Are Your Funds Safe? NFA to Shut down small forex fcms

[forex savior]

What about Refco? This is a common refrain I have been hearing from critics of the NFA Forex Dealer Dead Pool. Refco was massive and they went under in record time which proves that being adequately capitalized doesn't matter right? Wrong. While citing Refco is a good sound byte it in no way helps the case of the poorly capitalized. Here's why:

First of all Refco was a gigantic octopus of a company that had various affiliates and subsidiaries that were both regulated and unregulated. The two main players in the Refco saga were Refco Capital Markets (the unregulated outfit in Bermuda that was doing all those shady off-exchange trades) and Refco LLC (which was the licensed futures brokerage most traders knew about.) Refco Capital Markets was where the scandal erupted. For years executives at RCM covered up huge trading losses with creative bookkeeping. But when the scandal became public it caused a bank run everywhere at Refco. The bank run occurred even though Refco had adequate capital to handle the huge trading loss RCM had incurred. But that didn't matter because Refco was a publically traded company. As the stock price tanked talk of lawsuits by shareholders accelerated the bank run and that's when Refco's creditors stepped in and pushed the firm into bankruptcy knowing the only assets the firm had were the customer funds on deposit.

Had Refco not been a public company the scandal would have been a one day hiccup and it would have been business as usual precisely because it had a lot of capital reserves. That is a huge distinction that needs to be made. But when undercapitalized firms such as CFG take huge trading losses there is no room for error. It's one and done because they have no capital in reserve. Again, this is why the NFA has issued this proposal. Poorly capitalized firms do not have the luxury of taking the kinds of hits that large firms can take. This is also why there hasn't been a single case of a registered forex dealer member with over $10 million ever going bankrupt. So to the critics I say cite Refco all you want but it has no place in this debate unless you want to discuss the perils of being unregulated.

[WhipSawFX]

Originally Posted by WhipSawFX

In anycase, I also raised another important point by pointing out your posting the same material on every available forum:

Whats your motivation or payoff for your 'smear' campaign against the smaller firms all over the internet ?

Are you paid to do this ?

Why have you never posted before under these identities on these forums ?

nice sidestep, but answer the questions

[forex savior]

Update on Swiss Regulation

It appears that the winds of change are blowing in Switzerland according to FX Street:
Forex Street Weblog: Wind of important changes in Switzerland

Hi Everybody

As you may probably already know, SFBC (Swiss Federal Banking Commission) is decided to regulate the Foreign Exchange business in Switzerland . This process already started a couple of months ago and some important brokerages are already going through the process of getting SFBC’s approval.

One of my sources in Switzerland told me this morning that SFBC is implementing big changes in the way Swiss brokers use to work...

The restrictions that SFBC will require to brokers to implement to get their approval will probably force those not strong enough to disappear and this process could be faster than we think and could take place before the end of the year.

I’ll keep you posted about all this very interesting process.
Under my point of view, the fact that SFBC puts order in the Swiss Foreign Exchange business should be considered as a very good news for all the community, but we must remain alert over the whole process.
Francesc

So it could be that by the end of the year Switzerland will have instituted forex regulation at the retail level and the industry will not have to suffer any more Tradex Swiss AG style shenanigans.

[forex savior]

The great consolidation has begun. A few days ago PFG purchased Dead Pool Member American National Trading Corporation. Expect more of these types of purchases in the months ahead as the FX world contintues to evolve in light of the proposed capital requirement increase:

August 23, 2007
Peregrine Financial Group, Inc. (PFG) today announced it is purchasing the assets of American National Trading Corporation (ANTC), which is headquartered in Los Angeles, CA. ANTC is a successful FCM which conducts business in futures, foreign exchange, and managed accounts.

PFG will transfer ANTC customer accounts as quickly as possible.

"PFG and ANTC are joining forces to better serve ANTC’s customers," said PFG Chairman and Chief Executive Officer Russell R. Wasendorf, Sr. "There are so many synergies, and we believe there will be significant benefits to ANTC customers including:

Ability to utilize PFG’s proprietary online trading system, BEST Direct™
The opportunity to use multiple electronic trading platforms
Unique and additional suite of managed futures and forex product offerings
Auto trading systems and other exclusive electronic capabilities for clients."
PFG, one of the largest non-clearing U.S. FCMs, was registered in 1990 and has headquarters in Chicago, IL with customers, affiliates and brokerage offices in more than 80 countries. It has experienced rapid expansion in the past several years through organic growth as well as through strategic acquisitions.

