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

[Sweet Pip]

Originally Posted by forex savior

Francesc at FX Street received the same information this morning from an executive at another fx dealer:
Francesc’s Weblog » NFA - Not allowing stop and limit orders



This is bound to rock the U.S. retail industry and send customers packing in droves. How can the NFA ban this critical risk management tool? Trading without a stop is like driving in a demolition derby without a seat belt. Traders should follow this news very closely and if it turns out to be true start researching brokers that have offices in the U.K.

Correct me if I've misunderstood, but as far as MT4 goes, "stop" orders are just another type of "pending" order... like "limit" orders are. I don't think they mean you can't put a stoploss on an order

[goddy]

i do not understand this please

[o990l6mh]

This is quite disturbing news.

If true, I will likely pack my things and head off to the UK

[cadarkitek]

Originally Posted by o990l6mh

This is quite disturbing news.

If true, I will likely pack my things and head off to the UK

Disturbing indeed. If things turn out to be so you guys can switch to forex.com, heres an email from them:

Dear Client:

We're committed to providing you with the tools you need to execute your trading strategies. Beginning May 15, 2009, all MetaTrader accounts will be serviced by FOREX.com UK Ltd., which is authorized and regulated by the Financial Services Authority (FSA).

This change will allow us to continue to support all MetaTrader accounts, including those customers who currently use hedging as part of their trading strategy. As a FOREX.com UK customer, you will still benefit from the same level of stability and superior customer service you have come to expect.

The transfer of your account will be a seamless process. Within the next few days, you will receive another email with specific instructions regarding the account transfer process. In the meantime, please feel free to contact a forex representative with any additional questions or concerns.

Thank you in advance for your continued business.

Sincerely,
The Team at FOREX.com

[forex savior]

Looks like I Trade FX is throwing in the towel. With the NFA fining them $250,000 over the Olint affair and the $20 million capital requirement set to kick in I Trade FX is officially calling it quits: FXCM Acquires Clients of i-Trade FX

New York―May 4, 2009―Forex Capital Markets LLC (Forex | currency trading | forex trading | forex broker) today announced it has reached an agreement to acquire the U.S. and international retail forex clients of i-Trade FX. Subject to regulatory approval, accounts are expected to be transferred from i-Trade FX to FXCM on May 8, 2009. Like several other forex firms, i-Trade FX has decided to cease offering service to US retail clients. Other firms that have decided to exit the U.S. retail business include ODL Securities, Hotspot FX, and CMC Markets. To offer retail forex trading services under NFA rules, Forex Dealer Members (FDMs) will be required to have a minimum of $20 Million in firm capital as of May 16, 2009.

The U.S. industry consolidation should continue in the months to come as cap increases and a battery of new regulations continue to squeeze the market.

Next up, CFTC Net Capital report for March.

[forex savior]

Francesc at FX Street is hearing that the NFA’s rule banning the use of stops/limits as part of the NFA’s new FIFO edict will not be enforced until July 31st:

Francesc’s Weblog » Update1 NFA Not allowing stop and limit orders - FIFO delayed to July 31st

Hi everyone

On April 30th I published here that the NFA will not be allowing stop and limit orders on open positions as this conflicts with their FIFO - first-in, first-out - new policy.

This had to go into effect may 17th along the announced prohibition of hedging.

At this time, the only update I’ve got so far is that due to the strong opposition of forex brokers, FIFO is being delayed to July 31st.

Francesc

Never a dull moment in the U.S. forex market.

[Sweet Pip]

Originally Posted by forex savior

Francesc at FX Street is hearing that the NFA’s rule banning the use of stops/limits as part of the NFA’s new FIFO edict will not be enforced until July 31st:

Francesc’s Weblog » Update1 NFA Not allowing stop and limit orders - FIFO delayed to July 31st


Never a dull moment in the U.S. forex market.

Looks like some brokers are not waiting...just got this from IBFX:

Dear Customers:
Interbank FX, along with all FCM's, has received information from the NFA that we want to pass along to our customers. All registered FCM's have received a new Compliance Rule 2-43 regarding forex trading. On May 15, 2009, forex customers will no longer be allowed open "hedged" positions in their accounts. If you are currently using hedging as a trading strategy, we would encourage you to use the Interbank FX Demo accounts over the next month to help modify your trading strategy. Also, for those of you who utilize hedging strategy with your "Expert Advisors", we would encourage you to modify your code and test your advisor on the Interbank FX Demo servers as well. In order to assure a smooth transition for our customers to the new NFA Compliance Rule, Interbank FX has set May 8, 2009 as the last date that customers will be able to hedge open positions.
For customers trading on the MetaTrader 3 platform:
Due to the fact the MetaTrader 3 platform is no longer supported by MetaQuotes and they do not have the available resources to make the MetaTrader 3 platform compliant with this new rule, Interbank FX has decided to move all MetaTrader 3 customers to the MetaTrader 4 trading platform. This action will take place after the market closes on May 8, 2009. This action will require that MetaTrader 3 platform users download the MetaTrader 4 trading platform from our website. Instructions will be provided in future notifications explaining how to log into your MetaTrader 4 trading account

[shephrd]

"Thank you for your email. The thinkorswim platform has always followed the industry and now NFA and CFTC standard of first-in, first-out trade accounting . The NFA rule in no way prevents the use of limit orders or stop orders. This notice will not affect the way that thinkorswim processes or accounts for trades and you will continue to be able to make use of the award winning thinkdesktop long in to the future. If you are still concerned you can read the NFA press release at their site:

National Futures Association | News Center

I want to stress that thinkorswim was in compliance with this rule long before it was a rule there will be no changes to our order processing or order routing and all trades and order types will be available as before.

