Proposed NFA Capital Requirement | Page 63 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

NFA case against Forex.com/Gain Capital 6 replies

NFA Takes Action Against Gain Capital 27 replies

What happens to brokers not meeting the NFA capital requirement? 4 replies

Is losing a requirement to be successful? 72 replies

MIG vs Northfinance Margin Requirement 2 replies

Attachments: Proposed NFA Capital Requirement
Exit Attachments

Proposed NFA Capital Requirement

  • #1,241
  • May 19, 2009 12:42pm May 19, 2009 12:42pm
Interesting post from Francesc at FX Street regarding FXDD’s decision not to implement the NFA’s new hedging rule. Jim Green, Managing Director at FXDD, wrote in to say that FXDD “was not fighting NFA.” They’re just having “constructive conversations” with NFA about the new hedging rule:

http://blogs.fxstreet.com/francesc/2009/05/19/retail-forex-industry-fxdd-fighting-nfa-hedging-rule-a-misleading-information-apologies-fxdd/

Quote
“Dear Francesc: It has been some time since we last communicated. Although FXDD enjoys the coverage it (usually) receives on FXstreet, your recent headline was somewhat misleading and I want to state for the record that FXDD is not fighting the NFA on the hedging rule. As you know, FXDD is pending with the NFA and we discuss our application with the designated parties at the NFA. Our discussions with the NFA should not be interpreted as “fighting.” We have had and continue to have very constructive conversations...


Ok. FXDD may not believe they are fighting with NFA, but how else should NFA interpret FXDD’s decision not to implement the new hedging rule?

Of course, in fairness to FXDD, why should they implement a regulatory rule that will be harmful to their business if this same regulator continues to stall on their license application? This could be FXDD’s way of saying “give us a license, then we’ll implement your rules.”

But is it wise to take on NFA like this? This is why traders should sit on the sidelines until FXDD gets that license. They are playing a game of chicken with regulators. And in the current climate we are in where regulators are under enormous pressure to crack down on rogue financiers no trader wants to be in the middle of what could be one ugly head on collision.
  • #1,242
  • May 19, 2009 4:13pm May 19, 2009 4:13pm
Your pseudo should be ForexFUD.

NFA is just a pylon organization out to obsolete / make useless american forex companies.

The day of the US Forex company is rapidly coming to a close.

All this latest change is saying that you're sheep if you have an account with an NFA broker.

FXDD should just relocate to UK and get it over with.
  • #1,243
  • May 19, 2009 4:38pm May 19, 2009 4:38pm
good riddance to traders like you
  • #1,244
  • May 19, 2009 6:43pm May 19, 2009 6:43pm
Good riddance to YOU.
  • #1,245
  • May 19, 2009 7:31pm May 19, 2009 7:31pm
Good Riddance to HEDGING! LOL
  • #1,246
  • May 20, 2009 1:28am May 20, 2009 1:28am
Quoting blazespinnaker

The day of the US Forex company is rapidly coming to a close.

All this latest change is saying that you're sheep if you have an account with an NFA broker.
I think you overestimate the impact that an exodus of newbs like you (who are naiive enough to believe things like "Market makers are allowed to hedge, why isn't everyone else?") would have on the US forex marketmaking business. You're an insignificant minority and withdrawing your business and meagre capital is hardly likely to force US marketmakers into bankruptcy, lol! If anything you're a drain on MM's resources because you're forever asking dumb questions and complaining about non-issues like a couple of pips slippage across NFP, I imagine most marketmakers would be happy to unload the lot of you if it wasn't for the fact that you give your money away so willingly!

For the majority of serious retail forex traders NFA regulated brokers will have one very distinct advantage over their European competition when the new Price Adjustment rule comes into force, any minor inconvenience which the FIFO rule might have caused for the very small minority will pale into insignificance by comparison.

I think NFA are doing a great job of cleaning up this shady business, let's hope this is just the start of their campaign!
  • #1,247
  • Edited 4:35am May 20, 2009 4:16am | Edited 4:35am
Quoting pipmutt
I think you overestimate the impact that an exodus of newbs like you (who are naiive enough to believe things like "Market makers are allowed to hedge, why isn't everyone else?") would have on the US forex marketmaking business. You're an insignificant minority and withdrawing your business and meagre capital is hardly likely to force US marketmakers into bankruptcy, lol! If anything you're a drain on MM's resources because you're forever asking dumb questions and complaining about non-issues like a couple of pips slippage across NFP, I...
straw man, straw man, straw man.. You're arguing against imaginary ideas you've obviously hallucinated that someone has posted. Doesn't that feel kinda silly?

Force marketmakers into bankruptcy? non issues like a couple of points of slippage across the nfp? wtf? where did you read this?