ANTC was founded in 1988. It is led by Chairman Don Varden and President Guy Zummo in Los Angeles, CA.

[WhipSawFX]

Its interesting to note that the company which took over American National Trading Corporation, Peregrine was a few years ago, having exactly the same problem maintaining net capital as required by the CFTC, and this was at the time, when the requirements were a lot less stringent. And yet, the company is still trading years later, has now plenty of net capital to cover the current requirements, and is fact in a similar situation as FXCM as to its capabilities to cover any proposed net capital requirement changes.

As of 07/06/2007 http://www.cftc.gov/files/tm/fcm/tmfcmdata0706.pdf

Peregrines Net Capital : 13,758,638 
Requirement           :  5,000,000 
Excess                :  8,758,638
Requirement Cover     :  2.75x

American Trading      :  2,159,273 
Requirement           :  1,000,000 
Excess                :  1,159,273
Requirement Cover     :  2.16x

Here's how some other brokers compare normalised with their ability to meet the requirements.

COMPANY     | Net capital |  Required  | Excess    | Multiple
FX Solutions| 17,295,130  |  2,064,386 | 15,230,744  | 8.38
GFT         | 49,664,118  | 6,904,864  | 42,759,254  | 7.19x
OANDA       | 49,222,317  |  9,172,410 | 40,049,907  | 5.37
Gain Capital| 18,930,914  | 4,341,150  | 14,589,764  | 4.36x
I-TRADE-FX  | 3,957,357   |  1,000,000 | 2,957,357   |>3.96x
FCM         | 44,626,492  | 12,977,713 | 31,648,779  | 3.44x
Peregrine   | 13,758,638  |  5,000,000 |  8,758,638   | 2.75x
InterbankFX | 8,584,434   |  3,719,721 | 4,864,713   | 2.31x
1-World     | 2,308,460   |  1,000,000 | 1,308,460   |>2.31x
AMTC        | 2,159,273   |  1,000,000 | 1,159,273   | 2.16x

The pretext of this thread is dead firms walking ... as I've posted before, if anything this is simply consolidation for those that can't meet the requirements, and adjusting the books for most so that more of the companies capital is available for 'net capital'.

Its also interesting to note Peregrines regulatory actions :

BASIC Details

BASIC Case Summary

BASIC Case Summary

BASIC Case Summary
(fined for not meeting net capital requirements in 2000)

--------------------------------------
from : OANDA FXMessage: NFA Forex Dealer Dead Pool

Originally posted by forexfigure:
[qb]

It is important information. For too long a lot of this has been swept under the rug in the retail forex industry. A lot of traders have been burned as a result. Whistle blowing is often greeted with harsh responses from those who want to keep all this information secret. But I feel the more places I can blow the whistle at the better it is for the industry. [/qb]

I've asked you a number of times, what you meant by this statement. Are you sweeping your ineptitude under the rug ? And what and who are you whistle blowing for ?

Whistleblower - Wikipedia, the free encyclopedia

A whistleblower is an employee, former employee, or member of an organization, especially a business or government agency, who reports misconduct to people or entities that have the power and presumed willingness to take corrective action. Generally the misconduct is a violation of law, rule, regulation and/or a direct threat to public interest — fraud, health, safety violations, and corruption are just a few examples. For instance, Jeffrey Wigand is well-known in the United States for exposing the Big Tobacco scandal, revealing that executives of the companies knew that cigarettes were addictive and that they added other carcinogenic ingredients to the cigarettes.

Which company do you work for ? and what are they doing wrong ?

from : EFX/MB Trading Going Under? - Page 3 - The NDD Forum - Savvy Traders Want to Know

Moderator: It's appropriate this thread be ended with "badass's" comment but it shouldn't dissuade members from reading the rest of the thread because I think it has been highly instructive. It's interesting that badass's IP address is only 12 miles West of Forexscholar's which is only 5.4 miles West of FXCM's Manhattan offices. Like badass, I'm sure the inner circle at FXCM wishes this fear campaign (whoever started it) hadn't gotten as much attention as it has.

Found the above graph interesting from FXCM's Alexia page.

