Proposed NFA Capital Requirement - page 17
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The President of the National Futures Association, Dan Roth, dropped a 50 megaton bomb on the forex industry yesterday. In testimony before the Congress the NFA CEO requested that the Government increase capital requirements to TWENTY MILLION DOLLARS.
Here is what he is said in his testimony:
National Futures Association | News Center
Wow. If you thought it would be hard for poorly capitalized firms to raise a couple million dollars just wait until they have to raise $20 million. There is simply no way most of these little firms are going to be able to do that. In fact, medium sized firms are going to be hard pressed to do that.
It is starting to become crystal clear that the only firms that are going to survive the coming NFA purge are the biggest, most well capitalized firms in the business. That is why Oanda went out and got $100 million in funding and Interbank got $30 million. The serious industry players know what's going on. So should the trading public. If ever there were a time to beware investing in poorly capitalized firms now is the time.
After all, if the NFA has no confidence in the stability of "thinly capitalized" firms why should the trading public?Sounds like Don representing bigger firms very well. However, custoemrs like to have more choices. Do you remember how much you paid a call when there was only one huge telephone company, AT&T? Do you know why our phone bills are so little compared to the old time? We may pay higher spread with poorer services when we have no more choices with Forex.
It's Official NFA Increase Cap Requirement to $5 Million
Only days after the President of the NFA told the Congress he wanted them to raise the minimum capital requirement to $20 million the CFTC signed off on the NFA's current capital requirement increase to $5 million. And they are not waiting around till 2008. Firms need to have the money in the bank by DECEMBER. That's right around the corner.
With the forex industry rapidly changing before our very eyes I wanted to put together a much more comprehensive list of the industry's financial status. Therefore, I have included every single registered Forex Dealer member and listed their Adjusted Net Capital. Since I first started posting about the NFA proposal over a dozen firms have gone out of business. Two others have merged and several others are staring death in the face. It is astonishing that firms like Hamilton Williams (Velocity FX) can operate only $4,000 above the minimum needed to stay in business. How on earth can such a firm survive a few months from now when they're practically pushing up the daisies already? Here is the direct link for the CFTC capital reports: Financial Data for FCMs
Firms Under $5 Million
All these firms are reporting adjusted net capital below the $5 million mark as of the latest CFTC report. Some should be able to raise the necessary capital. Others clearly will not. Which ones can and can't will be anybody's guess. Already one of these firms, One World Capital, is not allowing customers to withdraw money.
Hamilton Williams ($1,004,000)
IG Financial Markets ($1,010,000)
Advanced Markets ($1,042,000)
One World Capital ($1,078,000)
Direct Forex ($1,117,000)
SNC Investments ($1,130,000)
Wall Street Derivatives ($1,220,000)
I Trade FX LLC ($1,801,000)
Solid Gold Financial ($1,955,000)
CMC Markets ($2,330,000)
MB Trading ($2,393,000)
GFS Futures & Forex ($3,259,000)
E FX Options ($3,342,000)
Forex Club ($3,715,000)
Easy Forex ($4,731,000)
Firms Under $20 Million
These firms all meet the coming minimum adjusted net capital requirement. However, there are other capital requirements that as market makers these firms (HotSpot excepted in some cases) will need to meet in addition to the minimum $5 million. Most firms will likely need $10 million to be in compliance with the NFA's rules. Clearly firms like Money Garden are not in the clear just yet.
Money Garden ($5,162,000)
HotSpot FX ($5,990,000)
IKon ($7,130,000)
ODL Securities ($10,822,000)
CMS Forex ($11,849,000)
IFX Markets ($12,293,000)
PFG Forex ($12,781,000)
FX Solutions ($15,077,000)
Firms Over $20 Million
These are the most well capitalized firms in the industry and two years from now may very well be the only firms left in the industry if Dan Roth and the NFA have their way and increase cap requirements to $20 million.
