You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Proposed NFA Capital Requirement
- Thread starter forexsavior
- Start date
NFA Strikes Again
Just when you thought $20 million would be the final line of demarcation for U.S. based forex brokers the National Futures Association has announced that capital requirements will be going even higher:
http://www.nfa.futures.org/news/PDF/CFTC/FRSec11_IntNotc021909.pdf
Wow. So unless a forex firm hands off every trade to a bank they have to pay this whopping 5% tax on their customer liabilities. Only a handful of firms offer STP execution. It appears the NFA is trying to encourage more firms to go in that direction.
Just when you thought $20 million would be the final line of demarcation for U.S. based forex brokers the National Futures Association has announced that capital requirements will be going even higher:
http://www.nfa.futures.org/news/PDF/CFTC/FRSec11_IntNotc021909.pdf
Subsection (a)(ii) applies to Forex Dealer Members that execute any customer transactions other than by using straight-through processing and that also have liabilities to customers of more than $10 million. Where it applies, the Memberâs capital requirement is the minimum capital required by subsection (a)(i) plus 5% of the liabilities over $10 million.
For example, if the minimum capital requirement is $20 million, a Forex Dealer Member that operates a dealing desk and has $208 million in liabilities to customers would be required to maintain adjusted net capital equal to or in excess of $29.9 million.
Forex Dealer Members with over $10 million in customer liabilities are subject to this alternative requirement unless they execute all customer transactions using straight-through processing. Straight-through processing refers to platforms that automatically (without human intervention and without exception) enter into an identical but opposite transaction with another counterparty, creating an offsetting position in the Forex Dealer Memberâs own name. A Forex Dealer Member that offers several platforms will be exempt from this requirement only if each platform executes all customer orders using straight-through-processing.
Wow. So unless a forex firm hands off every trade to a bank they have to pay this whopping 5% tax on their customer liabilities. Only a handful of firms offer STP execution. It appears the NFA is trying to encourage more firms to go in that direction.
Quote from forexsavior:
NFA Strikes Again
Just when you thought $20 million would be the final line of demarcation for U.S. based forex brokers the National Futures Association has announced that capital requirements will be going even higher:
http://www.nfa.futures.org/news/PDF/CFTC/FRSec11_IntNotc021909.pdf
Wow. So unless a forex firm hands off every trade to a bank they have to pay this whopping 5% tax on their customer liabilities. Only a handful of firms offer STP execution. It appears the NFA is trying to encourage more firms to go in that direction.
I think this is great news for the forex industry and the NFA is trying really hard to protect the small trader.
Do you know which firms now offer STP execution?
I know that Hotspot did - but now that they are bought by FXCM Im skeptical. I believe that GFS Forex & futures, and MB Trading do as well - but read the part of the customer account app in capital letters to find out - if it says all transactions are immediately offset then you know. if it says they take the opposite side, may from time to time take the opposite side, or offer different prices to different clients, then my guess would be they'll be responsible for the 5% surcharge.
Breaking News: Crown Forex to be Liquidated
The dangers of trading in Switzerland were revealed once again as Crown Forex is to be shuttered according to Francesc over at FX Street:
http://blogs.fxstreet.com/francesc/...-forex-is-to-liquidate-but-not-yet-effective/
Crown was an unregulated Swiss broker and thus their demise is certainly not a surprise. This is always the chance customers take when they open an account with an unregulated broker. Nevertheless, traders need to beware trading with any Swiss brokers unless they have a banking license. Let the corpse of Crown Forex be all the proof you need.
The dangers of trading in Switzerland were revealed once again as Crown Forex is to be shuttered according to Francesc over at FX Street:
http://blogs.fxstreet.com/francesc/...-forex-is-to-liquidate-but-not-yet-effective/
Crown was an unregulated Swiss broker and thus their demise is certainly not a surprise. This is always the chance customers take when they open an account with an unregulated broker. Nevertheless, traders need to beware trading with any Swiss brokers unless they have a banking license. Let the corpse of Crown Forex be all the proof you need.
Crown Forex â An Autopsy
Now that Swiss Regulators have pulled the sheet up over Crown Forexâs rigamortis racked cadaver it is time to ascertain the cause of death. Was it fraud? Was it incompetent management? Was it a complete lack of regulatory oversight? Was it a faulty business model? Or was it all of the above?
A good place to start is a thread that was started over at FX Fisherman by a former customer of Crown Forex in March of 2007, back when Crown Forex was strutting through the snow capped valleys of Switzerland with the cocky assurance that they had the world in the palm of their hand.
http://www.fxfisherman.com/forums/f...forms/1467-crown-forex-don-t-believe-1-a.html
Any firm that is promising a guaranteed one point spread should automatically be written off for suspicion of fraud. It just isnât possible in the forex market. Something has to give. And in Crown Forexâs case they reneged on their promise by constantly requoting their customers and refusing to allow them to deal on their phantom one point spreads.