I think it'll force brokers (retail ones) to open up in the UK, much like FXCM already has (which spends a lot of time hinting that it's clients should use their UK branch), and which other brokers do as well. Not to mention quite a few retail traders on these forums suggest.

I think anyone simply has to look at the impact of sarbox and how that pushed a lot of trade to london to appreciate the impact of pointless nanny state rule making.

eg:

Sarbox Forces Companies to Abandon NYSE for London's AIM
http://www.independent.co.uk/news/bu...im-412555.html

Washington Is Killing Silicon Valley
http://online.wsj.com/article/SB122990472028925207.html

etc.


What I don't get, is why you and others are all so ready to roll over and wag your tails like a bunch of puppies at the thought of someone telling you how to trade.


Also, are you saying that Market Makers do not hedge .. that is, they do not hold positions going both ways at / near the spread? For example, Oanda only has one position open at a time per pair, either going up or down at all times?
  • #1,248
  • Edited 5:00am May 20, 2009 4:43am | Edited 5:00am
the price adjustment rule is worse than the hedging rule.

The price adjustment rule means only that brokers are going to have to avoid quoting a lot of liquidity for fear that that they can not make a best effort approach to matching it. What the NFA should do is force all forex brokers to provide an option where they can set a trade as being unadjustable and make that the default. We should still be allowed to trade without the training wheels. Or what if I say, "you can adjust my order, but only by 0.3 pips" .. or something like that.

Garbage rules like that doesn't help. It just makes the system so rigid that nobody can do anything creative.

I mean seriously, anyone who is trading and can't tell when when their broker is adjusting too much shouldn't be trading. Some adjusting should be allowed.

What the NFA should be doing is making it so we can get a clear report of how many of our trades and which trades have been adjusted, so we can compare between brokers. A blanket no adjusting rule is just dumb.
  • #1,249
  • May 20, 2009 4:58am May 20, 2009 4:58am
Quoting blazespinnaker

I think it'll force brokers (retail ones) to open up in the UK, much like FXCM already has
lol, FXCM have had offices in the UK and been FSA regulated since 2003, the new rules about nedging obviously had nothing to do with their decision, in fact a lot of marketmakers have registered offices here as well as in the US!

I think you're the one who's hallucinating.....quote, "The day of the US Forex company is rapidly coming to a close.", or is that just wishful thinking on your behalf
  • #1,250
  • May 20, 2009 5:06am May 20, 2009 5:06am
Quoting blazespinnaker

Garbage rules like that doesn't help. It just makes the system so rigid that nobody can do anything creative.
I think that was the problem, some bucketshops were being a little too creative!

Bucketshops should have the same options as NFA are allowing STP brokers, time limited price adjustments backed up by documentary evidence from their liquidity provider of the pricing error. Perfectly fair and transparent and a definite improvement on the way it's been up until now. I think it's an excellent rule and it will certainly put an end to at least some of the dishonest practices which shops have got away with for so long.

You can't possibly cap the amount of price adjustment, that's ridiculous.

Go NFA!!
  • #1,251
  • May 20, 2009 5:11am May 20, 2009 5:11am
Quoting pipmutt
lol, FXCM have had offices in the UK and been FSA regulated since 2003, the new rules about nedging obviously had nothing to do with their decision, in fact a lot of marketmakers have registered offices here as well as in the US!
Yes, obviously, but they're pimping their UK branch based on the ability to hedge.

"Alternative Option
If you wish to continue hedging, you can trade through Forex Capital Markets Limited (FXCM UK), which is regulated by the Financial Services Authority in the UK.
Learn More about FXCM UK"

Quote
I think you're the one who's hallucinating.....quote, "The day of the US Forex company is rapidly coming to a close.", or is that just wishful thinking on your behalf

Perhaps a tad hyperbolic. But the real point is, why are you carrying water for someone who's telling you how to trade?
  • #1,252
  • May 20, 2009 5:14am May 20, 2009 5:14am
Quoting pipmutt
I think that was the problem, some bucketshops were being a little too creative!

Bucketshops should have the same options as NFA are allowing STP brokers, time limited price adjustments backed up by documentary evidence from their liquidity provider of the pricing error. Perfectly fair and transparent and a definite improvement on the way it's been up until now. I think it's an excellent rule and it will certainly put an end to at least some of the dishonest practices which shops have got away with for so long.

Go NFA!!
What this rule means is that a potentially profitable trade will go unfilled because the bucketshop can't adjust the price.

What if there are 100 such instances a day when you could post a trade and only if the bucketshop were allowed to adjust the price by 0.1 pips, you'd be able to fill that trade and profit.

