Thanks for this great thread FS. I appreciate your updates!!!
u r so kind!!!thank you sincerely!!!u helped me avoiding the fake and unsafe brokers!
After years of fraud and malfeasance perpetrated by Bernie Madoff style Swiss forex brokers the retail forex business in Switzerland is on the verge of going legit as all Swiss brokers must either get a banking license or close up shop. However, these changes are still months away and thus many Swiss forex brokers continue to operate without a license.
But the good news is that the legit brokers are making themselves known. MIG Investments has just issued a press release stating that they have formally submitted their banking license application to the SFBC. This is no small feat and MIG should be congratulated on taking this first step:
MIG Investments SA - Press Releases
Other Swiss brokers are moving in the same direction as well. However, one broker may be hitting a road block; Crown Forex. A disturbing report over at Forex Peace Army indicates the broker appears to be having difficulties making good on customer withdrawal requests
Now it should be noted that Forex Peace Army isn�t exactly The London Times and thus this report comes with a pretty big grain of salt. Forex Factory has since dumped the thread into the recycling bin:
Crown Forex has been notified about this report and been given an opportunity to respond by Forex Factory and rest assured their response will be included on this thread once it is given. Also, Crown Forex has announced that they plan on having 15 million Francs on hand to meet the SFBC�s capital requirement according to this recent press release: Francesc’s Weblog � Crown Forex increases its Share Capital
But the numerous instances detailed in the Peace Army report about Crown Forex not making good on customer withdrawals is very troubling and something traders should be aware of.
Again, the Savior�s advice is to wait until these brokers actually gets their banking license before opening an account with any broker based in Switzerland.
It appears the Peace Army�s muck raking was well founded in regards to Crown Forex. Kudos to Pharoah for being ahead of the curve:
Swiss banking regulators have launched an investigation of Crown Forex and appointed several care takers to administer the firm�s last rites. Here is the official announcement from the SFBC (rough translation from Google):
The Federal Banking Commission has appointed Laurent Winkelmann, of Geneva, Ch�ne-Bougeries and Philippe von Bredow, Lausanne, in Celigny responsible investigation Crown Forex SA. Laurent Windelmann and Philippe von Bredow are authorized to bind the Crown Forex SA by individual signature. It is forbidden for bodies Crown Forex SA to carry out any legal act without the agreement of the responsible investigation.
For breaking news on the investigation of Crown Forex check this thread here which recently posted an alleged letter from the SFBC regarding their investigation of Crown Forex:
Dear (name omitted)
In response to our e-mail dated 16 December 2008, we would like to present to you the following information:
As already informed, the Crown Forex SA, Bassecourt has no authorization by the Swiss Federal Banking Commission (SFBC) for an activity in the financial sector in Switzerland.
To clarify the existence of the authorization requirements, in cases of suspected law violations or suspected pursuit of activities without proper authorization and in danger of insolvency, the SFBC investigators have to clarify the facts to use.
For the SFBC, acting in such cases, a superprovisional decision is available for use of an investigation officer. These investigators are charged with the investigation of the business activities of the company and are to report to the SFBC. The investigation officers are equipped with all necessary power and as such they appear in the commercial registry. They can act now on behalf of the firm. That is the case for the Crown Forex AG with superprovisional order as of 9 December 2008 (published in the Gazette on 18.12.2008) were Mr. Laurent Winkelmann, Ch�ne-Bougeries and Mr Philippe of Bredow, C�lignym, investigators to the Crown Forex SA, were appointed.
On the basis of the report of the investigation officers the SFBC will make a decision and, where appropriate, publish it on its website. At the moment we can offer no further details. You or your contacts in the U.S. are invited to contact us again at a later stage.
Yours sincerely
Secretariat
SWISS FED. BANKING COMMISSION
I�ve said it before and I�ll say it again. DO NOT TRADE with a Swiss forex broker UNTIL they get a banking license. There are plenty of decent brokers that are regulated all around the world from Australia to the UK to the U.S. Crown Forex is just the latest example of what can happen when you trade with an unregulated broker.
