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

[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.

[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.

[forex savior]

Well it's clear that the NFA proposal is having an impact in the industry already. For the second time in a week a smaller firm in the Dead Pool has announced merger plans. They wouldn't be doing this if they had the capital to stay in business on their own. This shows you how serious an issue this is. The pressure is being wratched up and the time is fast approaching when those firms below $5 million will have to either join the borg, or die.

Royal Forex Trading LLC. Future Plans

Dear Valued Client,

I am pleased to announce that there has been a very big development for Royal Forex Trading. Before that, I wish to bring to your attention the minimum adjusted net capital requirement proposed by the National Futures Association (NFA). The NFA recently circulated a proposal calling all the FCM's to adjust their minimum net capital requirement from $1 million to $5 million to avoid risks to the customers.

Royal Forex Trading fielded many inquiries for several days and we addressed the issue in our last corporate newsletter. We believe the NFA is taking appropriate measures if they decide to increase the net capital limit for FCMs. Bottom line; this eliminates many inexperienced brokers.

RFXT’s management has been in the industry for many years and we believe we have adequate resources as well as a full fledged backup plan.

In the midst of all this, we have been approached by several companies inviting us to form a partnership. After further due diligence, we are very close to striking a deal with a company whose name cannot be mentioned at this juncture. This entity has an 8 year track record and does not hold a single complaint with the NFA. Their net capital is well over $5 million and they are licensed to do business in many continents.

In the past few weeks, we have been holding several conferences and meetings to finalize the deal. Upon completion of the deal, the following will occur:

Ø Royal Forex Trading will join as a division of a much larger entity.

Ø Royal Forex Trading will officially re-locate to Wall Street, the Hub of major financial institutions.

Ø Royal Forex Trading will retain its Service Desk.

Ø Royal Forex Trading will in the very near future be providing various other products like including Crude, Gold and Silver CFD’s, Currency Options as well as many other new and exciting products.

Ø Royal Forex Trading will be opening branches around the world.

Ø Royal Forex Trading will continue to provide superior execution and excellent customer support.

Ø Royal Forex Trading will be developing an Institutional Desk.

In the end, you as a client will benefit immensely from this merger and that is what we have always wanted; world class service for our clients.

I thank you from the bottom of my heart for all the trust you have put in us and I appreciate the excellent feedbacks we received during this "critical" phase. As we promised, our main goal and mission is and will always be to satisfy our clients beyond expectation.

Thank you
--

Rayan Elannan

President & Co-founder

Royal Forex Trading LLC

[tymen1]

Booooooooooooorrrrrrrrr.................ing



Regards, Tymen Wortel, Perth, Western Australia.

[daydreamer65]

Originally Posted by tymen1

Booooooooooooorrrrrrrrr.................ing


Regards, Tymen Wortel, Perth, Western Australia.

On the contrary I find this whole thread very illuminating &
would like to thank all the posters so far.

I also look forward to further posts.

[tymen1]

To Tess :

If it was not for you, Tess, I would never have known that these forex brokers are criminals.

Thank you for posting on this forum.

I think the brokers all have the same boss - his name is Osama Bin Laden.

Meanwhile, that coffee..................................(yum)

To Daydreamer65 : I like your little end caption ("best wishes" - lovely!)

Kind regards, Tymen Wortel, Perth, Western Australia.

[rhodytrader]

Originally Posted by tymen1

I think the brokers all have the same boss - his name is Osama Bin Laden.

I certainly hope you were making that statement in jest, otherwise that might very well be the most inflamatory statement I think I have ever seen on any forum of this kind.

While I certainly agree with Tess that the business model for the dealing desk brokers presents opportunities for abuse, let's not start labeling them all crooks and fronts for organized crime and/or terrorists. I'd be willing to bet that most folks in the business are honest types. As ever, it just takes a couple of less than honest ones to create an industry-wide bad impression.

I can't help but laugh at all of these charges of impropriety. I'm not talking about people walking away with customer funds or anything like that. I'm referring to stop running and other price manipulation type complaints.

First of all, most cries of foul come from folks who did stupid things in the market, lost money, and want someone other than themselves to blame. Secondly, people act like forex brokers are the first to be accused of such things. The guys in the trading futures pits (a highly regulated market) have been accused of running stops and the like for years. Ever heard of "fast market" conditions?

My point is you need to understand the structure underlying your trading, and obviously do your due diligence in terms of the folks with which you are dealing. If you do that, you can avoid getting caught out.

[WhipSawFX]

Its interesting that tymen1 joked as he/she did about some brokerages being run by criminals. Although, Im sure it was posted in jest, here's a couple of snipets I stumbled upon whilst doing my due dilligence which are interesting in light of his/her posts.

In January 2006, the NFA did a follow up audit after FXCM was fined $110,000 for violation of Rule C.R.2-36(b)(1) which is defined as "Cheat, defraud, deceive forex customers" . FCM in no way admitted or denied the charge, and made the settlement with the NFA. You can find the details here :

BASIC Case Summary

The follow on audit revealled that FXCM had not abided by the agreement which had the resolved the previous regulatory action. Thus the NFA initiated another complaint against FXCM, which is as yet unresolved (I believe) for violation of Rule C.R.2-36(b)(1) which is defined as "Cheat, defraud, deceive forex customers"

The audit also identified potential failings of "FXCM's anti-money laundering program (AML) "as evidenced by the high number of accounts FXCM opened for Nigerian nationals, without identifying those accounts as high risk for potential money laundering." [quote from http://www.nfa.futures.org/basicnet/...px?seqnum=1023 ]

You can find the details here :
BASIC Case Summary

The particular concern about Forex companies opening accounts for Nigerian nationals is that Nigeria is the origin of a number of internet scams commonly called the "Nigerian 419 Scam" If you dont know what the Nigerian 419 scam check out the the following very entertainment link :

Ebola Monkey Man: Nigerian 419 Scam

disclaimer : I in no way qualified to say that fxcm is Cheating, defrauding, or deceiving forex customers, or that they ever have. However, our regulatory body the NFA have made complaints that they have.