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

Broker Discussion Forex Brokers
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Lot of news in retail forex the past few weeks. In the U.S. both CMC and Bacera are closing their doors. And in Europe mega forex broker Saxo Bank has run into some serious trouble.

Saxo is one of the largest firms in the currency trading world. Over the summer they spent millions of dollars sponsoring the eventual winner of the Tour De France. It now appears in hindsight that this money was woefully squandered. News reports out of Denmark are saying that Saxo has had to make hundreds of employees redundant amidst the global financial meltdown. Saxo has not come forward with details but it appears the situation is quite serious: Saxo Bank foran stor fyringsrunde

To make matters worse they have had to suspend a senior manager who was the prior head of Swiss broker Synthesis Bank.

The Copenhagen Post

Saxo suspend boss | Denmark’s fastest growing bank and sponsor of Bjarne Riis’ cycling team, on Thursday suspended one of its top executives Charles-Henri Sabet, head of global trading and member of senior executive management. The bank would not say specify the reason for the suspension, but it is currently launching an internal investigation in connection with the Swiss financial authorities, reports DR. Last year the financial institution bought the Swiss Synthesis Bank, founded and owned by Sabet, as part of its global expansion for online investments. (kr)

Oh boy, yet another Swiss broker finds itself under government scrutiny. How many times must I tell the trading public (and retail brokers themselves) beware Swiss forex brokers!

This news following on top of the news that CMC closed its U.S. office and itself has had to make employees redundant around the world would seem to indicate that firms that are involved in the CFD business are really catching a lot of fallout from the financial panic of 08�. Developing�

334

Despite sacking 1/3 of their work force Saxo Bank executives are reporting the company is doing quite well.

Saxo Bank sacks up to 340 - Politiken.dk

Saxo Bank sacks up to 340

Between 320 and 340 employees of Saxo Bank are to be let go according to a new streamlining plan.

The Danish investment bank Saxo Bank is to axe between 320 and 340 employees according to a new plan designed to streamline the organisation.

When the bank’s two new managing directors Eric Rylberg and Karsten Poulsen were put in place at the beginning of August, the bank’s founders gave them the primary job of determining whether efficiency could be improved.

“Again this year, Saxo Bank has provided good results - but the bank has grown quickly in many areas. That normally results in a certain inefficiency - and that has also happened here. It’s a well-known phenomenon for a company in its entrepreneurial phase. Now it’s a question of putting the bank into a new phase in which growth is managed and methods are more systematic,” Director Eric Rylberg tells Ritzau.

The streamlining plan includes outsourcing, better use of technology, a simpler organisation and management structure, between 320 and 340 fewer employees in Denmark and some 50 fewer abroad - primarily in Great Britain.

Saxo Bank’s founders and CEOs Kim Fournais and Lars Seier Christensen regret the layoffs but say that the move is right for the company.

“Some people will criticise the fact that despite increased profits we lay off so many employees. But we have determined that we can be more efficient. We regret having to say farewell to employees, but it’s best for the company that we undergo this phase change now,” the two say in a statement.

CSC - Saxo untouched
The efficiency drive will not, however, affect Saxo Bank’s sponsorship of the Team CSC Saxo Bank cycling team, which is managed by the former Danish cycling icon Bjarne Riis.

"“There are no savings in our marketing. And Riis Cycling is only a third of our overall marketing budget,” says Kasper Elbj�rn.

Bjarne Riis and Saxo Bank agreed a three-year sponsorship of the Danish cycling team earlier this year.

Until the New Year, the team’s name remains Team CSC Saxo Bank, but from 2009 it will be called Team Saxo Bank.

Saxo is reporting record revenues for September, which makes the mass redundancies all the more curious. That the mass redundancies are also happening at the same time as the credit crisis adds to the curiosity factor. Developing�

335

Last week Bacera officially closed their U.S. office and are no longer servicing U.S. customers. It was always a long shot that they would be able to meet the increased capital requirement to $20 million so this closure comes as no surprise.

