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Proposed NFA Capital Requirement

  • #1,281
  • Jun 4, 2009 2:18pm Jun 4, 2009 2:18pm
Well they bought HotSpot FXr and a couple of other shops, that could perhaps partially explain it.
  • #1,282
  • Jun 4, 2009 2:32pm Jun 4, 2009 2:32pm
Please Note:In April, there was a significant drop in the firm's net capital. This decrease is related to FXCM fulfilling its tax obligations. Last year was a terrific year for FXCM with the firm hitting all-time volume highs, and as a result, the ownership of FXCM made payments of nearly $50 Million towards fulfilling taxes due. However, even after such payments, FXCM Holdings, LLC has over $100 Million in firm capital, of which $60,472,142 is held by the firm's US registered entity, Forex Capital Markets LLC.* The remaining capital is held by FXCM’s other entities, including regulated entities in Australia, Dubai, Canada, Hong Kong and the United Kingdom.


FULL PRESS RELEASE IN THE NEWS SECTION
  • #1,283
  • Jun 4, 2009 4:10pm Jun 4, 2009 4:10pm
Quoting jsales
Please Note:[font=&quot]In April, there was a significant drop in the firm's net capital....
Why isn't Oanda dropping? Do they not have to pay tax?

I'm curious as to why they're allowed to count the money as net capital when they such massive payables. Don't those creditors have higher precedence than clients? Do we get paid before the tax man?

Maybe Forex brokers should have to get audited and publish their balance sheets like public companies do.
  • #1,284
  • Jun 4, 2009 6:07pm Jun 4, 2009 6:07pm
Why don't their CEO comes out with all the figures like he used to blow his trumpets? And together with their auditors!!! TAX??? don't they know there is the term accrued payments?
  • #1,285
  • Jun 4, 2009 9:51pm Jun 4, 2009 9:51pm
If it is a tax issue that FXCM had to fulfill its tax obligations, shouldn't this also apply to all the other brokers?
  • #1,286
  • Jun 4, 2009 10:09pm Jun 4, 2009 10:09pm
Quoting PipStar
If it is a tax issue that FXCM had to fulfill its tax obligations, shouldn't this also apply to all the other brokers?
It is possible that the other broker's don't use the funds they put up as firm capital displayed to the NFA. I would think that FXCM's accountants would have planned this out a little better and it rather worrisome at how much of the 'firm's capital' is attributed to 'taxes' in the span of a month while we don't see the same kind of drop in other firms.

All the same FXCM has been rapidly expanding their business in the US so it is possible that they used the majority of the funds not put up as trading capital to buy out other companies leaving them no other choice than to take from the trading capital. There might be various other tax obligations that they have had to fulfill to make the taxes much larger after acquiring so much new business.
  • #1,287
  • Jun 4, 2009 10:36pm Jun 4, 2009 10:36pm
you guys really dont get it huh?

FXCM just loaded up that net cap number so that when the new rule came out and everyone was concerned about net cap numbers they would be at the top. now that the 20 million dollar net cap gauntlet has been drawn and your broker either made it or didnt they dont care anymore... they just want to make the minimum and put the funds to use
elsewhere.

It doesnt suprise me that they decided to manipulate thier number like that although you would think that they would have used some of that money to build a decent mt4 bridge....
  • #1,288
  • Jun 4, 2009 11:58pm Jun 4, 2009 11:58pm
Thank you all for this valuable thread!
according to the previous posts, I made the next calculation:


volumes/capital=
FXCM $9.260
Oanda $2.116
Gain $2.008
PFG $2.792
IBFX $2.191
Alpari $2.861

Cheers, Jazz
Trading S/R with PA only. No indicators anymore!
  • #1,289
  • Edited 10:32am Jun 5, 2009 10:05am | Edited 10:32am
The cap cuts could also be

1: as some may or may not know a brokerage reserves need not be cold cash, these funds could be in the form of (high credit quality) instrument , mostly gov backed securities. And we’ve all seen what’s happened with the US / UK credit ratings Lately,, Ratings go down so does the values of an instrument .


Or

2: the exit s of traders from the US brokerages could also be a reason.


Whatever it is it’s not Tax’s LOL
  • #1,290
  • Jun 5, 2009 10:16am Jun 5, 2009 10:16am
What is an interment? I had a look and only came up with a burial or some Swedish death metal band.
  • #1,291
  • Jun 5, 2009 10:35am Jun 5, 2009 10:35am
Quoting birdt
What is an interment? I had a look and only came up with a burial or some Swedish death metal band.

typo, should be instrument I.E securities
  • #1,292
  • Jun 5, 2009 9:22pm Jun 5, 2009 9:22pm
Quoting forexsavior
Michael Greenberg at Forex Magnates has released an interesting new survey on forex broker trading volumes (in the billions).

http://forexmagnates.com/top-forex-brokers-report-over-105b-in-daily-traded-volume/

Monthly Trading Volume
[list][*]FXCM $560,000,000,000[*][FONT=Times...