This is just a reduction in liquidity. The rule is pure garbage. I agree, make the adjusting more transparent, make it so we can control the adjusting .. but to outlaw it all together?

Give me a break.

What has happened here is the NFA has simply decided that you're stupid and they know what's good for you. Maybe you're OK with that, I however, am not.
  • #1,253
  • May 20, 2009 5:17am May 20, 2009 5:17am
Quoting blazespinnaker
But the real point is, why are you carrying water for someone who's telling you how to trade?
They're not telling me how to trade at all, they're introducing rules to make trading just that little bit more transparent and brokers accountable, these rules are in my best interests as far as I'm concerned.


Quoting blazespinnaker
What this rule means is that a potentially profitable trade will go unfilled because the bucketshop can't adjust the price.
What are you talking about, the rule applies to executed trades, trades which have already been filled by the broker.

Come on, have you actually read the rule?
  • #1,254
  • May 20, 2009 5:21am May 20, 2009 5:21am
Quoting pipmutt
What are you talking about, the rule applies to executed trades, trades which have already been filled by the broker.

Come on, have you actually read the rule?
Have you actually read what I've wrote?? Will it help if I bold face?

This rule will force brokers to NOT EXECUTE TRADES because they will not be able to ADJUST THEM after the fact.


This will result in a DROP IN LIQUIDITY.

Better would be a way to check off a box (which could be default on) which says .. Do Not Adjust This Trade.

Or, you can adjust this trade, but only by 0.XXX pips.


Unfortunatley, these ideas are too complex for the little minds at NFA, so rather than working overtime a couple nights to write up the rules, they just decided to ban price adjusting altogether.
  • #1,255
  • May 20, 2009 5:25am May 20, 2009 5:25am
Quoting pipmutt
They're not telling me how to trade at all, they're introducing rules to make trading just that little bit more transparent and brokers accountable, these rules are in my best interests as far as I'm concerned.
They ARE telling you how to trade. That's exactly what the hedging rule is! A rule on how you're allowed to trade with a single account.
  • #1,256
  • May 20, 2009 5:26am May 20, 2009 5:26am
Quoting blazespinnaker

This rule will force brokers to NOT EXECUTE TRADES because they will not be able to ADJUST THEM after the fact.

Ummmm, yes they will, within a limited 15 minute time window and if supported by documentary evidence from their liquidity provider. That applies to STP only at the moment but I expect bucketshops will petition for similar options.

Like I said, it doesn't seem like you've actually read the rule or if you have you don't seem to understand it.
  • #1,257
  • May 20, 2009 5:29am May 20, 2009 5:29am
Quoting blazespinnaker
They ARE telling you how to trade. That's exactly what the hedging rule is! A rule on how you're allowed to trade with a single account.
Oh right, of course, they're telling me not to pay spread and swap to my broker for absolutely no advantage. Let's take 'em out back and kick the shit out of them for saving me money!

If I want to have open opposite positions on the same pair I still can, in separate accounts, it's not exactly a hardship.


I've got to go and do some trading now so catch you later! Have a great trading day all
  • #1,258
  • May 20, 2009 5:30am May 20, 2009 5:30am
Quoting pipmutt
Ummmm, yes they will, within a limited 15 minute time window and if supported by documentary evidence from their liquidity provider. That applies to STP only at the moment but I expect bucketshops will petition for similar options.

Like I said, it doesn't seem like you've actually read the rule or if you have you don't seem to understand it.
Like you said, that only applies to STP. Yeesh, you just argued my point for me!
  • #1,259
  • May 20, 2009 5:31am May 20, 2009 5:31am
Quoting pipmutt
Oh right, of course, they're telling me not to pay spread and swap to my broker for absolutely no advantage. Let's take 'em out back and kick the shit out of them for saving me money!

If I want to have open opposite positions on the same pair I still can, in a separate account, it's not really a hardship.
Yes, you probably trade micro lots on some individual account and you're not particular as to your broker.

Some of us, however, use corporations to trade with and are very particular as to the broker we trade with. Opening up accounts willy nilly is not possible at our level.


There are situations when hedging is profitable:

Post two buy/sell trades close together with tight stops. The market goes up/down/up again before you can post another trade.

In that particular situation, if you can not hedge, you only get to profit one way and not on both trades.
  • #1,260
  • May 20, 2009 5:49am May 20, 2009 5:49am
Quoting blazespinnaker
Yes, you probably trade micro lots on some individual account and you're not particular as to your broker.
Yep that's me, solo micro trader extraordinaire, not a BIG corporate institutional trader like YOU, I'm surprised you're so concerned about such an insignificant little rule

If the new price adjustment rule helps prevent things like this then I'm more than happy, and I imagine anyone who's experienced a busted trade hours after it was executed will be too!
1 trader viewing now