Related Info for: fxcm.com/

I would encourage everyone to read the thread over at Forex No Dealing Desk Trading | Forex Trading Instruction

EFX/MB Trading Going Under? - The NDD Forum - Savvy Traders Want to Know

Here's the last post in it

I am closing additional posts to this thread because the ones that have been recently posted here distract from its central purpose. This thread is a must read for those who are visiting the forum for the first time. I suggest new visitors start reading it from the very beginning. It started almost immediately after I published a commentary on my blog related to FXCM's offer of no dealing desk trading.

It's interesting to note that neither Forexscholar and Basdass returned to the forum to refute their "outing" so there's little doubt in my mind that they are, in fact, shills for FXCM whether employed by FXCM or not. It's also been brought to my attention that identical posts suggesting that all FCMs with less than $5M in Adjusted Net Capital should be abandoned because the NFA is going to shut them done have been posted on a half dozen other forums. The poster, Forexsavior, obviously has little imagination otherwise he wouldn't have come up with a name with such a striking similarity to the one he used here.

From the very beginning of this forum, I have tried to get brokers to openly discuss the dealing vs non-dealing desk issue and [apart from Justin at EFX and Steve at MBtrading who obviously speak for non-dealing desk trading] no broker or broker representative has come forward to defend dealing desk brokerage. Had Forexscholar [and for that matter Badass] clearly identified themselves, stating the nature of their affiliation with FXCM, their comments would have been very instructive. Unfortunately, they chose to hide their real identities behind manufactured personas. I can only conclude that this is the case because there isn't a broker out there who can defend the indefensible. Members, of course, are intelligent enough to draw their own conclusions.

Personally, I dont think he's a shill for FXCM, or anyone else. But its funny as hell, and some coincidence. If FXCM or another company were doing anything like this, they would have employed someone way smarter than this cutnpaster. But why would anyone post the exact same thread on every forum he can find :

Proposed NFA Capital Requirement - Forex Trading
Forexnews.com
Proposed NFA Capital Requirement - Page 17
Proposed NFA capital requirements
NFA Forex Dealer Dead Pool - The NDD Forum - Savvy Traders Want to Know
NFA Forex Dealer Dead Pool - Forex Trading | MetaTrader Indicators and Expert Advisors
Forums - Proposed NFA Capital Requirement
PiP Trader Forum: NFA Forex Dealer Dead Pool
Are Your Funds Safe? NFA to Shut down small forex fcms
Proposed NFA Capital Requirement - Forex Trading
MoneyTec Traders Community Forum

[forex savior]

The NFA rule proposal says nothing about a firm's ratio of capital to excess net capital. It is very simple, they want firms to have over $5 million due to the higher risk associated with being poorly capitalized (see the CFG case). It's that simple. Everything else you have posted is irrelevant.

[Tess]

Originally Posted by forex savior

Everything else you have posted is irrelevant.

Whether you perceive Whipsaw's comments/posts to be irrelevant or not doesn't alter the fact you've made absolutely no effort to answer the guy's questions from post number 89 on here.

I wonder why you also refrained from revisiting Phil's Forum over at NDD when they immediately sussed you on there??

Appears to be the only Forum you've side stepped on your continuous quest to sate the appetites of the FX community.

Wouldn't have anything to do with the smart(er) minds & savvy dispositions across there would it by chance?

[Tess]

WhipSawFX:


A colleague just fired this e-mail receipt across to us.

Laughed so much I virtually fell off the chair...wondered how long it'd take them to begin their scare-mongering tactics!

Any comments forex savior??


FXCM


I found the enclosed snippets particularly laughable!!!

[forex savior]

Originally Posted by Tess

WhipSawFX:


A colleague just fired this e-mail receipt across to us.

Laughed so much I virtually fell off the chair...wondered how long it'd take them to begin their scare-mongering tactics!

Any comments forex savior??


FXCM


I found the enclosed snippets particularly laughable!!!

Good for FXCM. I'm glad to see them taking this issue a lot more seriously than you are Tess.

[Tess]

Originally Posted by forex savior

Good for FXCM. I'm glad to see them taking this issue a lot more seriously than you are Tess.

I'm not as stupid as to have accounts with these shylocks in the first place mister, so their slow-bleed tactics carry no truck with me fortunately.

I was having a sly dig at the fact you've been priming the community for a few weeks with your tales & then ho hum, along comes one of your "Premier League hitters" with a comforting bottle feed & arm around the shoulder (sickly) sales pitch.

Instead of pitching back & forth with your sackful of woe, why not drop a link to the CME??

Surely striking via the Ftrs thru a centralized exchange, even until all this "supposed" mess is ironed out, would be a workable option, would it not?