Just received this update from someone who has been involved in the controversy at Crown Forex. This would explain the withdrawal difficulties customers have been experiencing.
The skinny at Crown. Wanted to let everyone know what’s really going on with Crown. First of all the people who were having problems withdrawing were carry traders who were not paying any interest with Crown. Crown realized some of these guys were holding GBP/JPY long term and not paying the normal fee for doing so. As a result they froze the accounts and tried to retroactively charge the clients a fee. The clients were not willing to pay it and complained to the Swiss authorites. I was able to negotitate the return of all my client’s money so that he would not pay any fees. He was the biggest carry trader over there and one of the guys on FPA. Well they started to pay him but the investigation he helped get launched now will prevent him or anyone else from getting any money out of Crown at all intll the investigation finishes. So it’s a lose lose for everyone involved.
Scott Kuehne
FX Traders Inc.
Developing…
In light of the government takeover of Crown Forex I am once again being asked, �which specific broker do you recommend?� That is not for the Savior to say. Different brokers have different products and all traders should conduct a regulatory background check and thoroughly demo test a broker�s platform before opening a live trading account.
That said there are many solid brokers in the market place who are regulated and unlikely to go under anytime soon. Here is the Savior�s list of approved brokers:
U.S. Based Brokers
- Oanda
- FXCM
- Gain Capital
- GFT Forex
- FX Solutions
- Interbank FX
- CMS Forex
European Based Brokers
- Saxo Bank
- IG Index
- CMC Markets
- MF Global
- City Index
Banks
- DBFX
- CitiFX
I have omitted smaller based U.S. brokers who have yet to meet the $20 million capital threshold, Swiss brokers who have yet to get a banking license and any offshore broker hiding out in shady jurisdictions such as Cyprus or Belize.
Of course, any of the brokers on the Savior�s list of �approved� brokers could run into trouble in the future. If Lehman Brothers and Bear Stearns can vanish overnight no financial institution is immune from insolvency. Already, I have reported on the financial troubles of both Saxo Bank and CMC markets in the last few months. But even taking into consideration the mass layoffs at both firms neither is likely to go belly up and take customer deposits with them.
In addition most of the U.S. based brokers on my list have had various regulatory actions taken against them (none of them however were charged with any financial violations and were related to marketing practices, which doesn�t interest me.)
I�m sure there are readers thinking to themselves, �that broker on your list is a crook and a cheat so how can you approve them?!� Simple, because those who feel one of these brokers has cheated them always has the option of filing a complaint with the appropriate regulator and have your day in court. But if you are trading with an unlicensed broker you�ll be lucky to even get a customer service agent on the phone to complain to in the first place let alone actually have an arbiter hear your case.
In short, I would feel comfortable opening an account with any of these brokers. Hence the reason they have been given �The Forex Savior Seal of Approval.�
Forex Savior � I have a few questions that I hope you and others here will help me with. I have been investigating trading forex for about 3 months and I�m now looking for a broker to open an account. I saw somewhere that NickB uses GFT. I also saw that they are well-capitalized (in your posts). So at first they were my first choice.
In doing my due diligence I found some complaints about GFT. People complain that money disappears out of their accounts and they didn�t know why. Digging further I found that GFT has a policy that when a trader closes a trade, it is apparently not fully settled for a couple of days due to international exchanges, and GFT will charge the trader for two days of currency movement after a trade has been closed. Here is an excerpt from a post explaining the reason for this policy:
"Let’s say you have a base currency of USD and want to take a buy position on EUR/JPY, this means, you’re converting your USD to JPY, then selling that JPY to buy EUR. So if you close this EUR/JPY position, it means you’re selling the EUR you bought earlier to buy JPY again. Now your profit is in JPY and would normally take 3 days to be converted back to USD which is your base currency.
“If this is clear, then have you ever thought of how this happens, by just clicking a button? This process goes through a clearing that usually takes 3 days, and you know price is not stable.”
