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NFA Confirms New Leverage Requirements for US FCMS

  • #21
  • Nov 13, 2009 11:43am Nov 13, 2009 11:43am
Quoting Fulltime247
They didnt have to leave. ODL just decided to go back home. The overseas arm is a stronger branch. (ODL Securities) Plenty of brokers here are not in NFA - ATC Brokers (THE BEST BROKER!!!) - Collective FX - Jade FX - etc...
And, as for all this hedging and FIFO load of crap? Does that mean it only applies to NFA "regulated" brokers as well?

And what about IBFX? Are they registered with the NFA? I know that they're registered with the CTFC, but that's not the same thing is it?
  • #22
  • Nov 13, 2009 12:29pm Nov 13, 2009 12:29pm
A Reduction in Leverage

As of November 30, 2009, the NFA will implement amendments to the Financial Requirements Sections 11 and 12. The new amendments will require Forex Dealer Members ("FDMs") to collect a security deposit of 1% (100:1) of the notional value for specified currencies and 4% (25:1) of the notional value for all other currencies. The intended purpose of this new regulation is to protect over-leveraged traders and brokers alike.

Since FX Solutions offers the following major currency pairs, our leverage will be reduced from a maximum of 400:1 down to 100:1.
  • #23
  • Nov 13, 2009 12:41pm Nov 13, 2009 12:41pm
http://www.fxsolutions.com/images/le...trading_03.jpghttp://www.fxsolutions.com/images/le...trading_05.jpghttp://www.fxsolutions.com/images/le...trading_07.jpg



  • #24
  • Nov 14, 2009 8:42pm Nov 14, 2009 8:42pm
NFA is a big Joke.

I had 5 NFA brokers and of these 3 scammed me.
Yet, all the other non NFA, non USA brokers, even the ones you'd be afraid to put your $50 did not scam me or my 5 digit accounts.

NFA is just a private club composed of brokers, for the purpose of protecting themselves against other brokers and traders. NFA brokers can scam/cheat traders with a variety of illegal actions such as removal of profitable trades, changing of rates to their own benefits among other things. Then they will tell you to file the complain which will get you nowhere.

Bottom Line: Dont bother with NFA brokers. They are crap. The only NFA broker I would trust with any amount would be MBT among others (though I hate their exhorbitant commission).

Right now, I prefer brokers that accept Credit Card funding. If they so ever cheat me with my trades (stop hunts, delayed execution etc), I can file a complain with the Credit Card company and deny these brokers the money. If NFA brokers dont accept CC funding, that goes to show they are only after your money.
  • #25
  • Nov 14, 2009 9:43pm Nov 14, 2009 9:43pm
Quoting BurgerKing
NFA is a big Joke.

I had 5 NFA brokers and of these 3 scammed me.
Yet, all the other non NFA, non USA brokers, even the ones you'd be afraid to put your $50 did not scam me or my 5 digit accounts.

NFA is just a private club composed of brokers, for the purpose of protecting themselves against other brokers and traders. NFA brokers can scam/cheat traders with a variety of illegal actions such as removal of profitable trades, changing of rates to their own benefits among other things. Then they will tell you to file the complain which will get...
I agree - the NFA is a joke and they also suck. I have an account with FXCM in the UK but I got a notice from them that they are also following the NFA's lead on reducing leverage - so I might have to close that account. But I also have an account with Fxsol in Australia and so far they haven't notified me that they are going to force any oppressive rules on me like the NFA has done in the US. Even Russia is like "Man, even we wouldn't oppress our traders like they are doing in the US." What happened to this country? It used to stand for the little guy being able to go after his dreams and provide a place where opportunities were available even for the little guy. Not anymore. We are becoming nothing more than a communist country - worse than a communist country. Dear NFA: I hate you and you suck you unAmerican cowardly shameful jerks! My dad fought in a war for America so we could have freedom in all ways and you cowardly NFA wimps are taking away the freedoms that he fought for behind closed doors in the safety of your shameful little offices with the stroke of a pen. You don't deserve to even live in this country you grimey little cowards!!!
  • #26
  • Nov 15, 2009 11:40am Nov 15, 2009 11:40am
Quote
NFA membership is voluntary.
This is no longer true. Last year an ag bill was passed that requires FDMs to
be a member of a "futures association." The NFA is still the most permissive of
regulatory organizations in the US.

