Hi everyone and especially to you forex savior,
I was in the process of going to ask help in choosing a broker, then thought to read through the thread to see if my question hadn't been asked and answered prior to this time. alas, i 've had a eye full(?), just finished going through the entire thread.
Firstly, thank you to forex savior whatever anyone might think about your motive, i think it compels the prospective trader at least to become more aware by doing his own research. Now, this is my understanding about the issue of regulation of FDMs as it yet stands today, please, correct me if you believe i am wrong. NFA is at best a Self-Regulatory Organisation (more probably a designated self-regulatory organisation) for FCMs in the United States. CFTC functions are defined in their site as highlighted below:
About the CFTC
An Important Mission in the Ever-Changing World of Finance.
Congress created the Commodity Futures Trading Commission (CFTC) in 1974 as an independent agency with the mandate to regulate commodity futures and option markets in the United States. The agency's mandate has been renewed and expanded several times since then, most recently by the Commodity Futures Modernization Act of 2000.
In 1974 the majority of futures trading took place in the agricultural sector. The CFTC's history demonstrates, among other things, how the futures industry has become increasingly varied over time and today encompasses a vast array of highly complex financial futures contracts.
Today, the CFTC assures the economic utility of the futures markets by encouraging their competitiveness and efficiency, protecting market participants against fraud, manipulation, and abusive trading practices, and by ensuring the financial integrity of the clearing process. Through effective oversight, the CFTC enables the futures markets to serve the important function of providing a means for price discovery and offsetting price risk.
The CFTC's mission is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets.
In their site, FCMs are the closest type of businesses entities the CFTC has oversight functions for, FDMs does not seem to be included! Could this be because the fx trade is relatively in it's infancy? In performing their oversight function, CFTC indicates on their site for example that they require FCMs & IBs to be members of NFA. I couldn't find any mention of FDMs.
Question: If CFTC's remit include legally the regulation of FDMs, why would they foot-drag in ensuring complaince with registration/regulation by the designated bodies as NFA in this instance? Is it not more appropriate to ensure the proper operation of such firms to prevent the tales of woe as experienced by failed FDMs?
Forex Savior, refer to your thread #122 dated 17/9/2007 titiled FOREX DEALER DEAD POOL (version 4.0) where you indicated the following:
Unregulated Firms (Buyer Beware)
FXDD (?)
GCI (?)
WestCapFX (?)
ACM (?)
MIG (?)
DukasCopy (?)
GFX Group (Forex.CH) (?)
Crown Forex (?)
Krusty's Currency Trading (?)
Tradex Swiss AG (Shutdown!)
NorthFinance (?)
Ignore for the moment the SWISS FIRMS in the above, why/how could they operate at all without appropraiate registration/regulation if they ought to according to the law as it stands presently? I read the quote from an ealier thread of FXDD which i have also copied and pasted (highlighted below) from the FAQ section on their site.
Q: How is FXDD regulated?
A: FXDD began as a subsidiary of Tradition North America within the Tradition Group of companies. (www.tradtiongroup.com). FXDD’s management, operation, compliance, customer relations and its financial policies and procedures were structured to meet the Tradition Group’s oversight and those policies and procedures remain firmly in place. Our managers have deep experience in the foreign exchange markets and we conduct our business as highly qualified professionals. As yet, the OTC spot forex market in the United States is not subject to regulation by the SEC or the CFTC. FXDD is not a member of any private self regulatory organization such as the FINRA or the NFA and is not registered with either the CFTC or the SEC. Congress may, in the future, enact legislation requiring registration with a federal and/or private regulatory agency. As the regulatory environment for spot foreign exchange matures in the United States, FXDD will keep its options open and, if the regulatory environment becomes consistent and well defined, FXDD will register with the designated oversight agencies. Having said that, FXDD manages its business in conformity with well established dealing protocols and the customs and practices of the foreign exchange dealing community. FXDD has thousands of clients who have chosen us as their dealing firm because of the manner in which we conduct our business and because of our historic association with the Tradition Group. We maintain extensive dealing lines with the top global banks and have never had any issues relating to the protection of customer assets or the manner in which we handle our client accounts.
Note the underlined in the above(emphasis mine).
I like to state that I am NO advocate for non-regulation. Far from it, I believe firmly in regulation of entities otherwise societies would be reduced to jungle style existence. I just think it should be well defined/structured but do not think that the issue of registration/regulation of FDMs is so right now in the United States. I believe too, that this will change because the retail fx trade is set to grow, the awareness is only just begun.
As I indicated at the begining, my views are not set in concrete, I stand to continue to be educated.
Lastly, I want to say thank you to the providers of this forum, what I have learnt here in less than one year is more than what some get out of a college degree programme and to all the contributors, more grease to your elbow;
eh, more pips to your accounts.
