MB Trading Futures - Introduction

Justin-

I was talking to someone (can't say who, he's a ranking member of our government) who said that there is going to be a push to lower leverage globally down to 25 to 1. Evidently, Japan has already regulated that max leverage allowable is 50 to 1 and they are going to 25 to 1 in a year. FSA over in the UK is looking to do the same. I guess that the point of this section of the Dodd-Frank Reform Bill is to close off the possibility of firms dropping out of the NFA to maintain higher leverages. Essentially, this is making it ILLEGAL to transact FX at all without being a member of the NFA or a regulatory entity while requiring that those firms that are members abide by the max leverage rule, whether it be 100, 50, or 25 to 1.

The person I spoke to pointed to three things:

1) Recent filings of fraud by certain large deal desk firms that basically amounts to giving them a license to steal from us (traders) via bad execution (this points ultimately to the need for a competitive exchange).

2) Rampant money laundering and movement of "concerned" (i.e. terrorist) funds through the unregulated system. The idea was that an unregulated "company" could set up as an FX shop, allow "deposits" from abroad, those losses turned into gains for the "company" and now the funds were legally here in the US.

3) Higher-percentage of customer losses on accounts using high leverage.

Overall, it sounded like a concerted global effort to make this into a real market with lower leverage and really try to squash out the illegal factors that currently overwhelm the market. What would be your comments on that?

Brilinat, genius, fenomenal writing.... This is how automated trading works in 2010 (21st century)...

Sorry, I couldn't resist...

Justin,

Just got a very long "updated" forex agreement from MBT. Do you have an executive summary somewhere that summarizes the changes? Reading that document is a bit daunting unless you are a lawyer (and I am not)...

Most of the time, if someone is changing the terms of your account they will let you know what has changed and/or what the changed sections are highlighted in RED or underlined, etc.

Thanks.

IndyTrader,

I would agree with most of that. What the average retail trader has no idea about is all of the games and shenanigans that go on out there, much of it related to money laundering. This is why we, as a US-based broker, due to the Patriot Act, have a very large responsibility to really do background checks and analyze as thoroughly as possible everything that we can about customers, potential customers, IBs, etc. Having a non-regulated, non-exchange based system like FOREX leaves room for a lot of these issues. It’s a terrific market to trade, and I think getting better from the perspective of making execution cleaner for the public, but the lack of centrality and transparency leaves a lot of room for trouble. We may not agree with every step that the regulators take, but we have always said that in general, we approve of the steps that they are taking to raise net capital requirements and put in place protections for retail customers. That includes capital requirements but also rules about slippage and trade issues, etc. We are very pleased that we continue to meet all of the criteria and are easily within acceptable bounds of their requirements. Sometimes when you read on these boards, you get the feeling from some people that the government is out to destroy the FOREX marketplace, and some of the arguments certainly have merit about what the regulation accomplishes. But overall, we feel that their goals are generally to legitimize this market, which will make it acceptable for more traders. To the extent that that is the goal, we agree with the steps that they take. That includes consumer protections from non-regulated entities and tough standards to combat money laundering, etc. It’s also true that people that trade at full leverage are the most likely to take big losses. Most of the successful traders that I see in FX are not trading at 100-to-1 based on their account value.

Remember that over the last few years (largely since the Refco debacle), we’ve seen the industry change in all of these areas:

 

1. Net capital requirement raised from $250,000 to $1,000,000 to $5,000,000 to $20,000,000
2. Requirements to inform the NFA of any trade which is corrected or altered (instead of just letting desks “slip” people and then sometimes “fix” the trades if a customer complained)
3. Elimination of hedging (which serves to double commissions for deal desks)
4. Tough requirements on firms to manage the marketing of their products and their IBs (i.e. to make sure no one is saying “you are guaranteed to make money if…”)
5. Requirement of IBs to register (since a lot of the sketchy stuff out there came in the form of IBs)

Now we are looking at the likelihood of lower leverage (but probably not as low as the 10:1 that everyone was worried about eight months ago) and making it illegal to transact FOREX away from a registered entity.

Through each of those steps, I saw threads and posts on these boards about how each was going to kill the FX market and/or put brokers out of business (and several smaller brokers did fail to meet the $20,000,000 requirement). In several of those cases, we had to endure a lot of people saying that we would be adversely affected, even though we have always stated that we would not have trouble meeting each requirement. We’ve been operating under the SEC and FINRA rules on the stock and futures side for a decade without issues. We understand what the regulators are going for, and we plan to meet any requirement. We aren’t just a FOREX firm that popped up two years ago. There’s much bigger backing here based on our track record in the other asset classes.