The complaint, including several posts discussing the situation, the above quote and a copy of a chat session with a GFT person, can be viewed in this link: GFT Forex Reviews | GFT Forex Ratings | Ulrich Dietz| gft.com review and ratings by Forex Peace Army
My question is this: In your experience is this policy of GFT�s a standard operating procedure among forex brokers? Any comment would be greatly appreciated.
I also checked into Oanda, and found what appears to be a well-researched post on google answers.
My only concern here is that Oanda looks like a very small company (so I�m worried about customer service), and that my account will not be insured in any way.
Question: is this, too, standard procedure among forex brokers, not to insure the clients� accounts?
Last question: In my overall research, so far the biggest complaint is slippage � I�ve read about spreads jumping up to 30 pips in some posts! Can you experienced traders reading this tell me which brokers you think are the best to trade with as far as the least amount of slippage? Or at least the most consistent spreads? I�ve done a lot of googling, and I�ve found some broker comparison sites, but I�ve found nothing in-depth enough to really help me make a decision. Anyone know of such a website?
Thank you, Savior, for posting the broker capitalization lists every month and all the other information you share. As a forex noob, I�m more than a little paranoid about learning too much of this the hard way. Your posts give me a little insight into how this all works. I greatly appreciate any comments on this.
It looks like the links did not copy correctly into my post. I’m going to try to put them here. In case it still doesn’t work, you can google “GFT forex complaint” you’ll see a link to the forexpeacearmy article. Google on “Is Oanda reliable?” and you’ll see the link to the oanda article.
Thanks!
Hi Machine. In answer to your questions:
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Most brokers have some kind of policy in regards to trade adjustments. I’m not familiar with GFT’s but I do know that these kind of adjustments are about to come to an end as the NFA has just put new rules in place severly curtailing post-trade adjustments by forex brokers.
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Customer insurance is not really available in the U.S. for retail forex trading. If you are concerned about safety of funds best to open in the U.K. where the government requires by law that brokers segregate customer and company funds.
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Slippage is a way of life trading any financial instrument, including forex. On this one you just have to experiment with different brokers. It will be very hard piecing together which firms have best execution just reading comments on the boards.
ACM is officially closing their U.S. office and retreating back to Switzerland after failing to make any headway in the U.S. Of course the Savior has long suspected this Swiss broker wouldn�t last very long on this side of the pond in light of the increased capital requirements. Furthermore, I was right on the money in stating they clearly didn�t due their homework before opening an office here. The company was a registered NFA member for less than 12 months. What a wretched waste of money, time and man hours to set up an overseas office and then close it down in less than a year. This is not the sign of a company with a master plan. If they were publically traded I�d be shorting them with the intensity of a day trader dealing in shares of General Motors. Here is the official statement from ACM which you can find on the front page of their website: Forex - Currency Trading - Forex Broker - ACM (USA) LLC
ACM USA’s white-label licensor, ACM � Advanced Currency Markets SA (�AC-Markets�), announces another milestone in its already impressive and successful history: the formation and creation of ACM Bank. The ACM Group proudly announces the planned reorganization of the ACM Family under the new ACM Bank.
In an effort to ensure greater security, safety, and enhanced banking and investment services to their clients, ACM Group is in the process of applying for its Swiss banking license.
As a result, for the short term ACM USA will no longer be an active NFA member. This means that ACM USA will no longer act as a counterparty to forex positions and will not continue to service client accounts. Instead, ACM USA will remain a licensed office to AC-Markets assisting in the opening of forex trading accounts directly with AC-Markets and in the future with ACM Bank. AC-Markets is not a National Futures Association (�NFA�) member firm and cannot accept U.S. customers until the approval of its Banking license.
Please note the coming date which is of importance to your ACM USA forex trading account.
� On January 8, 2009 at 9:00 a.m. EST, all open forex positions and accounts will be closed at the prevailing market price.You may continue to trade or close your ACM USA account until the above mentioned date. However, should you not take any action before the above mentioned date, your account will be closed and the account balance will be returned to you by check.