But they still plan on doing business outside the NFA�s purview and are accepting customers from outside the United States. Bacera has several offices in China and most of their customers are Chinese. Will this become a trend with firms that can�t meet the upcoming adjusted net capital increase?

Here are the remaining firms that are still reporting Adjusted Net Capital below $10 million. If these firms are unable to increase their adjusted net capital to $10 million by the end of the month they too will have to close up shop in the U.S. Most of them should be able to do so as some, like HotSpot, have huge parent companies with ample financial reserves. But others like MG and Forex Club are in a very tough position.

Financial Data for FCMs

MG Financial $5,545,000
Forex Club $6,709,000
Advanced Markets $6,874,000
Hotspot $7,573,000
Ikon $8,088,000
Friedberg Mercantile $8,176,000
ACM $8,395,000
Easy Forex $9,630,000

336

This is what I was afraid of. We are going to lose competition and the perks that go with it. How long till there are no free practice accounts? How long until there are higher commissions or spreads?

Like the lending crisis of the US. We had a true lack of regulation so yes, the big banks got out of control. As a full time and successful real estate agent, I saw the other side. The stupid, foolish, reckless people that rushed into buying homes they could not afford. When I asked them to be careful or reconsidered…they would only get insulted and angry at me for trying to be the voice of reason. The funny thing is…it was not the poor people. It was the middle class and upper class types that did this. The lower income types were scared, cautious and sensible.

I suspect this is the exact same problem with Forex brokers. True, there are scam brokers out there and rip offs at every corner. There are also dumb people without patience to step back, relax, use a practice account while they take their time and research how to choose a broker, and do their due diligence as a whole. But no…they get excited think Forex = fast money. Greed clouds their mind and steers their judgment and 60 days later they are broke or scammed.

Meanwhile, the smaller, honest brokers trying to carve out their slice of the market, trying to grow, trying to provide competition, slip away. Partly because the average person cannot exercise some common sense and self control.

A fool and his money are soon parted. An old but wise idiom. This has not changed and this never will. No one can be protected 100% of the time from 100% of the harm. You must account for yourself as well.

337

The Great consolidation continues. Today RCG announced that they have bought out Money Garden:
Rosenthal Collins acquires MG Financial – chicagotribune.com

Rosenthal Collins acquires MG Financial

By James P. Miller | Tribune staff reporter
11:34 AM CDT, October 15, 2008
Rosenthal Collins Group LLC, the Chicago futures clearing firm, said Wednesday that it has acquired New York-based MG Financial LLC, a provider of online trading services in the foreign exchange market.

The two closely held concerns didn’t disclose terms of the acquisition, beyond saying that it involved “an exchange of equity interests.”

Rosenthal President Maureen Downs noted that the futures brokerage and clearing company embarked late last year on a growth initiative focused on capitalizing on the growing demand for futures and options, and building its presence in offshore markets such as Europe, South America, the Middle East and Asia. “We have made great progress in the past year,” the executive said, “and today’s transaction with MG tekes us to a whole new level with an unparalleled futures and foreign-exchange offering throughout key Asian markets and all of these regions.”

MG Financial, which was founded in 1992 and began offering online trading services in 1997, has an extensive client base in Asia, particularly among Chinese-speaking clients outside of China because of regulatory restrictions that are in force on the mainland of China, Rosenthal said; all MG traders are required to speak at least two languages fluently, Rosenthal said, and the New York firm’s polyglot group of traders contains people who speak languages such as Mandarin Chinese, Japanese, Russian, Arabic, German and Spanish.

Money Garden clearly could not survive on its own judging from their latest net capital number which is barely above $5 million. Expect more such buyouts in the next 12 months as the field winnows.

338

With the world financial system in chaos it�s never been more important to trade with a well capitalized firm. The CFTC has just released their latest net capital figures. Not a lot of changes from the last one. Only difference is that U.S. forex dealers have 30 fewer days to make it to the coming $20 million capital requirement deadline.

