Proposed NFA Capital Requirement

I was speaking with a rep over at GFT. While he didn't bad mouth any specific firms he gave me some good guidelines for choosing a broker that pretty much rules out most of these little firms being discussed on this thread.

1) Know how much net capital a firm has. This is important because these smaller firms don't have much money and so they don't spend anything on accounting or compliance or customer support.

2) Know the regulatory environment. There is a lot of stuff going on right now in this industry and a lot of firms are going to get closed soon. Opening an account with one of the smaller firms is a major risk right now.

3) Beware the hucksters promising Holy Grails. There are no guaranteed trading systems. As someone who was mezmerized by a 4X Made Easy infomercial I can tell you how alluring such "systems" are.

I have also used the chat service from FXCM and found their customer service to be pretty good as well. As such I am considering opening an account with either GFT or FXCM. As for execution, that remains to be decided which firm will be better...
 
Another day, another small forex broker dealer shuttered. But before we start throwing dirt on the coffin of forward forex let's take a peak inside and perform an autopsy on the cadaver. For some its old news but for those concerned about the fragile state of the forex industry I think a proper examination is in order. For starters, why and how did this firm get shut down by regulators?

Forward Forex was granted a NFA license in January of 2006.
http://www.nfa.futures.org/BasicNet/Details.aspx?entityid=0362887

On June 18, 2007, the NFA began its examination of Forward Forex and met its CEO, Onelio Manuel Murias. Murias stuck around for an hour after the NFA arrived and then apparently slipped out the back door. He has not been seen since. That's right. As soon as the regulators showed up at his door to look at his books the CEO of the company fled! It's like an episode of "To Catch a Predator" where Chris Hansen breaks out the cameras and the perps go running. So the NFA goes over and speaks with another AP/Principal of the firm, Marshall David Wertheim. Wertheim then tells the NFA that he didn't even know he was an Associated Person and just entered trades in the dealing room. And this guy was legally listed as an AP of the firm?! The rest of the audit consists of the NFA desperately trying to get basic book keeping information only to be told by clueless employees that "we know nothing." Finally Murias' lawyer followed up with the NFA and after a round of Monty Pythonesque negotiating conclude that Murias will not be responding to queries. Hard to believe right? See it all for yourself:
http://www.nfa.futures.org/BasicNet/CaseDocument.aspx?seqnum=1269

This goes right to the heart of what I have been saying these past few weeks. The National Futures Association has been inundated with this kind of activity amongst smaller, undercapitalized broker dealers (for the record Forward Forex had only $1.8 million according to the latest CFTC report.) When you don't have any capital you skimp on things like, oh, well, accountants, compliance staff, Associated Persons... This company was a complete farce. But if you are an ordinary trader how can you really tell? Before this scandal broke they were registered with the NFA and were meeting their minimum capital requirements. I'm sure they had some smooth talking salesmen spinning stories about how well regulated they were. So from the outside it looked ok, right?

Wrong. This is why the NFA is dramatically raising capital requirements. They are tired of dealing with these flimsy, undercapitalized firms. The very fact that the NFA is raising capital requirements should tell you that they have very little confidence in firms with net capital below $5 million. This isn't my opinion. This is the NFA's own opinion. And if a regulator thinks that then the average trader needs to think long and hard before putting their hard earned money in the bank accounts of any of the dead forex firms walking.

One last point. It has been said by some that after the NFA decides to raise capital requirements that there will be an orderly process for unwinding the smaller brokers who can't make the cut. Really? What's to stop the Murias' of the world from bolting with the company's funds and fleeing the state or country once they know the jig is up? The NFA couldn't even get the CEO of forward forex to answer some simple auditing questions and they're going to be able to keep some of these bucket shops out there from fleeing with customer assets? This whole Capitalization issue has the potential to be a real train wreck. So do yourself a favor and keep a sharp eye out on the dead forex firms walking.

P.S. To those firms on the dead forex firms walking list just put up the money now. Why put your customers through the agony of not knowing whether or not your firm is going to make the cut?
 
At first I thought this knucklehead was felix the fx bastard. Might well be but also might be a shill for one of the big bucket shops. Found this post on another forum where he is being outed.

http://www.nondealingdesk.com/showt...sted=1#post3202

Don't know how good theirs mods are at tracing IPs but it seems they've done some homework.

Anyone who doesn't think this guy has an agenda and is jumping on the bandwagon pretty much deserves to be with a bucketshop. Anyway, he is a humorous break in the day.

Quote from forexsavior:

Another day, another small forex broker dealer shuttered. But before we start throwing dirt on the coffin of forward forex let's take a peak inside and perform an autopsy on the cadaver. For some its old news but for those concerned about the fragile state of the forex industry I think a proper examination is in order. For starters, why and how did this firm get shut down by regulators?