I love how these brokers close up shop and give their customers barely any notice before their positions are forcibly liquidated. One day you are trading with a long term strategy waiting for a position to retrace and the next your broker sticks a fork in your positions and blows up your account. And ACM celebrates this as a �Milestone,� to be ranked right up there with the invasion of Normandy and the first man landing on the moon perhaps. This is why it is so important for traders to make sure their broker is around for the long haul. And as the record shows, Swiss brokers are anything but safe long term bets.
We�ll be waiting to see if you get that bank license guys but as of now ACM is an unregulated Swiss broker and should be avoided until they once again submit themselves to real regulation.
I guess it’s not enough for a broker to be regulated by NFA. I am now doing the necessary research on the broker I have the account in which I’m planning to adopt a long term position. I don’t want to see my account blowing up before being noticed.
One of the very first forex dealers that the Savior shined his light on was One World Capital. Here is an excerpt from the summer of 2007:
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool
As I continue to update the dead forex firms walking list I’m amazed how many people think fraud and undercapitalization are completely separate issues. Often times they are not. The reason is quite simple: firms that are committing fraud are not known for having legible books. And Vice versa. Firms that have a hard time maintaining their capital requirements will often cut corners and commit fraud to keep their firms from going under. Finally, smaller firms simply don’t have the money to maintain the kind of large legal and compliance staffs necessary to keep up with the battery of regulations being issued by the NFA and CFTC. And of course some firms are just plain incompetent. All these factors have come to a head with Forex Dealer Dead Pool Member One World Capital, who is now in serious trouble with regulators.
To see the full report on One World’s misdeeds you can click on the NFA’s report yourself: http://www.nfa.futures.org/BasicNet/...px?seqnum=1190
In short, One World is a classic Dead Forex Firm walking. Firms like One World are the reason the NFA is going to raise capital requirements. And when they do, does anyone honestly believe the One World’s of the world will survive?
Over the next several months One World rapidly circled the Bowl:
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool
The word on the street is that the situation at One World has become so dire that a large chunk of their sales force resigned because they hadn�t been paid for two months. Other traders are reporting non-responsive customer service, emails that go unanswered and phones that keep on ringing. All the signs of a firm in its last death throes�
The bottom line is when you can�t return a customer�s money when they ask for it you are finished in this business. One World may be able to limp on indefinitely but it is hard to see this firm making a comeback to respectability. Barring a fat sugar daddy willing to pump in ten million dollars this firm�s days appear to be numbered.
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool
And the hits just keep on coming for One World Capital. The NFA just announced that One World has been fined $100,000 for the complaint brought against them last spring.
ErrorIn any case, I strongly recommend ANYONE who has an account with One World for the love of criminy get your money out of that firm once and for all- if you even still can�
Finally, like that fat man in the Monty Python sketch who exploded upon eating a mint One World�s bloated and rotting gut burst into a million pieces in December of 2007 when regulators shut the firm down for good:
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool
Now the Feds have swooped in and arrested John Walsh and friends. Leading the charge is Patrick Fitzgerald. Fitz can mount Walsh�s head above the fireplace, right next to former kills like Scooter Libby and Governor Blago. Welcome to the party pal: Feds arrest 2 Winnetka futures dealers on fraud charges – chicagotribune.com
[B]Feds arrest 2 Winnetka futures dealers on fraud charges[/B]
By James P. Miller
Tribune reporter
4:27 PM CST, January 7, 2009
Federal agents arrested two top executives of a Winnetka foreign-exchange futures dealer that collapsed over a year ago on federal fraud charges, the Justice Department disclosed Wednesday.Both men were principals with One World Capital Group, which was effectively shut down in December of 2007 when the Commodity Futures Trading Commission � responding to a growing chorus of complaints from customers who said they’d been unable to withdraw funds from their accounts – obtained a court order that froze One World’s assets and barred the troubled foreign-currency trader from further trading activity.
Wednesday’s actions, including agents’ execution of “search and seizure” warrants at both officials’ homes, represent the first criminal charges to emerge from the company’s failure.
