Proposed NFA Capital Requirement

CFTC Cap Update

The New Cap Numbers are out! With the exception of MB Trading (now at $5,190,000) there has been no indication from the poorly capitalized firms on this list that they are shoring up their financials in preparation for the big cap increase to $5 million due in just 6 weeks. In fact one firm, Direct Forex, is reporting that they are in violation of the minimum capital requirement by $276,000!

Meanwhile, the $10 million minimum capital requirement for firms offering 100:1 leverage is proving to be a big barrier as well. How that plays out remains to be seen. But things might really get wild in the forex industry the next couple of weeks.

The following firms, according to the latest CFTC Report, do not meet the coming $5 million requirement:
http://www.cftc.gov/files/tm/fcm/fcmdata0907.pdf

Direct Forex ($762,000)
IG Financial Markets ($1,017,000)
Advanced Markets ($1,216,000)
Wall Street Derivatives ($1,231,000)
SNC Investments ($1,301,000)
One World Capital ($1,408,000)
Hamilton Williams ($1,453,000)
CMC Markets ($2,001,000)
Solid Gold Financial ($2,101,000)
GFS Futures & Forex ($3,078,000)
E FX Options ($3,752,000)
Forex Club ($3,989,000)
Easy Forex ($4,351,000)

The clock is ticking. Are your funds safe?
 
Forexsavior - I noticed a rather significant jump in the amount of capital Oanda has. Do you know what caused this surge?

Was this that 100 million investment?
 
Quote from Ivanovich:

Forexsavior - I noticed a rather significant jump in the amount of capital Oanda has. Do you know what caused this surge?

Was this that 100 million investment?
More...

They announced a major equity investor a short while back. They're loaded now.
 
Updated on $10 Million Rule

The Ten Million Dollar Capital Requirement effects ONLY those firms that trade at a margin level of greater than 100:1

So which firms in the Dead Pool are directly effected by this? Well, not many. IG index would be affected if they actually solicited customers in the U.S. but it appears their U.S. registration is just a shell. GFS Futures & Forex offers 200:1 mini accounts on their website. Thus this rule could have a major impact on their business. But the firm that stands to lose the most is Money Garden. MG Forex is notorious for offering 400:1 "Flex" accounts and this new rule could turn the firm upside down. Here is a quick rundown after looking at each firm's website.

IG Financial Markets ($1,017,000) [700 to 1 leverage]
Advanced Markets ($1,216,000) [100 to 1 leverage]
Wall Street Derivatives ($1,231,000) [Unknown]
SNC Investments ($1,301,000) [100 to 1 leverage]
One World Capital ($1,408,000) [100 to 1 leverage]
Hamilton Williams ($1,453,000) [100 to 1 leverage]
CMC Markets ($2,001,000) [100 to 1 leverage]
Solid Gold Financial ($2,101,000) [100 to 1 leverage]
GFS Futures & Forex ($3,078,000) [200 to 1 leverage]
E FX Options ($3,752,000) [100 to 1 leverage]
Forex Club ($3,989,000) [100 to 1 leverage]
Easy Forex ($4,351,000) [50 to 1 leverage]
Money Garden ($5,507,000) [400 to 1 leverage]
Ikon ($7,562,000) [Unknown]
 
Direct Forex is No More

Looks like the Savior missed this big development. Gain Capital bought out Direct Forex. So scratch them from the list. Here is the official Direct Forex Statement:

Dear Direct Forex Customer,

As you already know, Direct Forex LLC (“Direct Forex”) will be transferring the custody and clearing of all forex accounts to Gain Capital on Wednesday, August 29th 2007. Please keep in mind that it is important to liquidate any positions by the close of business, 4:00PM (CDT) on the aforementioned date. All open positions will be liquidated to facilitate the transfer of the accounts to Gain Capital.