Forward Forex was granted a NFA license in January of 2006.
http://www.nfa.futures.org/BasicNet/Details.aspx?entityid=0362887

On June 18, 2007, the NFA began its examination of Forward Forex and met its CEO, Onelio Manuel Murias. Murias stuck around for an hour after the NFA arrived and then apparently slipped out the back door. He has not been seen since. That's right. As soon as the regulators showed up at his door to look at his books the CEO of the company fled! It's like an episode of "To Catch a Predator" where Chris Hansen breaks out the cameras and the perps go running. So the NFA goes over and speaks with another AP/Principal of the firm, Marshall David Wertheim. Wertheim then tells the NFA that he didn't even know he was an Associated Person and just entered trades in the dealing room. And this guy was legally listed as an AP of the firm?! The rest of the audit consists of the NFA desperately trying to get basic book keeping information only to be told by clueless employees that "we know nothing." Finally Murias' lawyer followed up with the NFA and after a round of Monty Pythonesque negotiating conclude that Murias will not be responding to queries. Hard to believe right? See it all for yourself:
http://www.nfa.futures.org/BasicNet/CaseDocument.aspx?seqnum=1269

This goes right to the heart of what I have been saying these past few weeks. The National Futures Association has been inundated with this kind of activity amongst smaller, undercapitalized broker dealers (for the record Forward Forex had only $1.8 million according to the latest CFTC report.) When you don't have any capital you skimp on things like, oh, well, accountants, compliance staff, Associated Persons... This company was a complete farce. But if you are an ordinary trader how can you really tell? Before this scandal broke they were registered with the NFA and were meeting their minimum capital requirements. I'm sure they had some smooth talking salesmen spinning stories about how well regulated they were. So from the outside it looked ok, right?

Wrong. This is why the NFA is dramatically raising capital requirements. They are tired of dealing with these flimsy, undercapitalized firms. The very fact that the NFA is raising capital requirements should tell you that they have very little confidence in firms with net capital below $5 million. This isn't my opinion. This is the NFA's own opinion. And if a regulator thinks that then the average trader needs to think long and hard before putting their hard earned money in the bank accounts of any of the dead forex firms walking.

One last point. It has been said by some that after the NFA decides to raise capital requirements that there will be an orderly process for unwinding the smaller brokers who can't make the cut. Really? What's to stop the Murias' of the world from bolting with the company's funds and fleeing the state or country once they know the jig is up? The NFA couldn't even get the CEO of forward forex to answer some simple auditing questions and they're going to be able to keep some of these bucket shops out there from fleeing with customer assets? This whole Capitalization issue has the potential to be a real train wreck. So do yourself a favor and keep a sharp eye out on the dead forex firms walking.

P.S. To those firms on the dead forex firms walking list just put up the money now. Why put your customers through the agony of not knowing whether or not your firm is going to make the cut?
More...
 
threads like this are among the reasons I do not trade forex. I trade futures. It is nearly as easy to trade ecurrencies as it is forex, and your money will not disappear due to a bad broker

It does not always matter the capitalization; I use a small broker. IB just had problems, and they are large. Refco was large. Goldman Sachs just had problems.

BUT, If my money is not segregated, I don't use the broker or the instrument. Brokers constantly wink out, have troubled dealings, incorrect accounting, etc.

Refco futures customers did the best, because their money was not considered as part of the company assets, but was segregated.

Why aren't ALL instruments traded done as segregated in the USA? Forex, options, stocks, futures, mutual funds, etc. I don't see why my money is EVER part of a company's assets.
 
Corrected url http://www.nondealingdesk.com/showthread.php?p=3202&posted=1#post3202

Quote from bigmrfrank:

At first I thought this knucklehead was felix the fx bastard. Might well be but also might be a shill for one of the big bucket shops. Found this post on another forum where he is being outed.

http://www.nondealingdesk.com/showt...sted=1#post3202

Don't know how good theirs mods are at tracing IPs but it seems they've done some homework.

Anyone who doesn't think this guy has an agenda and is jumping on the bandwagon pretty much deserves to be with a bucketshop. Anyway, he is a humorous break in the day.
More...
 
To play devil's advocate for a second, there are about 10 million people who live in that area and there are at least 4 FX firms I can think of with offices in greater NY...I hardly think that points to one specific broker. To be honest, even if one broker had bad intentions of badmouthing other brokers, they did post a real NFA statement. And it is true that if the NFA raised requirements it would be an issue for many brokers. I think that is the most important thing to take away from this and not who did what to whom.
 
Quote from bigmrfrank:

At first I thought this knucklehead was felix the fx bastard. Might well be but also might be a shill for one of the big bucket shops. Found this post on another forum where he is being outed.

Anyone who doesn't think this guy has an agenda and is jumping on the bandwagon pretty much deserves to be with a bucketshop. Anyway, he is a humorous break in the day.
More...

Good to know that Big Brother is out there tracing the IP addresses of all those naughty bulletin board users. Talk about a smear job... I love savior's posts. They are hilarious! Keep em coming!
 
Quote from Stevie_G_5:

To play devil's advocate for a second, there are about 10 million people who live in that area and there are at least 4 FX firms I can think of with offices in greater NY...I hardly think that points to one specific broker. To be honest, even if one broker had bad intentions of badmouthing other brokers, they did post a real NFA statement. And it is true that if the NFA raised requirements it would be an issue for many brokers. I think that is the most important thing to take away from this and not who did what to whom.
More...

I agree on all counts.
 
Quote from creed:

Good to know that Big Brother is out there tracing the IP addresses of all those naughty bulletin board users. Talk about a smear job... I love savior's posts. They are hilarious! Keep em coming!
More...

Alias troll says what ... ?
 
I have actually been somewhat disappointed with Justin's (from EFX) responses that I have seen (some have been on other forums). Obviously his firm has been pinpointed but he keeps trying to change the subject. He would like everyone to start questioning ForexSaviours intentions when I would prefer he only address the allegations against his firm. By adding to the propaganda machine it kind of makes me wonder about the firm. Afterall, if there really is no danger of them going bankrupt, why not just give us the evidence and leave it at that? Facts speak for themselves and he could have taken the highroad. As I already said...even if this was posted by another firm, the document is still an official NFA document and EFX/MBT does not look good. The only thing I want to know as a trader: why should I ignore the NFA document and believe that you will survive if this is new rule is passed?
 
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