Awful isn’t it ? I found this little comprehensive chart of broker changes over at forex factory. Someone there has been compiling the info from forexmagnets.com, I think. Hopefully you can see it. Edit to add: the chart looks a little blurry to me and doesn’t enlarge well. If anyone (Clint?) can save it as a png to their desktop, tweak it, and reload so that it’s sharper, please do so. This is the best I know how to do.
Hello Babypippers,
The actions of the Swiss National Bank last week had a major impact on the entire financial industry and judging by the posts in this thread many of you have concerns about the long term viability of FX Choice. We can understand your concern and want to assure you that we have experienced minimal issues during this unprecedented event . We are strong and can continue giving our customers the exceptional service that has come to be expected of us. There is no cause for concern.
As always, you are free to chat with a our support representative regarding any questions you may have.
Regards,
Alex
[B]FX Choice (Belize)[/B]
no mention of the SNB crisis on their website as of 1/17/15
under [I]Company News[/I], they have posted this on Friday 1/16:
Bitcoin denominated accounts
Announcement from 16/01/2015
Dear Clients,
We are extremely excited to let you know that you are now able to open Bitcoin denominated accounts with us. Bitcoin is a new currency that was first introduced in 2009. Bitcoin transfers are made with no middle men which means, no banks are involved! In addition to that, international payments are easy and convenient because Bitcoins are not tied to any specific country or subject to regulation.
Please contact our support for more information — Bitcoin is their big news for Friday?
I can take care of that for you.
Here is the [I]Forex Magnates[/I] article that table came from —
How Is the Forex Leverage Landscape Changing? Full List of Brokers Forced to Hike Margin
I have a proposal- why not let US residents sign a waiver and allow us to trade retail-level ForEx with foreign brokerages since the trend here seems to be to regulate this to the point where the client is being exposed to new risks, such as FIFO restrictions that prevent closing open orders of the same currency pair out of First-In / First-Out sequence, or the prohibition of offsetting (or ‘hedging’ as it is commonly referred to by some ForEx clients) which I’ve been able to manage my account successfully with in a multitude of ways including preserving margin and stabilizing my account until volatility recedes…
Now leverage is being blamed yet the overwhelming majority of foreign brokers, including ones that use above 1:50, have survived due to segregated accounts, sensible reserves, stop-out levels and intelligent protections. Yes they are increasing their margin requirements temporarily as the SNB dust settles and NFA will now require under section 12 until further notice, but we’ll see how this plays out and if any entity engaged in damaging behavior, it is the Swiss National Bank itself- why not impose restrictions on this behavior instead?..
Higher leverage may be available to the retail-level client at the low end where it is needed the most but I remember that this ratio would typically scale down as the account balance reached higher thresholds. Increasing the margin requirement as some are proposing again would also require putting more, not less, capital at risk for the same return- is this protecting the client?
The US restrictions including those mentioned above imposed since the Dodd-Frank act have been causing one brokerage after another as well as foreign clients unwilling to trade under them to leave the US market, and seem unlikely to return here until this changes. My accounts here were blown out now like they would be anywhere else, so I don’t buy any argument that the price for accepting these restrictions is somehow a worthwhile price to pay. It is my money, and I don’t think I should have to move outside the US to trade in a way that I have proven to my family and myself to succeed at.
Thanks for that update, Alex. Are you able to give us any numbers?
Specifically, I’d be interested to know how many of your customers suffered negative account balances as a result of the volatility and lack of liquidity in the market on Black Thursday. Also, did FX Choice lose money or make money in that event? Finally, are you contemplating any changes in the leverage or spreads that you offer?
I’m glad to hear that you are still with FX Choice two-and-a-half years after your first visit here.
But, I have to ask: Why haven’t you joined the [I]Broker Aid Station[/I] forum?
That forum can give your firm a lot of exposure to a worldwide audience of retail forex traders (including a lot of American traders) — provided you’re dedicated to keeping your firm’s presence there active, and up-to-date. Just something to think about.