Financial Data for FCMs

The following firms have net capital below $10 million

MG Financial $5,393,000
Advanced Markets $6,786,000
Forex Club $7,558,000
Friedberg Mercantile $8,147,000
ACM $8,372,000
Ikon $9,544,000
Easy Forex $9,824,000
Hotspot $9,942,000

Not much change in capital for Advanced Markets, Forex Club and ACM. Swiss broker ACM still appears to be charging the proverbial machine gun nest with a butter knife. Is this firm really going to be able to put up $20 million in the coming months? Did they even know about this capital increase before they parachuted into the U.S. market? We�ll find out soon enough.

The following firms have net capital below $20 million

GFS Forex $11,451,000
MB Trading $12,767,000
ODL $14,870,000
I Trade FX $14,952,000
Alpari $15,786,000
IFX $18,623,000
FX Solutions $19,574,000

The following firms have net capital above $20 million

CMS Forex $20,199,000
PFG $21,345,000
Interbank FX $36,505,000
Gain Capital $67,906,000
GFT Forex $73,219,000
FXCM $91,840,000
Oanda $165,458,000

As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new law going into effect in the weeks and months ahead.

339

The NFA has come out with a statement that reads as follows:
National Futures Association | News Center

Net Capital Requirements for Forex Dealer Members

On October 22, 2008, the Commodity Futures Trading Commission approved increases to NFA’s capital requirements for Forex Dealer Members (FDMs). As stated in a July 23, 2008 Notice to Members, the minimum requirement will be $10 million as of October 31, 2008, $15 million as of January 17, 2009, and $20 million as of May 16, 2009.

The deadline to meet the new capital requirement is this Friday. The most up to date CFTC net capital statement shows the following firms with capital below the $10,000,000 requirement.

Financial Data for FCMs

MG Financial $5,393,000
Advanced Markets $6,786,000
Forex Club $7,558,000
Friedberg Mercantile $8,147,000
ACM $8,372,000
Ikon $9,544,000
Easy Forex $9,824,000
Hotspot $9,942,000

If you have an account with any of these firms contact them immediately to ensure that they will be able to comply with the new capital requirement this week. Some such as MG Financial and Hotspot have larger parent companies. But most do not. In this day and age safety of funds should be every trader�s top priority. Make sure your funds are safe.

340

Last year forex dealer SNC Investments sold off its forex business because they were unable to meet the NFA�s $5 million capital requirement. But it appears that they stayed in business as a Futures Commission Merchant and Money Manager. They are in business no more. Let�s roll the tape from the NFA complaint�

National Futures Association | News Center

On October 29, 2008, the CFTC contacted NFA. The CFTC advised NFA that it had received a telephone call from attorney David Serepca of San Carlos California, who said that he represented an individual by the name of Chris Lee. Serepca told the CFTC that, in April 2008, Chris Lee had written a check for $500,000 to SNC Asset Management and Kenneth Lee for the purpose of investing in a fund which would trade forex. Serepca said that he and his client had met with Kenneth Lee on October 29, 2008 and were told by Kenneth Lee that Peter Son (SNC CEO) had disappeared, and that customer money was missing.

Gotta love these CEO�s who just cut and run the moment everything goes pear shaped. I can picture Peter Son now, dressed up in drag like Jefferson Davis trying to escape the Union Army after the surrender of the Confederacy. Another forex fugitive gallops off in the dead of night�

On October 29, 2008, another principal of SNC, Young Choi � who worked at SNC�s main office in New York City � advised NFA that SNC was out of business and wished to withdraw its NFA membership. In addition, NFA became aware of a newspaper article that appeared in The Korea Daily on October 29, 2008, which reported that SNC � a Korean investment firm located in California � was �closing its operations due to the global financial meltdown� and that �the partners of the firm have no power to revive the business.� The article also stated that the firm had been managing over $70 million and that �it appears many Korean investors may lose their investments in the firm.� The article reported that the main office of SNC had been closed since October 28 and that employees had been notified to no longer come to work. In addition the article reported that the �president of the firm, Peter Son, has not been reachable by many investors and that his cell phone has been off.�

Well if you mismanaged $70 million you�d probably turn your cell phone off too. Better yet you�d probably have hurled it into the East River on your way to Macy�s to get fitted for that wig and frock�

Based on the telephone call from SNC�s Young Choi advising NFA that SNC was out of business, as well as the information received attorney David Serepca, and which appeared in the Korea Daily newspaper article, on October 30, 2008, NFA auditors went to SNC�s main office at 40 Wall Street in New York City to inquire about Peter Son and his whereabouts and to determine if customer funds were missing. However, when NFA auditors arrived at SNC�s main office they found that it was closed and its doors locked. The auditors left a note on the door requesting that a representative of SNC contact NFA.

Left a note on the door? Oh brother talk about closing the barn door after the horses have bolted� What could the note have possibly said? �Uh, Hello? You think you could let us regulators know what happened to that $70 million you had under management? Hope to hear from you. Warmest Regards, NFA.�

Subsequently, NFA�s auditors were contacted by Young Choi, who agreed to meet with NFA�s auditors at SNC�s main offices at 40 Wall Street. Thereafter, NFA�s auditors did meet with Young Choi, who again indicated that SNC was out of business and that he had terminated the lease for SNC�s main office effective October 31, 2008. Young Choi also told NFA�s auditors that he first became aware of SNC Asset a few weeks ago, that he was unaware that it was involved in forex trading, and that it was this understanding that SNC Asset only invested in real estate. Young Choi further indicated that he did not know Peter Son�s whereabouts.

There is always someone that gets left holding the bag in a stick-up. And Young Choi appears to be said bagman. Left behind to clean up Peter Son�s mess poor Young Choi must be ruing the day he ever joined SNC Investments.

The implosion of SNC is yet another lesson in the perils of sending money to poorly capitalized firms. There is no way of telling how many small firms are tottering on the brink of financial ruin in the wake of the global credit crisis that has wiped out billions of dollars in wealth. As always, conduct your due diligence and beware poorly capitalized firms like the late SNC Investments.

341

Forex Dealer Dead Pool member GFS Forex has run into a bit of trouble in the Middle East. Their Dubai office was recently shut down by regulators and they were hit with $500,000 in fines and plaintiff compensation. It wasn�t always this way for GFS.

Back in 2007 this �leader in the online global foreign exchange and futures market� was trumpeting its new office with the usual public relations talking points as seen in this article (with accompanying photograph of glad handing executives):
GFS Investments opens office at DIFC | DIFC

From its offices in the DIFC, GFS will work to bring its expertise in the foreign exchange market to its customers throughout the region.

GFS has established a reputation as a global leader in commodities trading.

Mike Leung, Director, GFS Investments (Middle East) Ltd., said: ‘We are extremely proud to join the DIFC, the leading international financial centre in the region. Working in the DIFC will allow us to provide our customers throughout the Middle East access to our foreign exchange and commodities market expertise from a platform that is internationally recognised for its integrity, transparency and efficiency.’

Integrity eh? Let�s see how accurate that claim turned out to be:
http://www.business24-7.ae/articles/2008/9/pages/09082008_fc2ef83f016143b1b76cf6dbc0a4fa3f.aspx

GFS broke the terms of its licence by placing foreign exchange trades on behalf of its clients when the company was allowed only to offer a platform for customers to place trades, according to the DFSA statement.

The trading on behalf of clients was often “unfair and unsuitable to the interests of the clients, motivated more by a desire to maximise commissions than to profit the clients,” the DFSA said. “Most clients suffered financial losses as a result of this misconduct.”

Well when you are $10,000,000 below the $20,000,000 capital requirement scheduled to kick in next spring you�d try to �maximise� your commissions too. GFS has a long, hard slog in front of it.

Authority suspends GFS Investments
By Babu Das Augustine, Banking Editor
Published: September 08, 2008, 00:03

Dubai: The Dubai Financial Services Authority (DFSA) on Sunday slapped hefty fines and sanctions on GFS Investments (Middle East) Limited, a company that offered online trading facilities in foreign exchange and commodities.