FBI agents arrested One World founder John E. Walsh at his Lake Forest home this morning, U.S. Attorney Patrick Fitzgerald’s office said in a Wednesday statement.
Another One World principal, 43-year-old Charles G. Martin, of Glencoe, was arrested last night in the Los Angeles area. The government calls Martin a “de facto” official of the currency-trading concern, although he was prohibited from holding a position with the company.
A criminal complaint unsealed this morning charges both men with one count of wire fraud each, for improperly diverting to their own use customer funds that were supposed to be invested in foreign-currency trades.
The two men used customer funds they had misappropriated “to finance a lavish and extravagant lifestyle,” racking up huge sums on corporate credit cards largely paid for by the company, the government’s criminal complaint says.
Martin charged over $1 million “at a strip club and restaurants” over the course of 20 months, the government says, spent $50,000 at toy stores, and used his company credit card to finance $280,000 in jewelry-store purchases.
In addition, the complaint says that Martin and Walsh used hundreds of thousands of dollars they had diverted from One World to finance a never-released movie entitled “Order of Redemption.”
The company, founded in 2006, hit turbulence in the spring of 2007, the government notes, when the National Futures Association found improprieties in the course of an audit.
The fallout from that audit sparked a rise in the number of customers who sought the return of money they had invested, the complaint notes, but the firm couldn’t honor those requests because the two men had allegedly been dipping into margin funds as part of their misappropriation scheme.
Based on the company’s refusal to honor those customer redemption requests, the federal regulatory agency known as the Commodity Futures Trading Commission filed a civil complaint against One World and Walsh in Chicago federal court in mid-December, 2007. That litigation led to the asset freeze that has been in place for the past year.
Chicago attorney Kevin Flynn, who is representing Walsh in the One World matter, said he hasn’t had a chance to review the government’s criminal complaint, but said “I don’t believe that Mr. Walsh will admit guilt of any criminal conduct.”
Indeed, said Flynn, Walsh has been cooperating with the CFTC’s One World probe, and had this week reached an agreement in principle, in the courtroom of the judge hearing the civil case, on a possible resolution of the CFTC’s complaint.
“We were shocked and surprised at the timing” of the government’s decision to bring criminal charges, said Flynn, “coming as it does on the heels” of the tentative resolution of the civil complaint.
Martin, who was to appear Wednesday in Los Angeles federal court, couldn’t immediately be reached for comment.
I’m sure I’m not the only one who has noticed that we seem to have dollar figures which are all different with each posting. Also; on the PDF list for example it has FXCM listed at below 1 mil which I know is incorrect. So can anyone explain this?
Thanks
Savior � I appreciate your taking the time to read my questions and thanks for your replies.
The NFA�s next scheduled capital requirement is set to kick in on January 17th at $15 million. Firms offering leverage of over 100 to 1 therefore must have over $20 million set aside. Alpari was showing $18 million in their last net capital filing but still appear to be about $5 million short of the amount required to offer leverage greater than 100 to 1. Therefore, Alpari has just announced they are raising their margin requirement:
Change to Customer Agreement and Terms of Business
Company News � January 8, 2009: Change to Customer Agreement and Terms of Business
Effective January 18, 2009, Section 2 of the Customer Agreement and Section 6 of the Terms of Business are being amended as follows:
CUSTOMER AGREEMENT � SECTION 2. SECONDARY RISK DISCLOSURE: HIGH RISK INVESTMENT
In accordance with these changes, effective January 18, 2009, Alpari (US) will increase its stop out level to 100% of the required margin.
Please refer to the following example for an explanation on how this will affect your trading:Assume that the quote for the EUR/USD is 1.2600, and you have $5,000.00 in your account.
Assume that, today, you open a position of 1 standard lot of EUR/USD. If the price moves against you after you open your position, MetaTrader 4 will automatically close your position around $252.00 (20% of the required margin), with a loss of around $4,748.00.