And the hits just keep on coming…
I will be closing my Oanda account on Monday. US brokers just aren’t worth it anymore. I’ll be lucky to make back my losses with a foreign broker before they are forced to stop accepting US clients.
[B]Immediate attention required – Additional increases in required minimum security deposit for forex transactions.[/B]
On Jan. 21, 2015, NFA’s Executive Committee exercised its authority under NFA Financial Requirements Section 12 and increased, until further notice, the minimum security deposits required to be collected and maintained by FDMs (Forex Dealer Members) under Section 12 for transactions involving the Swiss franc (5%), Swedish krona (3%) and Norwegian krone (3%). At the time of those increases, NFA alerted FDMs that NFA was continuing to monitor market conditions and that the Executive Committee could decide to make additional increases to these or other currencies if market conditions warranted. Given the continued volatility in the foreign currency markets, the Executive Committee has determined to increase the minimum security deposits required to be collected and maintained by FDMs under Section 12 as follows:
Currency
Previous Margin Requirement
New Margin Requirement
Japanese Yen (JPY)
2%
3%
Australian Dollar (AUD)
2%
3%
Mexican Peso (MXN)
5%
6%
These increases become effective at [B]5 PM EST on Monday, January 26, 2015[/B] and will remain in effect until further notice.
In addition, the period for which an account may be continuously undermargined [B]has been reduced from 7 days to 2 days[/B]. If an account is undermargined for 2 consecutive trading days (checked daily at 4 p.m. (EST/EDT), a margin closeout will occur and all open positions in the account will be automatically closed at the current fxTrade rates.
Please note that a margin closeout will also occur in the event the Margin Closeout Value of your account declines to 50% of the Margin Used. This will occur immediately and without prior notice. For your convenience Margin Closeout Value and Margin Used are displayed in the Account Summary table on the fxTrade interface.
OANDA’s Margin Rules and information on how to avoid margin closeouts are available on our website: http://fxtrade.oanda.com/help/policies/margin-rules
As a reminder, at [B]7:00 PM EST, January 30, 2015[/B], due to regulatory requirements determined by the National Futures Association (NFA), OANDA will no longer be permitting [B]credit card[/B] or [B]PayPal[/B] deposits to fund your FxTrade account. You may continue to fund your account via Credit Card or PayPal up until that time.
We will continue to accept account funding via wire transfer, check, and debit backed by Visa or MasterCard.
Please do not hesitate to contact us if you would like more information.
http://fxtrade.oanda.com/help/customer-service/
Kind Regards,
The OANDA Client Experience Team
Because THAT my friend would be LOGICAL…and everyone knows the US gvt doesn’t act on logic.
I feel bad for US traders come Monday with the new margin rules…
As for the SNB, they didn’t care one iota what the Fed, CFTC or NFA thought. They could have signaled the end of the peg to the market and [I]chose[/I] not to. I’m interested to know the [U]real[/U] reason(s) for their actions, but we may never discover the truth. It could have been as simple as last minute panic prior to the ECB announcement or perhaps something more complex that had unintended consequences? (gov’t bureaucracies are really good at that).
For all of us here, [B]what really matters[/B], is that the SNB’s poor execution has unleashed unwanted, impulsive and hasty regulation from another bureaucracy, which has renewed its campaign to [B]accelerate the extinction of the US retail FX trader[/B]. Why else does the NFA enforce these regulations?! The big guys don’t have to play by these idiotic rules.
If I had to trade under their rules and margin, trading FX would not pay my bills. Not only am I able to hedge drawdowns, but I can take off portions of large positions I have scaled into, right near the pullbacks and dips (when I get it right), bank some profit for the day, and let the more mature positions ride (LIFO). After all of that, I can look for setups to add more, possibly hedge, or just get out (you get the idea). [B]Outside of the US, I have the capability and flexibility to [I]manage[/I] my trades for maximum profit potential.[/B] Sure, I get stopped out because I am too early, or just plain wrong, but when I can build a good position with multiple trades at the [U]time and price of my choosing[/U], and get it right, well, you know what happens 
[B]None of us can expect to live reasonably well trading .1 lots on the short term[/B], but that’s all many of us will have theopportunity for, and means to risk,going forward. My most profitable trade in 2014 was on USDMXN. I would have never been watching that pair at 5% margin. This Monday, it goes to 6%. AUD and JPY increase to 3%! US traders have to now put up [I]and risk[/I] over $3k for $8.50/pip on a 1 lot USDJPY trade?! USDMXN will be $6,000! On the other hand, I will only risk $500 for the same trade. When I get it right,[I]I[/I] will have the opportunity to scale up- The US trader will have only a fraction of the same potential.