But this wasnât the only fraudulent marketing tactic of Crown Forex. Go to their own website and you can see a variety of bogus promises, such as, âSecured Funds.â Secured Funds? This is a company that hasnât allowed it customers to withdraw their funds for months! If that is security I hate to see what their idea of ânon-securedâ funds is.
So in determining cause of death it does appear fraud is one likely cause. But another likely cause is incompetent management and employing a faulty business model. If you are serious about being a long-term forex dealer you simply donât operate without a legitimate license. Yet, Crown Forex set up its base of operations in the notorious Swiss forex market, which over the years has become a haven for fraud and corporate malfeasance. They were never subject to audits, capital requirements or basic financial standards that other brokers around the world are subject too. This allowed their management team to get sloppy and cut corners, which they are now paying dearly for.
In the end Crown Forex got what it deserved. Sadly, too many innocent customers are being hurt in the process. Once again, traders should beware trading with any firm that doesnât have a license. In Switzerland, that means a banking license for anyone offering forex. Not a pending license, or a pending application, but AN ACTUAL LICENSE. And right now there are no major Swiss brokers who have actually gotten a banking license to date.
Now that Swiss Regulators have pulled the sheet up over Crown Forexâs rigamortis racked cadaver it is time to ascertain the cause of death. Was it fraud? Was it incompetent management? Was it a complete lack of regulatory oversight? Was it a faulty business model? Or was it all of the above?
A good place to start is a thread that was started over at FX Fisherman by a former customer of Crown Forex in March of 2007, back when Crown Forex was strutting through the snow capped valleys of Switzerland with the cocky assurance that they had the world in the palm of their hand.
http://www.fxfisherman.com/forums/f...forms/1467-crown-forex-don-t-believe-1-a.html
Been trading on Crown Forex for some time now, and sure enough, discovered that the old adage "if if it too good to be true, it probably isn't" holds true once again.
The Lure: One pip spreads on all 7 majors
The Bait: Demo trading with near perfect execution ('made' 125k just messing around on demo one session, when the price was bouncing about 15 pips either way.. and trading 100 lot orders)
The Hook: Far from instant execution.. and even the worst requote system I have seen in my limited broker experience (4 different ones).
The Reel: Even during relatively 'slow' markets, my RFQ (request for quote) would take upwards of 10 to 15 SECONDS before execution. Mind you, this is when the price wasn't moving AT ALL. No, the dealers would sometimes just wait to see if it moved against my request, and fill... or, in my direction, and requote!! Did you hear that? Wait FIFTEEN seconds when the price was stagnant to see which way it would move. If it moved FOR me, requote. If against, instant fill (before I could cancel... which they wouldn't always allow anyway, in keeping with the above scam)
The Net: Even if at times I would accept the requote, if the market was still moving IN THE DIRECTION I anticipated, I would get subsequent requotes... and again, each time it could literally take 5 or more seconds to 'see' if the market was continuing in my direction. For those of you not understanding the implications, allow me to boil it down. The supposed ONE pip spread in effect at times became 7, 8, 10 or MORE pips!!
In the Boat: I even have a screen shot of a requote where they are offering a price TWO pips above even the current market price. Wow, how gullible do those dealers think I am?
Flopping on the bottom of the boat, gasping for air: This may be a naive revelation... many may already suspect or know this to be fact. No matter. My conclusion of this all leads me to believe this: Crown Forex, and I am sure many others out there, are not dealing off your position. Meaning, when you buy, they aren't selling at the same time. And vice versa. No, since 80 to 90% or more of forex traders quit, go bust, or give a substantial amount of money to the market, I am convinced that the dealers are taking the other side of your position, assuming you don't know what you are doing and won't last long any way. Does any one else here see a conflict of interest? Seems to me, your dealer should be on your side, trying to keep you in the game, because in theory they SHOULD be making their money on the spread, high volume, and obviously longtime customers. In fact, I am convinced, that is not the case. They are not on our side, "working" for us so to speak (remember, spot Forex dealing is very competitive, so let's not forget who the CUSTOMER is!); in fact, quite the opposite.
Our only retaliation? Hurt their business by informing the community of forex traders, thereby reducing the lure of "one pip spread" to the scam that it is. You are better off finding yourself a dealer with quick fills of 2 to 3 pips, than to open an account with Crown Forex, as their spreads effectively are much, much larger than this.
Any firm that is promising a guaranteed one point spread should automatically be written off for suspicion of fraud. It just isnât possible in the forex market. Something has to give. And in Crown Forexâs case they reneged on their promise by constantly requoting their customers and refusing to allow them to deal on their phantom one point spreads.
But this wasnât the only fraudulent marketing tactic of Crown Forex. Go to their own website and you can see a variety of bogus promises, such as, âSecured Funds.â Secured Funds? This is a company that hasnât allowed it customers to withdraw their funds for months! If that is security I hate to see what their idea of ânon-securedâ funds is.