The DFSA’s action follows a detailed investigation into the business operations of GFS Investments.

GFS Investments is licensed to provide an online foreign exchange and commodities trading facility to clients who meet DFSA’s required eligibility standards. Eligible investors gain direct access to that platform via unique login and password.

Under its licence, GFS Investments was not permitted to conduct the trades, but received commissions for each trade carried out by its customers. The business is therefore suitable for professional investors who have relevant market experience, but unsuitable for retail investors.

An affected customer told Gulf News yesterday that the company used different customer accounts to carry out trades for customers who were not eligible under DFSA regulations.

“The investigations determined that GFS Investments had operated outside its authorisation by conducting business with non-eligible retail clients and by itself carrying out trading in the names of clients. The DFSA took immediate steps to ensure that no further unlawful trading took place,” DFSA said in a statement.

Investigation revealed that some employees of GFS Investments engaged in conduct designed to misrepresent the eligibility of clients, including the falsification of client particulars.

Following investigations, the DFSA has imposed a range of sanctions including the banning of relevant individuals for five years from the Dubai International Financial Centre (DIFC); the imposition of fines; and the compensation of relevant clients for financial losses suffered as a result of the misconduct.

"The DFSA has an important role to maintain business standards within the DIFC. The vast majority of our licensed firms take their governance and compliance responsibilities very seriously and this has helped the DIFC to quickly establish a reputation for excellence.

“We are, therefore, disappointed by the unacceptable conduct of GFS Investments,” said the DFSA’s Chief Executive, David Knott.

“The DFSA’s intervention will also ensure that all investors who suffered financial loss as a result of the misconduct will be fully compensated,” he said.

The bans imposed by DFSA prevent the individuals from performing any function in or in connection with the provision of financial services or ancillary services in or from the Dubai International Financial Centre during the designated period.

All sanctions have been recorded in enforceable undertakings made with the DFSA by GFS Investments and its relevant officers and employees.

342

Hello Friends,

I have read these threads for the first time since i have entered babypips. I have read all the threads and many of them are saying right. That firms indulged in the CFD business had to face failouts. I would say that before shaking hands with any broker please search about him. Is that broker certified or not have a proper registration number or not. What facilities he is providing etc…

343

So say news reports coming out of Australia. A few weeks ago, at the height of the financial panic, leading CFD provider Saxo Bank took a meat cleaver to their work force in a frenzied effort to slash costs. CMC now appears to be following suit. They had already laid off staff and closed their U.S. office and another office in Perth, Australia. But now more redundancies lie over the horizon and the company just held an emergency meeting for all their staff at a hotel in Sydney. Details below:
CompareShares.com.au - company news

Crisis meetings at CMC Markets
Toni Case - November 6, 2008

CFD specialist CMC Markets held an all-staff meeting at the Intercontinental Hotel in Sydney today at 2.30pm to put the rumours to rest once and for all. What is happening to CMC Markets?

CMC Markets’ normally thundering public relations machine has suddenly gone quiet, and in its place is FD Third Person, a media agency "specialising in financial transaction support and issues and crisis management�, according to their website.

CompareShares did its best to get clarification for traders with existing accounts with CMC Markets. We put in numerous calls to internal public relations, Sydney reception, the New Zealand office and even the 1300 303 888 number and couldn’t get anyone to comment. Phone calls rang out. According to FD Third Person, key staff were in meetings until late last night and again early this morning.

CMC Markets did not want to make an official announcement to the market until staff had been notified of the changes at 2.30pm today, was the official response.

It�s now official that managing director David Trew has been axed from the Group. Trew, who made headlines earlier this year when splurging on a $25 million trophy mansion in Point Piper (as reported in The Australian newspaper) is leaving the group, according to FD Third Person. And more staff cuts � �in non-client facing functions� � are scheduled for the Sydney office. CMC Markets shut its Perth office in August this year, and recently slashed Sydney staff by around 8 per cent.