Here’s Oanda putting lipstick on this pig-
“Some companies outside the U.S.A. may offer 100:1 leverage, or even 200:1, but OANDA believes these levels are far too risky and could cause clients to lose all their funds very quickly. Serious professionals seldom trade at those levels of risk.”
Are you buying any of the Oanda statement? [U]Seldom[/U] is the key word. I seldom go 200:1, but when I do, the strength of the position warrants the risk, and I can make a ton of money to pay for my losers AND go buy groceries. [I]I have the opportunity![/I] [B]The risk isn’t in the leverage, it’s in the trade size.[/B] Why are there so many people that believe leverage is “far too risky”? [B]Leverage isn’t the problem- People who don’t trade proper size are.[/B] [B]Leverage is a tool that provides opportunity with [I]less[/I] risk.[/B] Forking money over to any broker is a risk! The NFA wants us to give more money to the brokers? To protect us from risk? Like PFG or MF?
Risk is the name of the game. It’s[I] our business[/I], literally.
BTW, I’m risking my involuntary FinFx account transfer to Tallinex. If they turn out to be a good broker, I’ll let you all know.
–END OF RANT
[I]‘For all of us here, [B]what really matters[/B], is that the SNB’s poor execution has unleashed unwanted, impulsive and hasty regulation from another bureaucracy, which has renewed its campaign to [B]accelerate the extinction of the US retail FX trader[/B]. Why else does the NFA enforce these regulations?! The big guys don’t have to play by these idiotic rules.’[/I]
Well said, aaceofspades- yes, somehow I don’t see George S oros running retail-level accounts through US brokers, but there could also be some OWS mentality willing to inflict collateral damage to the little guy for the sake of the cause…on the SNB story, the venom unleashed in comments sections of various news stories towards the trading community was quite revealing, such as ‘Aww, poor babies!’ and the like- some of those ‘poor babies’ though include retirees, disabled people including veterans, caregivers for an elderly parent such as myself who cannot afford in-home care, or simply those who wish to earn income using an ability they have, as anyone else would wish to.
I’ll give up the NFA and CFTC being responsible for ‘protecting’ me, in exchange for trading with a foreign broker- just let me sign the waiver, and I’ll do it.
The only “good” news thus far is that you do NOT have to sign a waiver to set up an account with a foreign broker. All you have to do is go find the foreign broker of your choice, that still accepts US clients, and set up your account.
I am one of those “poor babies” that you mentioned, although I wasn’t caught up in the swissy mess that happened recently. Whew ! I have health issues that don’t allow me the ability to work for an employer in a typical 40 hour / week job, or even a part-time <40 hour / week job. I had advanced warning for the potential of this happening with my health a few years ago and began learning to trade with technical analysis via a couple of paid mentors, in anticipation that I may be working for myself someday.
Just this month, I see from my account growth that I am reaching the end of the most difficult part of my learning curve where all I did was consistently lose money. And then the SNB-gate happens. My first thought was to be glad I wasn’t caught in it… my second thought was to feel genuine empathy for the retail traders who were caught in it (even though many of them had not learned and employed proper position sizing and money management strategies), and my third thought was, the NFA / CFTC is going to plunder the retail FX market with new regulations… which could potentially kick me out of the game without ever having the chance to recover my learning curve losses and go on to become consistently profitable.
At this momentum of newly enacted regulations I think we might see some laws pass that make it illegal for US investors to use foreign FX brokers. It’s the beginning of the end. For anyone whos more than a hobby trader (I can’t say I’m passed that yet, I work full time) it might be time to give serious thought to expatriation. Otherwise start getting good with options. Options on commodities and stocks can offer similar leverage.