Linky:
http://frwebgate.access.gpo.gov/cgi-....1">ubl246.110

Inserted Code
     ``(C)(i)(I) <<NOTE: Applicability.>>  This 
                subparagraph shall apply to any agreement, contract, or 
                transaction in foreign currency that is--
                                    ``(aa) offered to, or entered into 
                                with, a person that is not an eligible 
                                contract participant (except that this 
                                subparagraph shall not apply if the 
                                counterparty, or the person offering to 
                                be the counterparty, of the person that 
                                is not an eligible contract participant 
                                is a person described in any of item 
                                (aa), (bb), (dd), (ee), or (ff) of 
                                subparagraph (B)(i)(II)); and
                                    ``(bb) offered, or entered into, on 
                                a leveraged or margined basis, or 
                                financed by the offeror, the 
                                counterparty, or a person acting in 
                                concert with the offeror or counterparty 
                                on a similar basis.
                    ``(II) Subclause (I) of this clause shall not apply 
                to--
                          ``(aa) a security that is not a security 
                      futures product; or
                          ``(bb) a contract of sale that--
                                    ``(AA) results in actual delivery 
                                within 2 days; or
                                    ``(BB) creates an enforceable 
                                obligation to deliver between a seller 
                                and buyer that have the ability to 
                                deliver and accept delivery, 
                                respectively, in connection with their 
                                line of business.
Ie: This law applies to anyone that offers leveraged currency transactions
to people that are listed in the "eligible contract participant" list (ie: you
and me), provided that it isn't a securities transaction (forex trades are not
secutiries) and there's no physical delivery of product.

Inserted Code
                 ``(iii)(I) A person, unless registered in such 
                capacity as the Commission by rule, regulation, or order 
                shall determine and a member of a futures association 
                registered under section 17, shall not--
                          ``(aa) solicit or accept orders from any 
                      person that is not an eligible contract 
                      participant in connection with agreements, 
                      contracts, or transactions described in clause (i) 
                      of this subparagraph entered into with or to be 
                      entered into with a person who is not described in 
                      item (aa), (bb), (dd), (ee), or (ff) of 
                      subparagraph (B)(i)(II);
                          ``(bb) exercise discretionary trading 
                      authority or obtain written authorization to 
                      exercise written trading authority over any 
                      account for or on behalf of any person that is not 
                      an eligible contract participant in connection 
                      with agreements, contracts, or transactions 
                      described in clause (i) of this subparagraph 
                      entered into with or to be entered into with a 
                      person who is not described in item (aa), (bb), 
                      (dd), (ee), or (ff) of subparagraph (B)(i)(II); or
                          ``(cc) operate or solicit funds, securities, 
                      or property for any pooled investment vehicle that 
                      is not an eligible contract participant in 
                      connection with agreements, contracts, or 
                      transactions described in clause (i) of this 
                      subparagraph entered into with or to be entered 
                      into with a person who is not described in item 
                      (aa), (bb), (dd), (ee), or (ff) of subparagraph 
                      (B)(i)(II).
                    ``(II) Subclause (I) of this clause shall not apply 
                to--
                          ``(aa) any person described in item (aa), 
                      (bb), (dd), (ee), or (ff) of subparagraph 
                      (B)(i)(II);
                          ``(bb) any such person's associated persons; 
                      or
                          ``(cc) any person who would be exempt from 
                      registration if engaging in the same activities in 
                      connection with transactions conducted on or 
                      subject to the rules of a contract market or a 
                      derivatives transaction execution facility.
A person that's not a member of a futures association and registered with the
CFTC shall not:

1. Accept orders from people that aren't in the "eligible participants" list.
2. Exercise discretionary trading authority
3. Operate a pool or solicit funds for a pool

"Eligible contract participants" are:

Inserted Code
                                         ``(aa) a financial 
                                        institution;
                                            ``(bb)(AA) a broker or 
                                        dealer registered under section 
                                        15(b) (except paragraph (11) 
                                        thereof) or 15C of the 
                                        Securities Exchange Act of 1934 
                                        (15 U.S.C. 78o(b), 78o-5); or
                                            ``(BB) an associated person 
                                        of a broker or dealer registered 
                                        under section 15(b) (except 
                                        paragraph (11) thereof) or 15C 
                                        of the Securities Exchange Act 
                                        of 1934 (15 U.S.C. 78o(b), 78o-
                                        5) concerning the financial or 
                                        securities activities of which 
                                        the broker or dealer makes and 
                                        keeps records under section 
                                        15C(b) or
                                        17(h) of the Securities Exchange 
                                        Act of 1934 (15 U.S.C. 78o-5(b), 
                                        78q(h));
                                            ``(cc)(AA) a futures 
                                        commission merchant that is 
                                        primarily or substantially 
                                        engaged in the business 
                                        activities described in section 
                                        1a(20) of this Act, is 
                                        registered under this Act, is 
                                        not a person described in item 
                                        (bb) of this subclause, and 
                                        maintains adjusted net capital 
                                        equal to or in excess of the 
                                        dollar amount that applies for 
                                        purposes of clause (ii) of this 
                                        subparagraph; or
                                            ``(BB) an affiliated person 
                                        of a futures commission merchant 
                                        that is primarily or 
                                        substantially engaged in the 
                                        business activities described in 
                                        section 1a(20) of this Act, is 
                                        registered under this Act, and 
                                        is not a person described in 
                                        item (bb) of this subclause, if 
                                        the affiliated person maintains 
                                        adjusted net capital equal to or 
                                        in excess of the dollar amount 
                                        that applies for purposes of 
                                        clause (ii) of this subparagraph 
                                        and is not a person described in 
                                        such item (bb), and the futures 
                                        commission merchant makes and 
                                        keeps records under section 
                                        4f(c)(2)(B) of this Act 
                                        concerning the futures and other 
                                        financial activities of the 
                                        affiliated person;
                                            ``(dd) an insurance company 
                                        described in section 
                                        1a(12)(A)(ii) of this Act, or a 
                                        regulated subsidiary or 
                                        affiliate of such an insurance 
                                        company;
                                            ``(ee) a financial holding 
                                        company (as defined in section 2 
                                        of the Bank Holding Company Act 
                                        of 1956);
                                            ``(ff) an investment bank 
                                        holding company (as defined in 
                                        section 17(i) of the Securities 
                                        Exchange Act of 1934 (15 U.S.C. 
                                        78q(i))); or
                                            ``(gg) a retail foreign 
                                        exchange dealer that maintains 
                                        adjusted net capital equal to or 
                                        in excess of the dollar amount 
                                        that applies for purposes of 
                                        clause (ii) of this subparagraph 
                                        and is registered in such 
                                        capacity with the Commission, 
                                        subject to such terms and 
                                        conditions as the Commission 
                                        shall prescribe, and is a member 
                                        of a futures association 
                                        registered under section 17.
1. Financial institutions
2. A registered broker/dealer
3. A registered FCM
4. Those affiliated with registered FCMs
5. Qualifying insurance companies
6. A financial holding company (bank)
7. An investment bank
8. A registered, qualifying fx dealer

If you aren't in that list, they can only do business with you if they themselves are registered with the CFTC and a member of a futures association.
  • #27
  • Nov 18, 2009 2:49pm Nov 18, 2009 2:49pm
So...I am looking for an MT4 broker with 400:1 leverage accounts and with micro accounts.....

any ideas guys?

Thanks,

BP
  • #28
  • Nov 19, 2009 1:03pm Nov 19, 2009 1:03pm
For me NFA is going a little bit too far with these new rules, for real, the independent mini trader will disappear for the US.
My broker is swiss with office in the US, acm. Wouldn’t go with a US broker ever!
  • #29
  • Nov 19, 2009 1:40pm Nov 19, 2009 1:40pm
Quoting kelly
For me NFA is going a little bit too far with these new rules, for real, the independent mini trader will disappear for the US.
My broker is swiss with office in the US, acm. Wouldn’t go with a US broker ever!
Really? What do you have to do in order to fund your account? Do they trade micro-lots?
  • #30
  • Nov 20, 2009 4:24pm Nov 20, 2009 4:24pm
Just a quick heads up on this one guys. word is a handful of US UK brokers are planing to change requirements this weekend, be careful with open trades..
  • #31
  • Edited 8:35pm Nov 20, 2009 8:32pm | Edited 8:35pm
I now hear that the NFA is considering implementing the pattern daytrader rule for forex also. This will mean that you cannot open and close more than 3 trades per week within the same day unless your account balance is $25,000 at all times. If you get caught doing more than 3 daytrades per week with an account balance less than $25k, your account will be frozen for 90 days. This is a big joke. Right now this rule only applies to Securities traders, (stock traders) but it is on the table at the NFA to be implemented in the forex and futures markets.

What about this Tobin Tax (an outrageous tax on each trade you take) they are considering? That Defazzio character is a real A-hole. He is gonna put us traders right out of business, and oh, just when you thought you could just open an account overseas to get around it, House Speaker Nancy Pelosi wants to make it a "global tax". These damn Liberals are killing us. We need the GOP back in office ASAP or we can all bend over and kiss our arses goodbye, and hello to Subway or Burger King. I guess they figure flipping burgers would contribute more to the economy than a trader making a living at daytrading. I suggest you contact your local congressman and tell him or her to vote no to the Tobin Tax or they will not get your vote come election time. We need to stand up to these fools and voice our opinion, to many of these brokers never even contacted the NFA regarding their feelings to the FIFO, hedging, and leverage changes. Goodbye forex trading and hello McDonald's. damn shame
  • #32
  • Nov 20, 2009 9:10pm Nov 20, 2009 9:10pm
Setup a foreign corporation. Trade thru foreign brokers. Let the NFA screw it's members till they die.