And through all of that, the FOREX market (and our customer base) has continued to grow and become a basic part of our financial-speak over the last few years (CNBC didn’t used to show the EURUSD quote on the screen, for example). It’s very true that some people will be unhappy about the move to lower leverages, and we can all debate whether that was a necessary step if it happens. But it will most likely occur GLOBALLY with a general consensus move by the regulatory bodies of key countries. We’re already seeing that as you said in Japan. This isn’t just a US issue, even if the US seems to have moved first. I think it is likely that there will be a move toward a more central exchange or two, just like there were a few ECNs on the stock side that became the winners and focused the liquidity through themselves instead of the NASDAQ or NYSE. We fully expect to be a big part of that transition.

InfinitySL-

Most of the changes that I am aware of include:

1. We have customers running EAs that aren’t fully tested on our system. We aren’t responsible for EAs that don’t properly send trade requests to us based on the Release Notes that we have for the MT4 software of our site (i.e. no instant executions, etc.)
2. In the past, there have been a handful of times where orders have gotten “stuck” in Meta. When someone is running an EA, we can see that they are sending a request to close the trade at the market, but it isn’t filling for whatever reason. Previously, the customer had to catch this and close the trade. Now, we have the right to close that trade at the market for you. This should be a welcome change for people running EAs who were concerned about even the possibility of a stuck order while they were running MT4 on a VPS and not watching it. We see everything that comes through, including the rejected trades and what the customer is trying to do, so now that shouldn’t be a problem.
3. A clause about Trailing Stops in MT4 only working if you leave your client software running. You wouldn’t believe how many people place a trailing stop and then close up the software for the day, and nothing happens.
4. A note about the cross conversion adjustments, although I have been told that these are going to go down quite a bit after the big update last week.
5. Some language about accepting all records and amendments and agreements from us electronically.
6. General release of liability (this isn’t new, just reworded) if any of our Third Party’s software that connects to us fails to act or behave properly.

I think that’s about it. Nothing overly major. I think the second point should be a welcome relief for EA users.

I wouldnt count on future regulation being rational, i.e. the Pattern daytrader rule and 4:1 leverage-limitation in the stockmarket, as a response to the internet bubble, was anything but rational. Of course this only affected samller retail traders and didn't adress any real issues. Maybe it will be the same this time round.

Hi Guys,

Just want to check out if mbtrading is went down? I can't open their website from my part and also the mt4 charting is disconnected. Anyone know what happen?

Hi,

This Market Close Order getting stuck seemed to happen to me last night, EA failed to close the order but after a few minutes the order was closed... But the price was no longer favorable...

If I use TakeProfit instead of market orders for closing trades, will the TakeProfit actually be stored in your server? or is this value just saved in metatrader? Will a takeprofit help insure the Trade is closed at the right time?

no connection for almost an hour now - WTF?

Same here, cant even access their website...

Alright MBT...uncle.....UNCLE!!!

Maybe someone can try to call them directly to ask what is happen? Website is down, charting is down, and this happen for over an hour now. Some sweat begin to drop here ...

Just talked to Hugo at MB. No answer as to what is happening other than IT is aware. Not alot of help although it did sound as if he could take care of trades that are open etc...

Last month CMS had experienced outages three times and now what is happening with MBT?

I am client of both...

This is a tad frustrating, it would be good if they were able to pass on this kind of information.

I currently have orders pending in my account yet no way to cancel them.... I am still waiting for a dealer to call me back and it has been over 1 hour now.

I am a relatively new MB client however in the short time I have been with them I have experienced 3 outages like this.

Is there anyone here who has been with MB longer and can give me an idea of how frequently they have experienced outages? Non metatrader ones please.

I like this company and I would like to stay with them but the frequency of outages is a bit of a concern... then again I could have just experienced a freakishly bad couple of months.

I have been logged in all day (nav sdk) and still am, getting quotes too. So the quote servers appear to be operational at least. Can't reach website neither, tho.

I have been with MBT for three whole years now. Been disconnected from the trading platform couple times but this time is the worst because we can't even access their website. But for most of all, I still love trading with them. I believe they will solve this problem really soon.

I have been for 1 year and half client and as you told I have experienced 3 outages like this.

[quote=wittyname;3923345]This is a tad frustrating, it would be good if they were able to pass on this kind of information.

I currently have orders pending in my account yet no way to cancel them.... I am still waiting for a dealer to call me back and it has been over 1 hour now.

quote]


Call the trade desk at 866-628-3003. They will open or close orders over the phone for you until the order server comes back online. You shouldn't be waiting for a call. Call the trade desk. That's what they are there for.

I have been with them for 2 1/2 years, I don't trade everyday, but this is the first time I have experienced them being down.