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

[wrtm_19]

Great info! Thanks for sharing. I'm also surprised for that FXCM change in capital, what could it be?

[Sweet Pip]

Originally Posted by o990l6mh

What! Can this be right? What has FXCM been up to? Been buying other companies or something I guess. If not it would be interesting to know why their capital has dropped like a stone.

Apparently they're doing so well they had to drop a huge chunk of cash to pay income tax...they'll be back up in no time...

FXCM Holdings LLC Releases Financial Data

[wrtm_19]

Originally Posted by Sweet Pip

Apparently they're doing so well they had to drop a huge chunk of cash to pay income tax...they'll be back up in no time...

FXCM Holdings LLC Releases Financial Data

I talked to one of their representatives today and he did not know what to anwer, I guess he didn't see that question coming. He told me that maybe, and just maybe, many of FXCM customers are switching their accounts to their UK office because of the recent hedge restrictions and because of the money protection they have in the UK according to their regulatory institutions.

[Sweet Pip]

Originally Posted by wrtm_19

I talked to one of their representatives today and he did not know what to anwer, I guess he didn't see that question coming. He told me that maybe, and just maybe, many of FXCM customers are switching their accounts to their UK office because of the recent hedge restrictions and because of the money protection they have in the UK according to their regulatory institutions.

Even if that were so, the UK office portion is still included in the overall financial statements that are released...just an internal shuffle on the 'ol balance statement.

[wrtm_19]

Originally Posted by Sweet Pip

Even if that were so, the UK office portion is still included in the overall financial statements that are released...just an internal shuffle on the 'ol balance statement.

That's what I thought, I guess he had to came up with a quick answer

[forex savior]

Former SNC Investment CEO Peter Son has been hauled into court by federal regulators a year after he disappeared during an NFA investigation into missing funds covered on this thread back in October of 2008:

NFA Forex Dealer Dead Pool - Page 21 - Forex Forum - FXstreet.com

The feds are now confirming that Peter Son was running an $80 million ponzi scheme:

http://www.sec.gov/litigation/compla.../comp21076.pdf

Among the SEC’s findings:

Son used investor funds to pay the mortgage on his $2.6 million home in Blackhawk, a gated community in Danville, California, his homeowner’s association dues, and his country club dues;

Son used SNCA investor funds to pay his wife a salary of $3,000 per month even though she did no work for SNCA;

Son and Chung Transferred SNCA investor funds to SNCI to help it meet regulatory requirements that it maintain certain levels of capital; and

Son and Chung transferred SNCA investor funds to SNCI’s Korean bank account, to Son’s Korean bank account, and to the Korean bank account of a Korean company under Chung’s control.

After covering these poorly capitalized firms for years I’m not the least bit surprised that SNC illegally used customer funds to meet their capital requirements back when they were still registered with the NFA. That’s why cap requirements had to be raised and thankfully the worst of these brokers are long gone in the U.S.

But let this be a lesson to the trading public to avoid opening an account with any poorly capitalized firm, or a firm that is not regulated and does not disclose their financials.

[fxquantitative]

Yeah right........

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FOREX GOLDEN SYSTEM
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[forex savior]

On July 31 the NFA’s FIFO order comes into effect. As of this moment the MT4 trading platform is not compliant with this rule and there is no guarantee that it will become compliant come the July deadline.

For firms that heavily rely on MT4 this is bad news. FXDD, which uses MT4 but are not regulated and therefore under no obligation to comply with NFA rules at present, are taking advantage of their unregulated status by telling NFA to get bent. As an unregulated firm they can do what they like (then again the whole issue of FXDD being unregulated is a serious red flag in and of itself. After all, the feds could basically raid the firm at anytime and shut them down overnight.)

But IBFX is (unfortunately for them) regulated solely by the NFA and their only trading platform at present is MT4. What is IBFX to do?

IBFX’s CEO seems confident and in “nothing to see here style” stated the following in an email to customers:

Forex Factory - View Single Post - All USA FX dealers may not be able to support MT4

To our valued clients,

As you may know, the National Futures Association (NFA), has implemented new First-in, First-out (FIFO) requirements that will be in effect as of July 31, 2009. We at Interbank FX have been working hard on a solution and are confident that our traders will be able to use our MetaTrader 4 platform with little or no interruption. They will also continue to be able to use their MT4 expert advisors.

The NFA is striving to ensure the highest levels of integrity from all market participants and their intermediaries. We want to assure you that Interbank FX strives to be 100% compliant with the NFA.