All of these rules will just push our tax dollars elsewhere.
  • #33
  • Nov 23, 2009 7:26pm Nov 23, 2009 7:26pm
If i live in the US can I trade with non-us based brokers?
  • #34
  • Nov 23, 2009 7:33pm Nov 23, 2009 7:33pm
Quoting morpheus305
If i live in the US can I trade with non-us based brokers?
Sure as long as the company is accepting applications from U.S. based customers. I live in the U.S. and all of my accounts are now overseas.
  • #35
  • Nov 23, 2009 7:51pm Nov 23, 2009 7:51pm
Magnum, what overseas brokers have you found take US customers?
  • #36
  • Nov 23, 2009 8:05pm Nov 23, 2009 8:05pm
Quoting Rabid
Magnum, what overseas brokers have you found take US customers?
Dukascopy, if you don't mind the spreads fxsolutions uk. I still have a small account with fxsolutions and they offered to move it over to the uk (which I jumped on). I use it mainly to test new ideas. Fixed spreads are nice when doing live testing.

I am sure there are others but these are the ones I deal with. I am pretty sure that Saxo bank will take U.S. based customers. I have dealt with them a little bit while trading someone elses account. Platform is a bit tough to get used to but once you do it's not bad.
  • #37
  • Edited 10:31am Dec 7, 2009 10:28am | Edited 10:31am
Quoting ecTrade
Really? What do you have to do in order to fund your account? Do they trade micro-lots?
Listen, it is very probable that one day in the near future, this may all become a centralized market in one way or another, even if not "officialy" then perhaps were regulation is concerned at least. You can bet your bottom peso that the UK will follow suit...they are cousins after all...and then the rest will follow. I am with a Swiss broker and hope they will be the Alamo to all this.

I moved from another broker lately to ACM. No, you can not trade micro lots, you can however trade mini lots (10,000) Yes they accept CC payments for funding and I was surprised to see they also payed my cost. Minimum req to open is $2000...and yes, no FIFO, yes to hedging (and scalping btw) and beautifull 100:1 across the board...for the moment!
  • #38
  • Jan 4, 2010 6:20am Jan 4, 2010 6:20am
Quoting ecTrade
Really? What do you have to do in order to fund your account? Do they trade micro-lots?
Fill the formulary online and they’ll contact you, it´s just sign the contract and transfer the money. Yes they have it but only for the mini account not the rest.
You should download the free demo before going live…
http://www.ac-markets.com/trading-so...ed-trader.aspx
regards!!
  • #39
  • Jan 7, 2010 5:06pm Jan 7, 2010 5:06pm
I have been trading for a while, and after finding a style which really suits my personality, I am now trading profitably. My style is not important to this thread except to say that I require 200:1 or greater. Recent changes now make it difficult for me to maintain the same level of performance.

The new NFA rule on leverage and margin have changed that. And their change made it tempting to look at an account with a broker outside the US.

However, the US federal government also recently established a new law affecting US citizens who reside within the US--these laws may make it very difficult to have a trading account or an investment account with a broker operating in a country outside the US. As an example, inquire with Alpari, UK or with the Swiss broker, Mandus Invest--the response you will receive is very interesting.

You may even come to feel, as I do, that you are being held captive between the NFA and the US government. A non-resident US citizen is less regulated in this area than is a US citizen residing in the US.

NFA's new regulation took effect December 1st, and it does 2 things. It standardizes Margin calculations so that all NFA member brokers are now required to calculate margin in the same way. Second, it establishes maximum leverage at 100:1.

I don't know yet what the new US law is that affects US citizens residing in the US, and I don't know how long it has been in affect. I have asked my accountant about ii--he attended a course which included the general application of the new law, but he had no clients he was aware of at the time who are affected by it, so he could offer no help now.

I have tried during December to trade under the new rules using 3 brokers, all of whom are reputable, and all of whom are either NFA members or are in the process of becoming an NFA member. My results during December, while good, are significantly less than what they had been previously. More importantly, the new NFA rules have had a very negative affect on my confidence.

If you have knowledge of the new US law affecting US citizens residing in the US and who wish to trade or invest in firms located outside the US, or if you work with an accountant who can advise me in this matter, I would appreciate your comments.
  • #40
  • Jan 7, 2010 5:13pm Jan 7, 2010 5:13pm
Quoting pipnu2me
If you have knowledge of the new US law affecting US citizens residing in the US and who wish to trade or invest in firms located outside the US, or if you work with an accountant who can advise me in this matter, I would appreciate your comments.
Currently, these laws do not effect traders directly, they regulate only brokers. So if you trade thru a foreign broker then that's that. Of course this is internet advice, not specific, and should be taken accordingly.

Your accountant is the wrong person to ask. He/she is not qualified to give you specific legal advice, for that you need an attorney.
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