how you can trust such volume data ?
  • #1,293
  • Jun 9, 2009 4:27pm Jun 9, 2009 4:27pm
Former SNC Investment CEO Peter Son has been hauled into court by federal regulators a year after he disappeared during an NFA investigation into missing funds covered on this thread back in October of 2008:

http://www.fxstreet.com/forum/showth...t=1005&page=21

The feds are now confirming that Peter Son was running an $80 million ponzi scheme:

http://www.sec.gov/litigation/compla.../comp21076.pdf

Among the SEC’s findings:

Quote
Son used investor funds to pay the mortgage on his $2.6 million home in Blackhawk, a gated community in Danville, California, his homeowner’s association dues, and his country club dues;

Son used SNCA investor funds to pay his wife a salary of $3,000 per month even though she did no work for SNCA;

Son and Chung Transferred SNCA investor funds to SNCI to help it meet regulatory requirements that it maintain certain levels of capital; and

Son and Chung transferred SNCA investor funds to SNCI’s Korean bank account, to Son’s Korean bank account, and to the Korean bank account of a Korean company under Chung’s control.

After covering these poorly capitalized firms for years I’m not the least bit surprised that SNC illegally used customer funds to meet their capital requirements back when they were still registered with the NFA. That’s why cap requirements had to be raised and thankfully the worst of these brokers are long gone in the U.S.

But let this be a lesson to the trading public to avoid an account with any poorly capitalized firm, or a firm that is not regulated and does not disclose their financials.
  • #1,294
  • Jun 9, 2009 6:09pm Jun 9, 2009 6:09pm
Please anybody correct me if I am wrong but without funds segregation any broker, big or small, regulated or not, may do such kind of things easily and unnoticed...
  • #1,295
  • Jun 11, 2009 4:10pm Jun 11, 2009 4:10pm
Apparently Oanda will come under the STP (straight-through processing) exception when the new NFA Price Adjustments Compliance Rule 2-43(a) comes into force very soon, can anyone confirm this either way?

From what I've been told Oanda execute a large volume of micro and sub-micro trades and it's hard to understand how they could be processed by STP to their liquidity provider(s). Perhaps Oanda plan to channel trades above a certain amount directly by STP and the rest hedge on aggregate?

Does anyone know if, and how, trade execution may be affected by this new rule?
  • #1,296
  • Jun 25, 2009 9:31am Jun 25, 2009 9:31am
is ODL regulated by the NFA?
  • #1,297
  • Jun 30, 2009 3:27pm Jun 30, 2009 3:27pm
Quoting mike999
is ODL regulated by the NFA?
ODL left the U.S. Market. They are based in UK.
  • #1,298
  • Jun 30, 2009 3:28pm Jun 30, 2009 3:28pm
On July 31 the NFA’s FIFO order comes into effect. As of this moment the MT4 trading platform is not compliant with this rule and there is no guarantee that it will become compliant come the July deadline.

For firms that heavily rely on MT4 this is bad news. FXDD, which uses MT4 but are not regulated and therefore under no obligation to comply with NFA rules at present, are taking advantage of their unregulated status by telling NFA to get bent. As an unregulated firm they can do what they like (then again the whole issue of FXDD being unregulated is a serious red flag in and of itself. After all, the feds could basically raid the firm at anytime and shut them down overnight.)

But IBFX is (unfortunately for them) regulated solely by the NFA and their only trading platform at present is MT4. What is IBFX to do?

IBFX’s CEO seems confident and in “nothing to see here style” stated the following in an email to customers:

http://www.forexfactory.com/showpost...3&postcount=18

Quote
To our valued clients,

As you may know, the National Futures Association (NFA), has implemented new First-in, First-out (FIFO) requirements that will be in effect as of July 31, 2009. We at Interbank FX have been working hard on a solution and are confident that our traders will be able to use our MetaTrader 4 platform with little or no interruption. They will also continue to be able to use their MT4 expert advisors.

[size=3][font=Times New Roman]The NFA...

That all sounds reassuring, but what if something isn’t worked out by July 31st?

Meta Quotes is under no obligation to jump through hoops for IBFX and the NFA. And if Meta Quotes chooses not to (or is technically unable to) make any major changes to MT4 then IBFX is in big, big trouble as they will be stuck with a platform that is basically illegal.

Would IBFX close? Would they halt trading? Would the NFA and CFTC step in? Would IBFX be granted an extension by regulators? Can they get a UK license in time? Can they roll out a new trading platform in time?

Finally, how on earth did IBFX allow itself to be put in such a vulnerable position where their entire company is at the mercy of an independent third party based in Russia?

These should be mandatory questions that every current and potential customer of IBFX should be asking.
  • #1,299
  • Jun 30, 2009 4:11pm Jun 30, 2009 4:11pm
This is sad and true. I was an IBFX customer for 3 years. I have nothing to complain about them. Now that NFA started its destruction campaign, I moved to Alpari-UK and NordMarkets, both FSA regulated. Still keeping a close eye on the latter.
  • #1,300
  • Jun 30, 2009 4:53pm Jun 30, 2009 4:53pm
They could get a new trading platform, its easy , quick and probably cheap. The money they make a day would pay for 20 new trading platforms, so i dont think thats the issue
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