We are currently working on some informational and instructional videos regarding the FIFO requirements and our solution, however most of you will be able to continue trading without any impact to your platform or strategies. In our effort to provide the best solution for your trading, you will be fully advised prior to any proposed changes.

We thank you for your continued support and wish you the best of luck with your trading.

Best regards,

Todd Crosland
and the Interbank FX Team

That all sounds reassuring, but what if something isn’t worked out by July 31st?

Meta Quotes is under no obligation to jump through hoops for IBFX and the NFA. And if Meta Quotes chooses not to (or is technically unable to) make any major changes to MT4 then IBFX is in big, big trouble as they will be stuck with a platform that is basically illegal.

Would IBFX close? Would they halt trading? Would the NFA and CFTC step in? Would IBFX be granted an extension by regulators? Can they get a UK license in time? Can they roll out a new trading platform in time?

Finally, how on earth did IBFX allow itself to be put in such a vulnerable position where their entire company is at the mercy of an independent third party based in Russia?

These should be mandatory questions that every current and potential customer of IBFX should be asking.

[o990l6mh]

Originally Posted by forex savior

On July 31 the NFA’s FIFO order comes into effect. As of this moment the MT4 trading platform is not compliant with this rule and there is no guarantee that it will become compliant come the July deadline.

For firms that heavily rely on MT4 this is bad news. FXDD, which uses MT4 but are not regulated and therefore under no obligation to comply with NFA rules at present, are taking advantage of their unregulated status by telling NFA to get bent. As an unregulated firm they can do what they like (then again the whole issue of FXDD being unregulated is a serious red flag in and of itself. After all, the feds could basically raid the firm at anytime and shut them down overnight.)

But IBFX is (unfortunately for them) regulated solely by the NFA and their only trading platform at present is MT4. What is IBFX to do?

IBFX’s CEO seems confident and in “nothing to see here style” stated the following in an email to customers:

Forex Factory - View Single Post - All USA FX dealers may not be able to support MT4



That all sounds reassuring, but what if something isn’t worked out by July 31st?

Meta Quotes is under no obligation to jump through hoops for IBFX and the NFA. And if Meta Quotes chooses not to (or is technically unable to) make any major changes to MT4 then IBFX is in big, big trouble as they will be stuck with a platform that is basically illegal.

Would IBFX close? Would they halt trading? Would the NFA and CFTC step in? Would IBFX be granted an extension by regulators? Can they get a UK license in time? Can they roll out a new trading platform in time?

Finally, how on earth did IBFX allow itself to be put in such a vulnerable position where their entire company is at the mercy of an independent third party based in Russia?

These should be mandatory questions that every current and potential customer of IBFX should be asking.

You're usually spot on, but here I disagree.

Firstly, of course Metaquotes has to jump through hoops to fix this problem for their customers, ie IBFX and others. It's a simple matter of the customer is always right, and not helping out IBFX would likely translate into a Metatrader death sentence as brokers everywhere would jump ship realizing that Metaquotes allowed IBFX to get badly hurt.

Second, what do you mean by "Finally, how on earth did IBFX allow itself to be put in such a vulnerable position where their entire company is at the mercy of an independent third party based in Russia?"
What's the difference to a company being at the mercy of Microsoft for instance? That's todays outsorced world, nothing extraordinary about that as far as I can see. Is it the russian part that bothers you?
( The dental organisation I work for is 100% dependent on a Finnish software company. If they wanted to, they could basically wreck us beyond rescue.)

Thirdly, what guarantees are there that brokers with their own in house built platforms will be able to comply with FIFO on time? Most likely they don't have the software muscles that Metaquotes likely has. Who knows, maybe those are the brokers that will end up deep in it, not IBFX.
MT4 is such a widely used program and so everyone knows that it doesn't comply as of today, but what about other brokers in house programs that are less watched? Who knows what those brokers are sitting on? A FIFO bomb maybe...

[forex savior]

The CFTC has just released their latest net capital figures. This is the current state of the U.S. retail fx industry:

Financial Data for FCMs

Advanced Markets $20,722,000
Easy Forex $20,928,000
Ikkon Royal $21,247,000
MB Trading $21,360,000
Alpari $22,312,000
Forex Club $25,427,000
CMS Forex $29,788,000
Interbank FX $35,611,000
PFG $36,465,000
FX Solutions $48,262,000
FXCM $63,999,000
GFT Forex $79,368,000
Gain Capital $98,125,000
Oanda $159,062,000