For your convenience, we have attached a link that allows you access to Gain Capital’s two proprietary trading platforms. These platforms can be accessed through Direct Forex’ website (www.directforex.com) and by clicking on the link http://www.directforex.com/products/demo1.aspx. Please take time to familiarize yourself with these new trading platforms in order to minimize any disruption to your trading.

Please keep in mind that Gain Capital is in the process of integrating MetaTrader 4, and is confident that the system will be available on or around October 1st, 2007. Direct Forex appreciates your business and will keep you informed of any updates.

Sincerely,
Direct Forex
 
E-FX Options is NO More

So imagine one fine morning you wake up feeling bright and chipper. You have your morning coffee and scrambled eggs while listening to the banality of the local weather report. You look across the tv screen and see the currency rates scroll by. Hmmm, time to log into your currency trading account to see how your positions look. You are still long USD/JPY where you are taking a beating, hoping the pair will make a come back. In the meantime at least you can console yourself with the interest rate yield you’re getting.

But not anymore. Because if you’re a customer of E-FX Options you are spitting out your coffee at your computer screen right about now. Why? Because without almost any notice E-FX is closing its doors and liquidating all customer positions in two weeks.

Now had you been reading Forex Savior’s reports all along and taken him seriously you could have closed your account months ago knowing E-FX was a poorly capitalized firm that was well below the coming $5 million capital requirement. But for those poor sods stuck in positions at this doomed firm you are about to get the margin call from hell. Meanwhile, the rest of E-FX’s customers can expect the worst trade execution imaginable from a firm about to slip beneath the waves. Run Forrest, Ruuuuuuuuun!

Dear Customer,

We regret to inform you that due to the restructuring of E-FX Options, LLC (“E-FX”), that the trading platform will cease service on 30 November 2007. Arrangements are further explained as follows:

Effective 30 November 2007 at 5:00 pm US Eastern Standard Time (1 December 6:00am Peking Time), E-FX will no longer be the counterparty to customer positions and will not service customer accounts.

All open positions will be liquidated at the closing price on that day and subsequently, the account will be closed. You may also liquidate your positions at any time on or before the close of 30 November 2007 via the platform, at a price for which you find suitable.

Fund withdrawal instructions may be provided to E-FX via the trading platform or by completing the Withdrawal Form on the firm web Site http://www.efxo.com/html/download/e/withdrawal.pdf

In the event that E-FX does not receive withdrawal instructions by December 1st, we will automatically deposit the remaining balance of your funds to the bank account registered with the company in your new account application. If E-FX does not have bank instructions as of 30 November, our customer service department will contact you.

For inquiries, please do not hesitate to contact our customer service manager Joey To at the hotlines listed below.

Lastly, account statements will remain available on the trading platform through 9 December 2007.

We apologize for any inconvenience brought about by the above arrangements!

Yours truly,
E-FX Options, LLC
More...

I like how they "apologize" for any inconvenience. These firms are so irresponsible it spins the head. This firm knew months ago they were not going to be able to make the $5 million requirement and yet they didn't make the slightest effort to warn their customers ahead of time. They just wanted to milk the cow until the very last moment. Well, the cow is being taken to the slaughterhouse and its E-FX's customers that are about to become hamburger meat.
 
Quote from forexsavior:

They announced a major equity investor a short while back. They're loaded now.
More...

I guess that makes me sleep a bit sounder at night knowing that's where my money sits.

Please PM me if you see any cause for concern. I'd appreciate your insight.
 
forexsaviour, I don't see on IG Markets' page where they offer 700:1 leverage? Maybe I am missing something. Please point this out.

Thanks.
 
Quote from ssblack:

forexsaviour, I don't see on IG Markets' page where they offer 700:1 leverage? Maybe I am missing something. Please point this out.

Thanks.
More...

IG says they offer 700 to 1 leverage on their home page:
http://www.igforex.com/

Please note: E-FX Options has no relationship with EFX Group. E-FX Options is owned by Emperor Financial in Hong Kong. EFX is owned by MB Trading in California.
 
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