Proposed NFA Capital Requirement

[forexsavior]

Rosenthal Collins Buys MG Financial

The Great consolidation continues. Today RCG announced that they have bought out Money Garden:
http://www.chicagotribune.com/business/chicago-rosenthal-collins-mg-oct15,0,5693946.story

Rosenthal Collins acquires MG Financial
By James P. Miller | Tribune staff reporter
11:34 AM CDT, October 15, 2008
Rosenthal Collins Group LLC, the Chicago futures clearing firm, said Wednesday that it has acquired New York-based MG Financial LLC, a provider of online trading services in the foreign exchange market.

The two closely held concerns didn't disclose terms of the acquisition, beyond saying that it involved "an exchange of equity interests."

Rosenthal President Maureen Downs noted that the futures brokerage and clearing company embarked late last year on a growth initiative focused on capitalizing on the growing demand for futures and options, and building its presence in offshore markets such as Europe, South America, the Middle East and Asia. "We have made great progress in the past year," the executive said, "and today's transaction with MG tekes us to a whole new level with an unparalleled futures and foreign-exchange offering throughout key Asian markets and all of these regions."

MG Financial, which was founded in 1992 and began offering online trading services in 1997, has an extensive client base in Asia, particularly among Chinese-speaking clients outside of China because of regulatory restrictions that are in force on the mainland of China, Rosenthal said; all MG traders are required to speak at least two languages fluently, Rosenthal said, and the New York firm's polyglot group of traders contains people who speak languages such as Mandarin Chinese, Japanese, Russian, Arabic, German and Spanish.

Money Garden clearly could not survive on its own judging from their latest net capital number which is barely above $5 million. Expect more such buyouts in the next 12 months as the field winnows.

 

[forexsavior]

August Net Capital Report

With the world financial system in chaos it’s never been more important to trade with a well capitalized firm. The CFTC has just released their latest net capital figures. Not a lot of changes from the last one. Only difference is that U.S. forex dealers have 30 fewer days to make it to the coming $20 million capital requirement deadline.

http://www.cftc.gov/marketreports/financialdataforfcms/index.htm

The following firms have net capital below $10 million

MG Financial $5,393,000
Advanced Markets $6,786,000
Forex Club $7,558,000
Friedberg Mercantile $8,147,000
ACM $8,372,000
Ikon $9,544,000
Easy Forex $9,824,000
Hotspot $9,942,000

Not much change in capital for Advanced Markets, Forex Club and ACM. Swiss broker ACM still appears to be charging the proverbial machine gun nest with a butter knife. Is this firm really going to be able to put up $20 million in the coming months? Did they even know about this capital increase before they parachuted into the U.S. market? We’ll find out soon enough.

The following firms have net capital below $20 million

GFS Forex $11,451,000
MB Trading $12,767,000
ODL $14,870,000
I Trade FX $14,952,000
Alpari $15,786,000
IFX $18,623,000
FX Solutions $19,574,000

The following firms have net capital above $20 million

CMS Forex $20,199,000
PFG $21,345,000
Interbank FX $36,505,000
Gain Capital $67,906,000
GFT Forex $73,219,000
FXCM $91,840,000
Oanda $165,458,000

As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new law going into effect in the weeks and months ahead.

 

[milktruck]

tick tock tick tock

 

[forexsavior]

Dead Pool Alert

The NFA has come out with a statement that reads as follows:
http://www.nfa.futures.org/news/newsNotice.asp?ArticleID=2198

Net Capital Requirements for Forex Dealer Members

On October 22, 2008, the Commodity Futures Trading Commission approved increases to NFA's capital requirements for Forex Dealer Members (FDMs). As stated in a July 23, 2008 Notice to Members, the minimum requirement will be $10 million as of October 31, 2008, $15 million as of January 17, 2009, and $20 million as of May 16, 2009.