So in determining cause of death it does appear fraud is one likely cause. But another likely cause is incompetent management and employing a faulty business model. If you are serious about being a long-term forex dealer you simply donât operate without a legitimate license. Yet, Crown Forex set up its base of operations in the notorious Swiss forex market, which over the years has become a haven for fraud and corporate malfeasance. They were never subject to audits, capital requirements or basic financial standards that other brokers around the world are subject too. This allowed their management team to get sloppy and cut corners, which they are now paying dearly for.
In the end Crown Forex got what it deserved. Sadly, too many innocent customers are being hurt in the process. Once again, traders should beware trading with any firm that doesnât have a license. In Switzerland, that means a banking license for anyone offering forex. Not a pending license, or a pending application, but AN ACTUAL LICENSE. And right now there are no major Swiss brokers who have actually gotten a banking license to date.
"In the end Crown Forex got what it deserved."
There have now been quite a few Swiss MT4 shops that went bankrupt over the last few years (or were forced to by the Swiss banking commission), some of them operated by the same people. They are making money of this, so i don't think the people behind Crown got what they deserved. Fortunately, the Swiss are putting an end to this now.
Although I can't commiserate too much with their clients either, there ought to be some punishment for gullibility - so in a way its them who got what they deserve.
There have now been quite a few Swiss MT4 shops that went bankrupt over the last few years (or were forced to by the Swiss banking commission), some of them operated by the same people. They are making money of this, so i don't think the people behind Crown got what they deserved. Fortunately, the Swiss are putting an end to this now.
Although I can't commiserate too much with their clients either, there ought to be some punishment for gullibility - so in a way its them who got what they deserve.
January Net Capital Report
The CFTC has just released their latest net capital figures. AMIFX saw its net capital double. And with their new website it looks like they have gotten an injection of cash from somewhere. Forex Clubâs net capital also jumped by over 50%. Our final pool of contestants is beginning to take shape.
http://www.cftc.gov/marketreports/f...rfcms/index.htm
The following firms have net capital below $20 million
MB Trading $15,227,000
Easy Forex $15,544,000
GFS Forex $15,957,000
I Trade FX $16,088,000
Ikkon Royal $16,548,000
Alpari $19,690,000
Advanced Markets $19,873,000
The following firms have net capital above $20 million
Forex Club $22,409,000
PFG $26,005,000
CMS Forex $29,255,000
Interbank FX $39,945,000
FX Solutions $43,785,000
GFT Forex $76,055,000
FXCM $98,456,000
Gain Capital $107,390,000
Oanda $169,501,000
As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new $20 million capital requirement going into effect in the months ahead.
The CFTC has just released their latest net capital figures. AMIFX saw its net capital double. And with their new website it looks like they have gotten an injection of cash from somewhere. Forex Clubâs net capital also jumped by over 50%. Our final pool of contestants is beginning to take shape.
http://www.cftc.gov/marketreports/f...rfcms/index.htm
The following firms have net capital below $20 million
MB Trading $15,227,000
Easy Forex $15,544,000
GFS Forex $15,957,000
I Trade FX $16,088,000
Ikkon Royal $16,548,000
Alpari $19,690,000
Advanced Markets $19,873,000
The following firms have net capital above $20 million
Forex Club $22,409,000
PFG $26,005,000
CMS Forex $29,255,000
Interbank FX $39,945,000
FX Solutions $43,785,000
GFT Forex $76,055,000
FXCM $98,456,000
Gain Capital $107,390,000
Oanda $169,501,000
As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new $20 million capital requirement going into effect in the months ahead.
Intersting numbers. Advanced Markets, who I am not very familair with seem to be a real STP broker as well - pretty evident from their NFA required notice disclosure which clearly says -
ALTHOUGH AMI IS THE COUNTERPARTY TO EACH OF YOUR TRADES, AMI LIMITS RISK TO ITSELF BY INSTANTANEOUSLY OFFSETTING THE TRADES AND POSITIONS IT ENTERS INTO WITH YOU WITH A BANK OR INSTITUTIONAL MARKET MAKER. AS A RESULT, AMI DOES NOT PROFIT WHEN YOU LOSE MONEY ON A TRADE. RATHER, AMI IS COMPENSATED BY MARKING UP THE PRICE IT RECEIVES FROM THE BANK OR INSTITUTIONAL MARKET MAKER.
ALTHOUGH AMI IS THE COUNTERPARTY TO EACH OF YOUR TRADES, AMI LIMITS RISK TO ITSELF BY INSTANTANEOUSLY OFFSETTING THE TRADES AND POSITIONS IT ENTERS INTO WITH YOU WITH A BANK OR INSTITUTIONAL MARKET MAKER. AS A RESULT, AMI DOES NOT PROFIT WHEN YOU LOSE MONEY ON A TRADE. RATHER, AMI IS COMPENSATED BY MARKING UP THE PRICE IT RECEIVES FROM THE BANK OR INSTITUTIONAL MARKET MAKER.