Thank you for your concern and please let us know if you need any further information or clarification."

Therefore, there's no "hedging" allowed at ThinkOrSwim, but Stops, Limits, Trailstops, OCOs, and many other advanced order types are all unaffected.

Originally Posted by forex savior

Francesc at FX Street is hearing that the NFA’s rule banning the use of stops/limits as part of the NFA’s new FIFO edict will not be enforced until July 31st:

Francesc’s Weblog » Update1 NFA Not allowing stop and limit orders - FIFO delayed to July 31st


Never a dull moment in the U.S. forex market.

[StxyLo]

Hey guys!
NFA Compliance Rule 2-43(b)
Check this out:

"Notice I-09-12
May 05, 2009
Revised Effective Date for Portions of NFA Compliance Rule 2-43(b)

Notice I-09-10, issued on April 13, 2009, stated that new NFA Compliance Rule 2-43(b) would be effective for any positions established after May 15, 2009. Rule 2-43(b) prohibits Forex Dealer Members (FDMs) from carrying offsetting positions in a customer account and requires that they be offset on a first-in, first-out (FIFO) basis.

NFA has received several requests to extend the effective date due to the complexity of the programming changes required to comply with the FIFO requirement. After considering those requests, NFA has decided to extend the effective date for the FIFO part of the rule until July 31, 2009. Therefore, FDMs may not carry offsetting positions in the same account if either of those positions was established after May 15, 2009, but FDMs may offset positions on some basis other than FIFO through July 31, 2009."

Any comments:
NFA Compliance Rule 2-43(b)

[forex savior]

The stampede of small brokers out of the U.S. market continues. GFS Forex and Futures has announced they are shutting down their U.S. forex operation. GFS has purchased City Credit Capital in the U.K. and is relocating their business to London. However, they are no longer allowing U.S. customers to trade forex with them:

GFS Forex & Futures, Inc.

Dear Valued Clients,

GFS Forex & Futures, Inc. is pleased to announce that we will be expanding territorially with the anticipated merger of City Credit Capital (UK) Ltd. ("CCC"), a United Kingdom based brokerage firm registered with and regulated by the Financial Services Authority ("FSA"). As part of this expansion, GFS is moving its trading operations for over-the-counter products to our London operations.

Because this move means that our US operation will no longer be able to handle your forex trading account, you will need to transfer or close your GFS forex account. You should, therefore, decide which course of action you want to pursue. You can liquidate your open positions at anytime and close your account simply by completing and submitting the GFS Fund Withdrawal Form available on GFS' website. We will also assist you in transferring your account to a forex broker of your choice.

If you have questions about these matters or wish to deliver your transfer or liquidation orders personally, you can contact Mr. Alan Ho at GFS Forex and Futures, Inc., One Post Street, Suite 2550, San Francisco, CA 94104, (415) 321-7188, closeaccount@gfsforex.com.

You need to understand that the last trading day for your GFS forex account will be Friday May 8, 2009. If you have not already closed or transferred your account before this date, by 4:00 pm East Coast Time on 8th May 2009, all open positions will be automatically closed at that day's closing price and any funds remaining in your account will be sent to you. Please recognize that we may need to verify a current wire transfer address for receipt of your funds and may need to contact you to obtain this information.

On April 20, 2009, GFS posted a notice on its website which could be taken as an offer for GFS to transfer your forex account to CCC. While CCC is registered with the FSA in the UK, it is not registered in any capacity with the CFTC nor is CCC a Member of NFA. Pursuant to the Commodity Futures Modernization Act (the "Act") and NFA Rules, GFS may only transfer forex accounts and positions of its US retail customers to certain enumerated entities to act as the new counter-party for any such transferred forex positions. CCC is not such an enumerated entity under the Act or NFA Rules.

Consequently, if you are one of our US retail customers, GFS may not transfer your forex positions or account to CCC. GFS regrets any confusion this posting may have caused.

Once again, the moral of the story is to stay clear of these smaller U.S. based forex dealers until they can clearly meet the $20 million capital requirement and demonstrate that they can adapt to the NFA’s new rules and regulations. Having your account forcibly liquidated with barely any notice should not be part of the bargain when you open up an account with a forex dealer.

The CFTC should be releasing their new financial data any day now. It should be required reading for anyone with an account in the U.S.