Furthermore, the London head office will be taking the reins over its Antipodean businesses. CMC Markets� business units, Sydney, New Zealand and Asia (Singapore, Hong Kong and Japan) will now report directly to London, states FD Third Person. To date, the Australian and New Zealand businesses came under the wing of former managing director Trew.

Two months ago, CompareShares reported on a series of events that had unfolded at CMC Markets, �An AVO, staff cuts and a trophy mansion � it�s all happening at CMC Markets.�

Back then, managing director David Trew denied the suggestion that staff cuts were a result of problems at CMC Markets. He insisted that further staff cuts were not anticipated.

Stay tuned - we’ll keep you updated with any developments in this story.

So will the Savior�

344

Hello forex savior,

I have read your article. CMS is doing good as most of the CFD brokers are failing and this becoming inconvenient for traders. Most of the investors interested in entering forex market but not having proper knowledge about forex brokers have to face the CFD crises.

Well this is good news which you have given.

345

I use FXCM in NY. Does anyone here have any experience with MB Trading ?

How do they compare to FXCM ?

Thanks in advance for any information that you can share with me.

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Hello Aviel. What has your experience been with FXCM?

347

I am a IB there. I have no real issues with them. Service good. All in all I would say good. They are effecient !

348

The CFTC has just released their latest net capital figures. The big news is that everyone is doing well. Firms are seeing big jumps in net capital as forex brokers appear to be raking in the cash in this volatile market. It doesn�t appear that anyone has had difficulty clearing the $10 million hurdle judging by the fact the NFA has not closed down anyone since Halloween (although AMIFX continues to report way below the $10 million requirement although keep in mind CFTC reports lag a full month behind the current date.) The only other change appears to be that IFX and FX Solutions have formally merged as IFX is no longer listed on the CFTC Report.

http://www.cftc.gov/marketreports/financialdataforfcms/index.htm

The following firms have net capital below $10 million

Advanced Markets $6,743,000
Friedberg Mercantile $8,164,000
ACM $8,891,000
Forex Club $9,615,000
Easy Forex $9,943,000

The following firms have net capital below $20 million

Hotspot $10,021,000
Ikon $10,424,000
GFS Forex $11,908,000
MB Trading $14,245,000
ODL $15,180,000
I Trade FX $17,258,000
Alpari $17,437,000

The following firms have net capital above $20 million

FX Solutions $21,197,000
CMS Forex $22,018,000
PFG $22,038,000
Interbank FX $37,596,000
GFT Forex $67,073,000
Gain Capital $77,580,000
FXCM $114,299,000
Oanda $168,344,000

As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new $20 million capital requirement going into effect in the months ahead.

349

Last month the S.S. Saxo Bank forced hundreds of employees to walk the plank in a furious effort to keep their Danish Longship from taking on any more water amidst the financial tsunami that has engulfed CFD brokers around the world. But it is another former shipmate of Saxo that has now taken to his Somalia-like pirate ship to fire pot shots at this listing to port Viking Broker. Ahoy it�s Charles-Henri Sabet! With parrot perched on shoulder and a black eye patch in place Sabet has Saxo in his sights�

According to Euromoney Magazine in an article titled �Charles Henri Sabet Bites Back in Saxo Saga� Sabet says that he was exiled to Davey Jones locker because of a shareholder dispute, not because of an SFBC investigation of alleged insider trading.

Charles-Henri Sabet bites back in Saxo saga /Euromoney magazine

�This is really about an argument between shareholders,� says Sabet. �I still own around 5% of Saxo and I was not happy with what I saw as the bank�s domestic focus. I offered to leave, but I wanted Saxo to buy my shares as was agreed when it took over Synthesis,� he adds. Sabet says that Saxo is now focused on becoming a well-known name in Denmark, including giving backing to the small, centrist Liberal Alliance political party.

So how did this investigation come about? Euromoney states:

Saxo has declined to comment on whether or not the investigation came about because it informed the regulator of an irregularity, rather than the SFBC acting because it suspected suspicious activity. But a letter from the commission makes it clear it was informed by Saxo of the issue.

