 1:38pm
They gave me a post a few days ago:

MGForex offers Futures trading

Dear clients of MG Financial,

We are glad to announce that we will start offering Futures trading services to our clients in addition to Forex trading services. This will allow you to trade both Forex and Futures with MG without having to switch Brokers...
...................
With Forex they where requoting like mad lately i donno if it was just me. But
Futures on the Dollar? Why not.. As once said before I just like their
charting software..
  • #1,090
  • Feb 3, 2009 1:46pm Feb 3, 2009 1:46pm
Quoting green
They gave me a post a few days ago:

MGForex offers Futures trading

Dear clients of MG Financial,

We are glad to announce that we will start offering Futures trading services to our clients in addition to Forex trading services. This will allow you to trade both Forex and Futures with MG without having to switch Brokers...
...................
With Forex they where requoting like mad lately i donno if it was just me. But
Futures on the Dollar? Why not.. As once said before I just like their
charting software..
Interesting. can you quote the entire email?
  • #1,091
  • Feb 3, 2009 1:48pm Feb 3, 2009 1:48pm
MGForex offers Futures trading


Dear clients of MG Financial,

We are glad to announce that we will start offering Futures trading services to our clients in addition to Forex trading services. This will allow you to trade both Forex and Futures with MG without having to switch Brokers.

This change is the result of our recent merger with Rosenthal Collins Group, a leading independent futures clearing firm headquartered in Chicago. We will be offering a suite of futures products to our clients white-labeling RCG's proprietary state-of-the-art Onyx2 electronic trading platform with the name DealStation Futures. MG will serve as an introducing broker to RCG for futures.

With the launch of DealStation Futures, you will now have access to commodity exchanges in US and Europe and will be able to trade some of the most popular futures products of your choice. For a detailed list of trading products that MG Futures offers as well as applicable conditions, please refer to our newly launched Futures website www.mgfutures.com.

We are very excited about this new direction of our business and will continue to offer you the very best trading products.

Should you have any questions about our futures services, please contact us at [email protected].



Sincerely,

MG Financial
www.mgforex.com
  • #1,092
  • Edited 3:51pm Feb 4, 2009 3:33pm | Edited 3:51pm
The news from Moscow has been grim recently. The fall of the Russian Ruble has policy makers mulling over some scary choices; including the imposition of stringent currency controls which could block customers from withdrawing their funds from Russian based forex brokers.

http://www.financialpost.com/news/story.html?id=1245528

The whole situation is reminiscent of the Asian Currency Crisis of 1998. A full collapse in the Ruble could not only lead to huge losses for any traders who have Ruble denominated accounts but could also destroy banks and brokerages throughout Russia who would be bankrupted when they are unable to pay back dollar denominated loans with worthless Rubles.

It is something that traders who have accounts with Russian based forex brokers (i.e. Broco Company) need to seriously take into consideration.

Russians are already dispensing with the Gallows’ Humor by quoting 19th-century writer Mikhail Saltykov-Shchedrin: "It is not a tragedy when in exchange for a ruble you get half a ruble; the tragedy is when in exchange for a ruble you get a punch in the face."

Well, too many forex traders have gotten punches in the face instead of their money back as I have detailed on this thread (and even as we speak Crown Forex is busy socking their own customers in the chin with all the rage of Christian Bale on a movie set:
http://www.youtube.com/watch?v=tLXVuy0h29c)

The good news is if you are trading with a broker that offers USD/RUB all I can say is “Buy! Buy! Buy!”
  • #1,093
  • Feb 6, 2009 12:32pm Feb 6, 2009 12:32pm
The hounds are closing in on David Smith. With his Ponzi Scheme in ruins the police in the Turks and Caicos Islands have arrested and frog marched Smith before a magistrate court; where he promptly ponied up $1 million in bail money...

http://www.tcinetnews.com/news-1016--2-2---.html
Quote
Jamaican David Smith, the head of Olint TCI Corporation, was arrested in the Turks and Caicos Islands on Thursday on eight charges.

According to TCI police press officer, Sgt Chase, Smith was arrested on two counts of uttering false documents, four counts of forgery, and two counts of theft; he was subsequently released on $1 million bail and will appear in the magistrate court at a later date.


Don’t you just love how these Bernie Madoff types claim to be broke and bankrupt and yet always seem to have that cool million stuffed under the mattress that they can whip out on a moment’s notice? If he can produce $1 million in bail money surely he has more money stashed away. So what’s to prevent him from hiring a private jet and fleeing to Cyprus or the British Virgin Islands to start all over again?