The deadline to meet the new capital requirement is this Friday. The most up to date CFTC net capital statement shows the following firms with capital below the $10,000,000 requirement.

http://www.cftc.gov/marketreports/financialdataforfcms/index.htm

MG Financial $5,393,000
Advanced Markets $6,786,000
Forex Club $7,558,000
Friedberg Mercantile $8,147,000
ACM $8,372,000
Ikon $9,544,000
Easy Forex $9,824,000
Hotspot $9,942,000

If you have an account with any of these firms contact them immediately to ensure that they will be able to comply with the new capital requirement this week. Some such as MG Financial and Hotspot have larger parent companies. But most do not. In this day and age safety of funds should be every trader’s top priority. Make sure your funds are safe.

 

[forexsavior]

Scandal at SNC

Last year forex dealer SNC Investments sold off its forex business because they were unable to meet the NFA’s $5 million capital requirement. But it appears that they stayed in business as a Futures Commission Merchant and Money Manager. They are in business no more. Let’s roll the tape from the NFA complaint…

http://www.nfa.futures.org/news/newsRel.asp?ArticleID=2201

On October 29, 2008, the CFTC contacted NFA. The CFTC advised NFA that it had received a telephone call from attorney David Serepca of San Carlos California, who said that he represented an individual by the name of Chris Lee. Serepca told the CFTC that, in April 2008, Chris Lee had written a check for $500,000 to SNC Asset Management and Kenneth Lee for the purpose of investing in a fund which would trade forex. Serepca said that he and his client had met with Kenneth Lee on October 29, 2008 and were told by Kenneth Lee that Peter Son (SNC CEO) had disappeared, and that customer money was missing.

Gotta love these CEO’s who just cut and run the moment everything goes pear shaped. I can picture Peter Son now, dressed up in drag like Jefferson Davis trying to escape the Union Army after the surrender of the Confederacy. Another forex fugitive gallops off in the dead of night…

On October 29, 2008, another principal of SNC, Young Choi – who worked at SNC’s main office in New York City – advised NFA that SNC was out of business and wished to withdraw its NFA membership. In addition, NFA became aware of a newspaper article that appeared in The Korea Daily on October 29, 2008, which reported that SNC – a Korean investment firm located in California – was “closing its operations due to the global financial meltdown” and that “the partners of the firm have no power to revive the business.” The article also stated that the firm had been managing over $70 million and that “it appears many Korean investors may lose their investments in the firm.” The article reported that the main office of SNC had been closed since October 28 and that employees had been notified to no longer come to work. In addition the article reported that the “president of the firm, Peter Son, has not been reachable by many investors and that his cell phone has been off.”

Well if you mismanaged $70 million you’d probably turn your cell phone off too. Better yet you’d probably have hurled it into the East River on your way to Macy’s to get fitted for that wig and frock…

Based on the telephone call from SNC’s Young Choi advising NFA that SNC was out of business, as well as the information received attorney David Serepca, and which appeared in the Korea Daily newspaper article, on October 30, 2008, NFA auditors went to SNC’s main office at 40 Wall Street in New York City to inquire about Peter Son and his whereabouts and to determine if customer funds were missing. However, when NFA auditors arrived at SNC’s main office they found that it was closed and its doors locked. The auditors left a note on the door requesting that a representative of SNC contact NFA.

Left a note on the door? Oh brother talk about closing the barn door after the horses have bolted… What could the note have possibly said? “Uh, Hello? You think you could let us regulators know what happened to that $70 million you had under management? Hope to hear from you. Warmest Regards, NFA.”

Subsequently, NFA’s auditors were contacted by Young Choi, who agreed to meet with NFA’s auditors at SNC’s main offices at 40 Wall Street. Thereafter, NFA’s auditors did meet with Young Choi, who again indicated that SNC was out of business and that he had terminated the lease for SNC’s main office effective October 31, 2008. Young Choi also told NFA’s auditors that he first became aware of SNC Asset a few weeks ago, that he was unaware that it was involved in forex trading, and that it was this understanding that SNC Asset only invested in real estate. Young Choi further indicated that he did not know Peter Son’s whereabouts.

