Proposed NFA Capital Requirement - page 8
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Thanks, as always, really instructive. And in your personal opinion FXDD it's a better choice? I mean, they can make the same things because they use MT server.
All MT4 brokers have the same capabilities. I distrust them all, but tried to find better brokers so I could use MQL4. My claim so far about FXDD is that I see less strange spikes. I compared the downloaded FXDD web site data vs their chart data and found that the chart sometimes delayed large movements. I have reason to believe the FXDD site downloaded data comes from their feed, while the chart data is delivered to their customers. It was very refreshing to compare feed vs chart and see very very few anomalies. You can't use Demo data for this at any broker, because the Dealing Desk probably won't spike the Demo data. Real data is required.
What I'm working on so hard is trying to get a free automated trading system up to connect to ECN. ECN can't send strange spikes because they have no single data stream. Every price comes from another trader. Looking at the level 2 data reveals much about the market. Trading on a bank still goes through a dealing desk, ECN are the only place I really feel that my trades won't be manipulated. https://www.mql5.com/en/forum/general
It might be possible to trade with banks directly and exclusively without a dealing desk, but that would involve becoming a ring member instead of a bank customer. To join an ECN or be a ring member is the same code: we need to implement FIX. Right now I can send command line messages but I'm still working on implementing the programmatic API. Volunteers welcome.
Do you think that we are more safe to invest with any regulated FCMs even some of them are shut down by NFA because none clients lose any money? However, unregulated firms will be more danger.
That's a good question. I would say first of all it is NEVER safe to invest in an unregulated company. You are not protected AT ALL. If someone put a gun to my head and said pick a firm, either a dead forex firm walking or an unregulated firm I would pick a dead forex firm walking. Because at least you can appeal to a regulator for help when it all hits the fan. But an unregulated firm is truly a game of Russian roulette. Fortunately, you don't have to make that choice. There are some MT4 brokers out there who are decently capitalized, InterbankFX and FXLQ for example. In either case if your heart is set on a dead forex firm walking I recommend at least waiting until the firm makes it clear they'll be able to meet the new capital requirement. For now it is just too much of a risk.
Big firms always have higher spreads and smaller firms. Maybe that it's why they are bigger. More competitions will just benefit traders like us. I will like to support smaller firms as long as they are regulated. If NFA does shut down a smaller firm, we should be able to get our money back.
Where We Stand Today
As of August 2, 2007, this is where we stand in regards to the NFA proposal to raise capital requirements to $5 million:
FX Week states, "Following redrafting to include industry feedback, the proposals will be presented to the NFA board in August and then to the CFTC, and are not expected to be effective until the end of the year, the NFA explained."
http://www.fxweek.com/public/showPa...gin2&url=%2Fpublic%2FshowPage.html%3Fpage%3D459830
So if the proposal passes all the firms in the forex dealer dead pool, which from all appearances are currently meeting their capital requirement, will have several months to meet the new one. The big question is should this pass which will meet it and which ones won't? And for those that cannot meet the new requirement what will happen to the firms, and more importantly the customers of these firms? You could have a situation where one of the proprietors of these firms runs off with customer funds in the last hours. You could also see a situation where the NFA goes in to close a firm only to discover they have no money left and the firm then gets forced into bankruptcy.
Now, the likelihood of this happening to firms with $3 or $4 million in capital is a lot less than with firms with only $1.5 million in capital. But the whole point of this thread is to point these dangers out to the trading public and then let them draw their own conclusions.
As of August 2, 2007, this is where we stand in regards to the NFA proposal to raise capital requirements to $5 million:
FX Week states, "Following redrafting to include industry feedback, the proposals will be presented to the NFA board in August and then to the CFTC, and are not expected to be effective until the end of the year, the NFA explained."
http://www.fxweek.com/public/showPa...gin2&url=%2Fpublic%2FshowPage.html%3Fpage%3D459830
So if the proposal passes all the firms in the forex dealer dead pool, which from all appearances are currently meeting their capital requirement, will have several months to meet the new one. The big question is should this pass which will meet it and which ones won't? And for those that cannot meet the new requirement what will happen to the firms, and more importantly the customers of these firms? You could have a situation where one of the proprietors of these firms runs off with customer funds in the last hours. You could also see a situation where the NFA goes in to close a firm only to discover they have no money left and the firm then gets forced into bankruptcy.
Now, the likelihood of this happening to firms with $3 or $4 million in capital is a lot less than with firms with only $1.5 million in capital. But the whole point of this thread is to point these dangers out to the trading public and then let them draw their own conclusions.I think NFA should do whatever it takes to pretect Forex traders instead of hurting them.
Breaking News: Two More Dead Pool Dealers Go Down
Breaking News:
Both the National Futures Association and the CFTC have apparently de-listed Performance Capital International Inc. The NFA says on its website their membership was withdrawn on July 26, 2007. The most recent CFTC report also shows Performance as a member of its "deletions" category right next to FX Option1 Inc and the Cal Financial Corporation.
http://www.cftc.gov/files/tm/fcm/tmfcmdata0706.pdf
It could be that Performance was rolled into the Solid Gold Group as it says it is a member of the "SolidGold Group" on the front page of its website which is still functioning. In any case that is one less firm to report on.
Welcome to PFEC - Online Forex FX Currency Trading - Performance Forex - www.eforex-asia.com
Another firm that no longer has a functioning website is FiniFX: FINI FX - Forex International Investments, Inc.
The website says they are "under construction" and the word on the street is that they are no longer accepting new customers. However, they are still a member in good standing with the NFA according to the NFA's website so I won't pronounce them dead quite yet. But it looks like they have one foot in the grave.
Coming up Next Week:
1) New CFTC Capital Numbers - Some of the numbers will surprise you
2) A Three part Series on the Demise of the Concorde Forex Group
3) The Sordid Saga of Crooklyn native Udo Rotmistrenko
Enjoy the Weekend!
I assume the capitalization figures posted by the NFA for its members is supposed to represent funds owned by and held by the brokers for the purpose of doing business, which includes maintaining liquidity. I assume this amount is totally unrelated to customer-owned funds used as margin requirements for trading.
Are these assumptions correct?
What I don't understand is why the NFA REQUIRES brokers to make it plain that customers funds are NOT protected by being kept in a separate account, totally untouched by the brokerage or its business partners. It seems to me that the only positive or negative effect upon my funds should be my own trading decisions and that otherwise, account funds not currently required to maintain margin are safely in the bank. Why couldn't a brokerage be run this way and why wouldn't this benefit the trading customer?
It's a theoritical statements, news is news and it depends on the people how they react toward the news. He..he..he....
Nic