DCM Forex and Eligible Contract Participants? What is this?

Trading Discussion
1

Hi All,

This is my first post here at the forums and I’m glad to be here, how are you?

I’m a USA resident and I was interested in opening a Forex trading account with DCM Forex in Australia and I was told that I would have to meet the “Eligible Contract Participant” requirements. Looking over the PDF file they sent me it appears that it requires a company/group/individual to have a net worth of $1 million to $10 million, depending on the circumstances.

Investigating these requirements further they appear to be part of the Dodd-Frank legislation.

Is this for real or is DCM Forex just closing the door on small retail investors?

Thanks!

2

since you live in USA, I suggest you using USA Brokers, investing in another countries have a high risk opportunity to get scammed if they’re not regulated with NFA, and I never heard about DCM Forex, I know couple of brokers which are based in USA, let me mention one of them which is Wall Street Brokers, I deal with them personally with fixed spreads, I wont trade with a broker based outside of my country.

Good luck man.

3

Hello, pipsaregood

Welcome to this forum.

The broker you mentioned is giving you [I]their interpretation[/I] of current CFTC rules, and [I]their interpretation[/I] of how these rules apply to them. Some other brokers see things differently.

The main issue here is whether the CFTC has jurisdiction over offshore (foreign) brokers who have no business presence in the U.S. — that is, whether offshore brokers (who are [I]completely[/I] offshore) need to concern themselves with what the CFTC thinks or does. There are differing opinions on this question.

The broker you mentioned is not blowing smoke. They have simply made a business decision that, until the reach of the CFTC has been tested in court, they don’t want to risk being sued, fined, or sanctioned. Forget about them.

Look elsewhere for a solid, well-regulated broker who meets your personal selection criteria — one who is not intimidated by the CFTC’s bully tactics.

For about a year, a number of us on this forum have been studying and debating these issues, and we have compiled a List of offshore brokers who continue to do business with American residents. You should spend some time reading our thread — 301 Moved Permanently

Currently, the List can be found at Post #1010, #1011, and #1012 on that thread. But, from time to time, as new posts are added to the thread and the List sinks out of sight, I move it back to the end of the thread — so, those post numbers are subject to change.

The List is fluid. Over the past several months, we have had to change the status of several of the offshore brokers on our List, as their policies toward American customers have changed.

Regarding Eligible Contract Participants (ECP’s), this is a designation which the CFTC has applied to the [I]commodity futures business[/I] for many years (since 2000, if I’m not mistaken). That designation has recently (within the past year) been amended, so that it now applies to the [I]forex business,[/I] as well. Here is a reference —

Eligible Contract Participant (ECP) Definition — Hedge Fund Law Blog

For more on Eligible Contract Participants, google [I]CFTC eligible contract participants.[/I]

4

Hi Clint,

Thank you for your very well put together and informative reply. I’m not too sure that DCM Forex is closing the door on all USA based traders and perhaps they could be using the Elagible Contract Participant thingy to scare away possible traders that are looking for extra and sensitive information. Let me explain:

I already know of an individual that has opened an account with DCM Forex and as far as I know this person doesn’t meet the criteria of an Eligible Contract Participant. Furthermore, as I was investigating DCM Forex I asked them about the IP address of their transaction servers (they are located in New York city)

I also let them know the reason I was asking these questions was that if I should open an account with them, I wanted to rent a VPS as near to their transaction servers as what I could.

Anyhow, they never offered me their servers IP address and I’ve always felt DCM Forex uses the Eligible Contract Participant to shine on possible clients they don’t wish to deal with.

In conclusion: I don’t feel that I was asking DCM Forex any questions that any other prudent trader wouldn’t ask his broker. I mean, if I’m going to allow a broker to hold my hard earned money I want to know as much about that particular broker’s operations as I can. DCM not furnishing me with their server IP address and then presenting me with the Eligible Contract Participant thingy - when they are not even located in the USA - not only speaks of their lacking professionalism, but aludes to their integrity and honesty as well.

pipsaregood

5

Hello pipsaregood

I’m not sure what info you are posting but I can assure you that DCM takes regulation seriously. It is not by choice that we must reject US resident trading clients; just a matter of fact in accordance with CFTC/ASIC collaboration. There are a number of australian brokers that have recently been subject to proceedings being brought against them (vantagefx for example) for accepting US resident clients. The CFTC has co-operation agreements with many regulatory bodies around the western world (yes with ASIC in Australia too). We value the continuity of our business and unfortunately legal requirements dictate that as an Australian regulated broker we must not accept US resident retail clients that do not meet certain eligibility criteria. In other words, we can deal with large investment funds but not an individual unless they meet eligibility requirements.

In regards to your comment about not disclosing our IP address, I find this difficult to accept as DCM is a transparent, conflict free broker. Our mission is to provide an institutional level trade execution service to all valued retail DCM clients globally.

DCM trade server is located in NY- here it is: 206.155.75.147

6

Dear Traders,

If you have any further questions about Direct Currency Markets company, please feel free to ask. I will be more than happy to help you.

Best regards,
Yana.

Direct Corrency Markets representative.