Still, silence from American regulators. Now that Smith has been arrested and charged with fraud surely I Trade FX’s case will be decided upon shortly? Smith was a former principal in I Trade FX who made some highly suspicious transactions with the firm. In 2007 I Trade FX’s net capital fluctuated wildly and all the while David Smith was behind the scenes cutting deals left and right. The NFA needs to clear the air once and for all.
  • #1,094
  • Feb 8, 2009 7:21am Feb 8, 2009 7:21am
from this web site :
http://www.cftc.gov/marketreports/fi...fcms/index.htm

New capital requirement is 15M, right?
I find MB trading have net capital 14.664.024. so they short about 0,37 M, am I right?

I was planning to open an account at MB trading, Should I worried about this new regulation of capital requirement ?

Could anybody help me?,,,,thanks ,,,,,,,
Vedanta - The End Of Knowledge. ~ J. Krishnamurti ~
  • #1,095
  • Feb 9, 2009 10:56am Feb 9, 2009 10:56am
Quoting Aloen
from this web site :
http://www.cftc.gov/marketreports/fi...fcms/index.htm

New capital requirement is 15M, right?
I find MB trading have net capital 14.664.024. so they short about 0,37 M, am I right?

I was planning to open an account at MB trading, Should I worried about this new regulation of capital requirement ?

Could anybody help me?,,,,thanks ,,,,,,,
I would be wary of trading with any firm below $20 million. Not because I think they are going to go out of business and take all your money with them because they can't meet the capital requirement. Those days are thankfully over in the U.S.

Again the issue is that firms are closing their doors with little notice leaving customers who have long term positions in the lurch. Remember that for months ACM USA was saying they would have no problems meeting the new capital requirements. There was even some guy on this thread who would throw a temper tantrum every time I mentioned the difficulty ACM was in and would claim they would be fine. Sure enough, as I hinted at, ACM had not planned for the capital requirement increase and went out of business giving their customers almost no notice whatsoever.

The $20 million requirement will not be reached by everyone. Of that you can sure.
  • #1,096
  • Feb 10, 2009 4:39am Feb 10, 2009 4:39am
Quoting forexsavior
I would be wary of trading with any firm below $20 million. Not because I think they are going to go out of business and take all your money with them because they can't meet the capital requirement. Those days are thankfully over in the U.S.
My advice would be to avoid any firm in the US (Except maybe fxcm who mysteriously seem to be the one benefiting most from this turmoil) , and move your accounts to UK, Europe or Offshore. I had an account with a US based broker but I closed it and split the funds between a UK based firm and my offshore accounts.

There is just too much funny business going on in the US for me to remain confident that my chosen company will not be forced to close, or be forced out of the country because of this NFA nonsense.
  • #1,097
  • Feb 11, 2009 9:14am Feb 11, 2009 9:14am
Quoting forexsavior
Sources are telling Jamaican media outlets that David Smith’s infamous investment scheme has only $10 million in local cash on hand. In short, it has become clear that David Smith is the Bernie Madoff of Jamaica, with the exception that Smith’s Ponzi Scheme is doing far more damage to the local economy:

http://www.sunheraldja.com/article/show/2177



[FONT=Times...

he got arrested this was such a scam
  • #1,098
  • Feb 12, 2009 3:51pm Feb 12, 2009 3:51pm
The CFTC has just released their latest net capital figures. The field is narrowing dramatically with the departure of HotSpot, ACM and ODL. Which firm will go next?
http://www.cftc.gov/marketreports/f...rfcms/index.htm

The following firms have net capital below $20 million

Advanced Markets $10,071,000
GFS Forex $12,888,000
Easy Forex $13,094,000
Ikon Royal $14,249,000
MB Trading $14,779,000
I Trade FX $15,254,000
Forex Club $15,982,000
Alpari $17,497,000

The following firms have net capital above $20 million

PFG $27,395,000
CMS Forex $28,021,000
Interbank FX $43,669,000
FX Solutions $44,618,000
GFT Forex $75,215,000
Gain Capital $107,167,000
FXCM $115,260,000
Oanda $169,722,000

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.
  • #1,099
  • Feb 12, 2009 10:28pm Feb 12, 2009 10:28pm
forexsavior, what will happen to company that could not raise their net capital to meet the min requirement?
and also what will happen to their customer money?
Thanks
Vedanta - The End Of Knowledge. ~ J. Krishnamurti ~
  • #1,100
  • Feb 13, 2009 10:04am Feb 13, 2009 10:04am
Quoting Aloen
forexsavior, what will happen to company that could not raise their net capital to meet the min requirement?
and also what will happen to their customer money?
Thanks
I suspect teh company will simply be forced to unwind their positions. Customers should get their money back.
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