So instead of paying Sabet his share of Saxo�s booty the scallywags in Denmark simply ratted him out to regulators? Shiver me timbers that�s a low thing to do to a mate. But Sabet wasn�t the only one sent to the brig.

Sabet says he is also particularly upset that his dismissal was followed by a purge of his former employees, including his chauffeur. He believes that he will be fully exonerated when the SFBC reports its findings. In the meantime he is preparing to take legal action to clear his name and to complete the deal that was agreed when he sold Synthesis Bank to Saxo in September 2007; this included the verbal agreement to purchase his remaining shares in the bank.

Yarrrgh matey, Saxo ain�t likely to depart from its treasure anytime soon. This Sabet fellow could be waiting a long time before he sees one gold doubloon from the cash strapped folks in Denmark. I reckon Sabet would have a better chance demanding ransoms from oil tanker owning Saudi princes than from a forex and cfd broker that had been spending money like a drunken sailor on shore leave prior to the financial panic.

Arrgh, Sabet best crack open a bottle of Rum and batten down the hatches cause Saxo will fight him to the last cannon ball over that 5% share. To be continued I�m sure.

350

The forex market has long been known as the Wild West of Finance due to its unregulated nature. But the frontier is being tamed and it now appears the day of the unregulated Introducing Broker is drawing to a close. While the CFTC has not yet released its new Forex Dealer rules to the public the NFA just issued a preliminary set of guidelines for all introducing brokers who are now required by law to be licensed: National Futures Association | Compliance

Among the rules, IBs must maintain net capital of $45,000. Aside from other requirements like proficiency exams and disclosure documents the NFA is doing background checks which require finger printing:

NFA requires all individual applicants to submit fingerprint cards, which are sent to the Federal Bureau of Investigation (FBI) to determine if the applicant has a criminal record.

This should help drive some of the industry�s worst cattle rustlers out of the market and into a new line of work, like holding up banks instead…

It remains to be seen just how onerous the new rules from the CFTC will be but with the NFA releasing this guide now the CFTC shouldn�t be too far behind.

351

The U.S. retail forex industry appears to be soaring over the new capital requirements by leaps and bounds. October showed an across the board increase in virtually every dealer�s net capital. Still, for some firms it is a long way to $20 million. And while small firms like ACM and Advanced Markets were able to meet the first barrier the Savior will be watching closely to see if they can keep it up.

Financial Data for FCMs

The following firms have net capital below $15 million

Advanced Markets $10,163,000
Hotspot $10,559,000
Easy Forex $10,891,000
ACM $11,855,000
GFS Forex $12,503,000
MB Trading $14,522,000

The following firms have net capital below $20 million

Ikon $15,033,000
Forex Club $16,489,000
Alpari $18,212,000
I Trade FX $18,411,000
ODL $19,991,000

The following firms have net capital above $20 million

PFG $21,809,000
CMS Forex $25,162,000
Interbank FX $40,892,000
FX Solutions $43,570,000
GFT Forex $76,980,000
Gain Capital $96,371,000
FXCM $122,924,000
Oanda $170,982,000

As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new $20 million capital requirement going into effect in the months ahead.

352

The National Futures Association has passed some new rules that all traders should be aware of ASAP:

A Forex Dealer Member may not cancel an executed customer order or adjust a customer account in a manner that would have the direct or indirect effect of changing the price of an executed order�

Translation- No more �adjustments,� unless these adjustments meet strict NFA standards.

Forex Dealer Members may not carry offsetting positions in a customer account but must offset them on a first-in, first-out basis.

Translation- no more hedging of the same position.

These are profound changes. How many times have traders complained about profits being �removed� from their accounts? Well, if you trade with a NFA registered firm those days appear to be over. The hedging prohibition may upset some traders but truth be told there is little logic behind holding the opposite positions in the same currency pair. Still, you would think traders would be allowed to trade as they see fit without the nanny state running around dictating what positions you are allowed to hold.

In any case the evolution of FX trading continues