As of January 18, 2009, you open a position of 1 standard lot of EUR/USD in your account. If the price moves against you after opening your position, MetaTrader 4 will automatically close your position at $1,260.00 (100% of the required margin), with a loss of $3,740.00.
Please note the following: all positions that are left open with insufficient margin after the market closes on January 16, 2009 will be automatically closed upon the market�s re-opening on January 18, 2009, without further notice.
Team of Alpari (US)
With the new cap requirement scheduled to kick in shortly expect more such announcements. Traders who employ high leverage may want to consider winding down their positions if they are trading with smaller brokers to avoid any nasty margin calls.
I hope Alpari isn’t closing down. Alpari has a good name and reputation in this industry.
The CFTC has just released their latest net capital figures. With the $15 million dollar deadline just days away who will make the cut and who will not?
Financial Data for FCMs
The following firms have net capital below $15 million
Advanced Markets $10,195,000
Hotspot $10,527,000
Easy Forex $10,606,000
GFS Forex $12,861,000
MB Trading $14,664,000
AMIFX, HotSpot and Easy Forex are really behind the 8 ball. They are not even close to the $15 million mark. Sure the CFTC cap report lags about six weeks behind but time is running out and these firms have not shown any kind of gradual increase in their cap numbers unlike their other competitors.
The following firms have net capital below $20 million
IKon Royal $15,013,000
Forex Club $15,823,000
I Trade FX $17,098,000
Alpari $18,158,000
ODL $18,982,000
The following firms have net capital above $20 million
CMS Forex $26,540,000
PFG $27,704,000
Interbank FX $42,954,000
FX Solutions $45,125,000
GFT Forex $73,808,000
Gain Capital $102,959,000
FXCM $131,416,000
Oanda $170,799,000
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.
ODL Securities has developed a nervous reaction to the battery of new regulations in the United States and has officially thrown in the towel. They are closing their U.S. office and shipping all their customers to FXCM. ODL released a fascinating press release making the announcement:
ODL Securities Sells US Business
ODL Securities Sells US Business
ODL Securities, the leading independent FOREX, derivatives, equity, spread betting and commodity trading house has sold the US division of its profit making US Forex business to Forex Capital Markets LLC (FXCM).
The move follows the current and planned implementation of new and more complex regulatory rules that have made it increasingly burdensome for all Forex Dealer Members to operate in the United States. These include increases in the minimum amount of regulatory capital that a Forex Dealer Member must maintain - up by three times over the past year and due to increase further in May to $30mn.
A strategic decision was therefore taken by ODL to use its financial capital more efficiently to fuel its growth in other parts of the world.
As part of its expansion strategy ODL Securities will open new JV offices in Turkey and Australia in the very near future, and expand its operations in Japan and Canada. In the UK head office, the business has been restructured to improve its offering with a focus on multi-lingual customer service and support (ODL now has clients from over 100 countries).
Announcing the sale, Graham Wellesley, Chief Executive of ODL Securities, said: �This has been a hard decision for us to make, ODL Securities Inc. is a very successful and profitable operation, but we could not justify disproportionately supporting one of our smaller subsidiaries.
�We remain firmly committed to expanding our international reach and to that end we have dramatically strengthened the management and resources of our UK Sales and Servicing Teams as well as developing new ventures in Europe, Asia and Australia. We remain profitable and our strategy will continue to focus on growing the business in 2009.�
Higher capital requirements are clearly squeezing smaller forex brokers and there are sure to be more brokers leaving the industry in the months to come. Traders need to be very wary of opening up long term positions with brokers who have less than $20 million in capital. As we have seen these smaller forex brokers close up shop (or raise margin requirements) with barely any warning to their customers. Traders deserve better peace of mind than that. It is hard enough just trading in these crazy markets let alone having to worry if your broker is about to close their doors and give your account the boot. Money talks in this business. If your broker can�t crow about having lots of capital on hand, beware�
NOTHING COULD BE BETTER for trader peace of mind !
as long as firm monopolies and higher spreads arent the result
but i bet thats exactly what happens
mp