I “think” you’re right… but, I “hope” that you’re wrong. 
I am also a US citizen at FinFX and have some questions for Paul at Tallinex: MY concern is about your segregated accounts --how they are segregated and with what protection. I know another broker that advertised segregated accounts with Wells Fargo afew years ago, but they still controlled the accounts and simply transferred the funds back to their regular business account. Are the funds in separate accounts under the names of each individual or are they lumped together in one “segregated” account that the broker controls? If they are individual accounts under our names do we get anything showing that we control the accounts so Tallinex cannot transfer the funds out to their business accounts? What about this bank in Latvia? What happens to our funds if the bank goes south?
Hey, Dewey - I believe that this was answered already by our support team, but to reiterate, you can’t stop an unscrupulous company from doing something unscrupulous.
Tallinex operates segregation accounts in the exact same way as every other broker - including your current one.
In the same vein, the situation with our bank is no different to the situation with any other broker’s bank - including that of your current broker.
My following comment isn’t specifically for Tallinex, but it is meant for everyone here: What is the purpose of having a segregated account if it essentially means nothing? If a broker can easily transferred the funds from a segregated account back to their regular business account, then what is the point of having a segregated account in the first place??
I just don’t understand the purpose of a “segregated” account if the broker can easily access those funds whenever they want - including when they (the broker) are having serious financial issues, such as with a bankruptcy or whatever. If it is true the brokers can access the segregated accounts at any time, then essentially there is no such thing as a “segregated” account? Am I correct? Or am I just not understanding the entire “segregated” concept?
This conversation is complicated by two issues:
• First, different countries, with different laws, are being compared to one another, and
• Second, there is great confusion about the difference between “separate customer accounts”, and legally “segregated customer accounts”.
• On the first point, the broker referred to by [I]deweymcg,[/I] which “advertised segregated accounts with Wells Fargo” obviously was a U.S. broker. And the situtation with U.S. brokers vis-a-vis U.S. bankruptcy law and the legal definition of “segregated account” is dicey, to say the least, as the later portion of this post will illustrate.
Similarly, the broker referred to by [I]pipfreak,[/I] where he wrote “I just don’t understand the purpose of a “segregated” account if the broker can easily access those funds whenever they want…” is an apparent reference to FXCM here in the U.S.
As we will see in a moment, [B]there are no segregated forex customer accounts in the U.S.,[/B] regardless of what your U.S. broker tells you, and regardless of whether your broker deals, not only in forex, but also in futures (which [B]do[/B] provide segregated accounts).
Is it any wonder we hate the regime under which U.S. brokers struggle?
Is it any wonder we look for better trading conditions offshore?
• On the second point above, brokers can divide customer funds into separate accounts in banks all over the world — and this provides [B]no protection[/B] to their customers, [B]unless[/B] the laws of the countries involved keep those customer funds out of the hands of the brokers, and/or the brokers’ creditors in the case of bankruptcy proceedings.
The following quotes will explain this further. I have highlighted certain portions in red, for emphasis.
So, where does that leave us? It leaves us with a very big “due diligence” requirement, when we look offshore for a new broker. Where is that broker domiciled? What are the laws in that locale regarding truly, [B]legally[/B] segregated customer funds?
We know about the customer protections written into law in the U.K. and Canada. But, we are locked out of those markets. (And we probably wouldn’t want to trade in Canada, anyway. Canada may do a good job of protecting customer funds — but, in every other aspect, Canada is outpacing the U.S. as the world’s biggest nanny-state.)
So, what about Tallinex in St. Vincent and the Grenadines? We need to ask, not only Tallinex, but also their regulator. Oh, wait, they’re not regulated. See how tough due diligence can be?
.
[B]AnnexFX (Estonia)[/B] now states clearly on their website that they are owned and operated by AssetsFx (Finland). They also state clearly on their FAQ page that [U]they do not accept U.S. clients[/U]. I will add AnnexFX to Group 2.