There is always someone that gets left holding the bag in a stick-up. And Young Choi appears to be said bagman. Left behind to clean up Peter Son’s mess poor Young Choi must be ruing the day he ever joined SNC Investments.

The implosion of SNC is yet another lesson in the perils of sending money to poorly capitalized firms. There is no way of telling how many small firms are tottering on the brink of financial ruin in the wake of the global credit crisis that has wiped out billions of dollars in wealth. As always, conduct your due diligence and beware poorly capitalized firms like the late SNC Investments.

 

[BigGun]

forexsavior In light of all the recent US banking / brokers / regulatory issues, don’t you think this thread be changed to:

“Are your funds in US brokers/bank under the US regulatory agencies’ safe/secure” !!!?????

the US banking / brokers / regulatory reatings have droped to some of the lowest safety levels one could imagined!! US is no way the the safe place to send your $$


http://www.guardian.co.uk/business/feedarticle/7941879



Also

Why not start a new list with “Safe none US firms” ?? after all thease forums you so dilegenacee post in are for a global tradering comminty why None US firms.

 

[milktruck]

Any firms get the ole cease and desist?

I was poking around the NFA site and didnt look like it.

 

[forexsavior]

Quote from milktruck:

Any firms get the ole cease and desist?

I was poking around the NFA site and didnt look like it.

not yet. they're still tracking down old firms like snc who were supposed to be out of business a year ago

 

[forexsavior]

GFS Forex Suspended in Dubai

Forex Dealer Dead Pool member GFS Forex has run into a bit of trouble in the Middle East. Their Dubai office was recently shut down by regulators and they were hit with $500,000 in fines and plaintiff compensation. It wasn’t always this way for GFS.

Back in 2007 this “leader in the online global foreign exchange and futures market” was trumpeting its new office with the usual public relations talking points as seen in this article (with accompanying photograph of glad handing executives):
http://www.ameinfo.com/127185.html

From its offices in the DIFC, GFS will work to bring its expertise in the foreign exchange market to its customers throughout the region.

GFS has established a reputation as a global leader in commodities trading.

Mike Leung, Director, GFS Investments (Middle East) Ltd., said: 'We are extremely proud to join the DIFC, the leading international financial centre in the region. Working in the DIFC will allow us to provide our customers throughout the Middle East access to our foreign exchange and commodities market expertise from a platform that is internationally recognised for its integrity, transparency and efficiency.'

Integrity eh? Let’s see how accurate that claim turned out to be:
http://www.business24-7.ae/articles/2008/9/pages/09082008_fc2ef83f016143b1b76cf6dbc0a4fa3f.aspx

GFS broke the terms of its licence by placing foreign exchange trades on behalf of its clients when the company was allowed only to offer a platform for customers to place trades, according to the DFSA statement.

The trading on behalf of clients was often "unfair and unsuitable to the interests of the clients, motivated more by a desire to maximise commissions than to profit the clients," the DFSA said. "Most clients suffered financial losses as a result of this misconduct."

Well when you are $10,000,000 below the $20,000,000 capital requirement scheduled to kick in next spring you’d try to “maximise” your commissions too. GFS has a long, hard slog in front of it.

Authority suspends GFS Investments
By Babu Das Augustine, Banking Editor
Published: September 08, 2008, 00:03

Dubai: The Dubai Financial Services Authority (DFSA) on Sunday slapped hefty fines and sanctions on GFS Investments (Middle East) Limited, a company that offered online trading facilities in foreign exchange and commodities.

The DFSA's action follows a detailed investigation into the business operations of GFS Investments.

GFS Investments is licensed to provide an online foreign exchange and commodities trading facility to clients who meet DFSA's required eligibility standards. Eligible investors gain direct access to that platform via unique login and password.

Under its licence, GFS Investments was not permitted to conduct the trades, but received commissions for each trade carried out by its customers. The business is therefore suitable for professional investors who have relevant market experience, but unsuitable for retail investors.

An affected customer told Gulf News yesterday that the company used different customer accounts to carry out trades for customers who were not eligible under DFSA regulations.

"The investigations determined that GFS Investments had operated outside its authorisation by conducting business with non-eligible retail clients and by itself carrying out trading in the names of clients. The DFSA took immediate steps to ensure that no further unlawful trading took place," DFSA said in a statement.
Investigation revealed that some employees of GFS Investments engaged in conduct designed to misrepresent the eligibility of clients, including the falsification of client particulars.

Following investigations, the DFSA has imposed a range of sanctions including the banning of relevant individuals for five years from the Dubai International Financial Centre (DIFC); the imposition of fines; and the compensation of relevant clients for financial losses suffered as a result of the misconduct.

"The DFSA has an important role to maintain business standards within the DIFC. The vast majority of our licensed firms take their governance and compliance responsibilities very seriously and this has helped the DIFC to quickly establish a reputation for excellence.

"We are, therefore, disappointed by the unacceptable conduct of GFS Investments," said the DFSA's Chief Executive, David Knott.

"The DFSA's intervention will also ensure that all investors who suffered financial loss as a result of the misconduct will be fully compensated," he said.

The bans imposed by DFSA prevent the individuals from performing any function in or in connection with the provision of financial services or ancillary services in or from the Dubai International Financial Centre during the designated period.

All sanctions have been recorded in enforceable undertakings made with the DFSA by GFS Investments and its relevant officers and employees.

 

[forexsavior]

CMC in Crisis

So say news reports coming out of Australia. A few weeks ago, at the height of the financial panic, leading CFD provider Saxo Bank took a meat cleaver to their work force in a frenzied effort to slash costs. CMC now appears to be following suit. They had already laid off staff and closed their U.S. office and another office in Perth, Australia. But now more redundancies lie over the horizon and the company just held an emergency meeting for all their staff at a hotel in Sydney. Details below:
http://www.compareshares.com.au/~compare1/case32.php

Crisis meetings at CMC Markets
Toni Case - November 6, 2008

CFD specialist CMC Markets held an all-staff meeting at the Intercontinental Hotel in Sydney today at 2.30pm to put the rumours to rest once and for all. What is happening to CMC Markets?

CMC Markets' normally thundering public relations machine has suddenly gone quiet, and in its place is FD Third Person, a media agency "specialising in financial transaction support and issues and crisis management”, according to their website.

CompareShares did its best to get clarification for traders with existing accounts with CMC Markets. We put in numerous calls to internal public relations, Sydney reception, the New Zealand office and even the 1300 303 888 number and couldn't get anyone to comment. Phone calls rang out. According to FD Third Person, key staff were in meetings until late last night and again early this morning.

CMC Markets did not want to make an official announcement to the market until staff had been notified of the changes at 2.30pm today, was the official response.

It’s now official that managing director David Trew has been axed from the Group. Trew, who made headlines earlier this year when splurging on a $25 million trophy mansion in Point Piper (as reported in The Australian newspaper) is leaving the group, according to FD Third Person. And more staff cuts – “in non-client facing functions” – are scheduled for the Sydney office. CMC Markets shut its Perth office in August this year, and recently slashed Sydney staff by around 8 per cent.

Furthermore, the London head office will be taking the reins over its Antipodean businesses. CMC Markets’ business units, Sydney, New Zealand and Asia (Singapore, Hong Kong and Japan) will now report directly to London, states FD Third Person. To date, the Australian and New Zealand businesses came under the wing of former managing director Trew.

Two months ago, CompareShares reported on a series of events that had unfolded at CMC Markets, “An AVO, staff cuts and a trophy mansion – it’s all happening at CMC Markets.”

Back then, managing director David Trew denied the suggestion that staff cuts were a result of problems at CMC Markets. He insisted that further staff cuts were not anticipated.

Stay tuned - we'll keep you updated with any developments in this story.

So will the Savior…