[B]AssetsFX (Finland),[/B] the parent of AnnexFX (Estonia), has been in Group 1 of our List for some time. According to their website (as of today), [U]they continue to accept U.S. clients[/U]. (The list of countries which they exclude can be seen HERE).
Edit:
Also note that the maximum leverage offered by AssetsFX has been corrected to read 200:1.
Hello Clint,
As far as the number of negatively affected accounts is concerned, well, luckily it is not such a big figure, in total there were 50 accounts. Nonetheless, we had to cover clients’ losses in amount of USD 44k. This is a relatively small figure.
In answer to your question on whether or not we were able to make any profits on that day, we can openly say that although our trading volume was through the roof, our commissions didn’t offset our clients’ losses which we were forced to cover.
You also wanted to know if we were going to possibly change our trading conditions. The events of the ,Black Thursday“ exposed the weaknesses of the existing safeguard mechanisms and practical inability of brokers to do anything about this situations, which leads us to believe that we can expect some drastic changes in the entire industry. Meanwhile we can observe isolated instances where LPs increase initial margin and widen spreads.
We are not going to change our conditions for as long as our LPs don’t change theirs…
Many of you could observe the absence of liquidity for almost 20 minutes, which translated into inability to close or otherwise modify open positions. The market has been in the state of confusion ever since SNB published their decision and it is too early to make any forecasts as to what other changes we can expect.
The fact that technologies initially developed for institutional clients have been used on a retail market without being adapted and leverage increase have all contributed to the situation we have on our hands right now. Many brokers say that they were able to overcome this disaster thanks to their sophisticated risk management tools and internal control systems but we say it was pure unadulterated luck. The simple truth is that ECN brokers simply don’t have any kind of protection from that kind of risk and from being literally forced to cover their clients’ losses.
Many large brokers were affected because they had massive CHF exposure and no matter how big your liquidity reserves are, they won’t be enough when the value of a currency changes by 30% within a relatively short period of time. Let’s be honest, clients won’t be able and won’t be willing to cover their losses, which would eventually hurt brokers a lot. This is exactly what happened to Alpari UK.
This is precisely the reason why highly unpopular leverage decreases have their merits and ultimately have one particular goal, that is being stability, especially when a broker lacks other tools to cover the losses.
Regards,
Alex
Thanks for your detailed reply to my questions, Alex.
You’ve been more open and forthcoming than most of the brokers out there, regarding the SNB crisis and its direct impact on the industry, in general, and on your firm, in particular. And we applaud you for clearly telling us your position.
I’ve made some small changes to the data we show for FX Choice in our Offshore Broker List, to make our listing match your website. You can check the way we have FX Choice listed on THIS PAGE.
I hope FX Choice will continue to welcome U.S. clients. The FAQ page on your website uses [I]very[/I] cautious wording regarding U.S. clients.
And I hope you will stay in touch with us here on the Babypips site.
Thanks again for your post.
You offshore, unregulated forex brokers, which are now the hope of many to most forex traders, I have the solution to your worries about any future “Black Thursday.” Simply tell prospective and existing trading customers that in the event of another cataclysmic central bank or other announcement, if their open position within seconds increases in value by let’s say 400 pips or more, or decreases in value 400 or more pips with the EUR/USD for example, then 400 pips profits will be the [B][I]MAXIMUM[/I][/B] profits the trader will receive. For losing trades, the maximum loss will only be the total value of the account. Always warn your traders to set protective stops on all trades.
I know that this harsh advice will probably be ignored, but if implemented it should go a long, long way towards protecting both traders and brokers and preventing unnecessary lowering of currency pair leverages. Most traders would be thrilled to have their open positions increased with a profit of 400 pips if another super, super rare “Black Thursday” ever happens again (to be paid from the broker’s profits and from the accounts of the losing traders), and losing traders should be content to not have to reimburse the broker with money that is not already in their account. Losing traders should remember that they have been warned repeatedly to trade only with money that they can afford to lose. Losing traders also should have already withdrawn some of their previous profits and put them in something safer like dividend yielding stocks or apartment buildings or just cash so that they can start over again in the world of forex if necessary.
Brokers, think about it.