Interbank FX ($25,178,000)
Gain Capital (29,061,000)
Forex Liquidity ($39,909,000)
FXCM ($50,465,000)
Oanda ($50,837,000)
GFT Forex ($54,662,000)
Firms No Longer in Business
These are the firms that have gone out of business since I began posting on the forum. That's a quarter of the industry in just a few months. And one of those firms, Nations LLC, has gone into bankruptcy and customers can't get their money back, and may never get their money back.
Bacera Corporation
Cal Financial Corporation
FiniFX
Forward Forex
FX Option1 Inc.
Nations Investments
Performance Capital International
Spencer Financial
Tradex Swiss AG
Trend Commodities
United Global Markets
Worldwide Clearing
Firms that Merged
These are the firms that could not make the new capital requirement on their own and decided to merge with larger players as a result.
American National Trading Corp (Merged with PFG)
Royal Forex Trading (Merging with IKON)
Summary
It is a very turbulenet time in the forex industry. My advice is what it has always been, do not trade with a poorly capitalized firm. And if you must, at least wait until after the December 17, 2007, deadline before putting any money on deposit with any firm that is not meeting the current minimum capital requirement.
ForexSavior,
Your claim about One World not allowing customers to withdraw money is bull****. I just withdrew my September profits last Monday and it was wired to my bank account. The One World people told me that they are ready to raise and adjust to NFA requirement of 5 Million before the deadline this December.
ForexSavior, Your claim about One World not allowing customers to withdraw money is bull****. I just withdrew my September profits last Monday and it was wired to my bank account. The One World people told me that they are ready to raise and adjust to NFA requirement of 5 Million before the deadline this December.
I've been flooded with Private messages from people who couldn't get their money out. It's all over the bulletin boards. have a look for yourself:
GoldenMoneyTree.com :: View topic - 1world-forex.com
Dirty 1World at its work
Well, I am glad it's not happening to me. I have been with One World since last January of 2006. I never had any problems with them. I withdrew my profits every month for 9 months in a row. I am sorry that it happened to other people. If there is an actual customer who has experienced withdrawal denial, please post here and I will bring it to One World's attention and find out why it did happen but not me. Thanks!
Linuxtroll the issue here is capitalization. A lot of these big firms have been slapped by the NFA for marketing problems. That doesn't concern me. What concerns me is the question of whether or not a firm has the financial resources to meet the coming capital requirement. Oanda and FXCM cleary do. These firms as of right now do not:
Firms Under $5 Million
All these firms are reporting adjusted net capital below the $5 million mark as of the latest CFTC report. Some should be able to raise the necessary capital. Others clearly will not. Which ones can and can't will be anybody's guess. Already one of these firms, One World Capital, is not allowing customers to withdraw money.
Hamilton Williams ($1,004,000)
IG Financial Markets ($1,010,000)
Advanced Markets ($1,042,000)
One World Capital ($1,078,000)
Direct Forex ($1,117,000)
SNC Investments ($1,130,000)
Wall Street Derivatives ($1,220,000)
I Trade FX LLC ($1,801,000)
Solid Gold Financial ($1,955,000)
CMC Markets ($2,330,000)
MB Trading ($2,393,000)
GFS Futures & Forex ($3,259,000)
E FX Options ($3,342,000)
Forex Club ($3,715,000)
Easy Forex ($4,731,000)
New CFTC Cap Numbers Are In
The new capital numbers are out. Here is the most comprehensive list available of the industry's financial status. I have included every single registered Forex Dealer Member and listed their Adjusted Net Capital. Since I first started posting about the NFA proposal over a dozen firms have gone out of business. Two others have merged and several others are staring death in the face. Here is the direct link for the CFTC capital reports: Financial Data for FCMs
Firms Under $5 Million
All these smaller firms are reporting adjusted net capital below the $5 million mark as of the latest CFTC report. Some should be able to raise the necessary capital. Others clearly will not. Which ones can and cannot will be anybody's guess. Already one of these firms, One World Capital, is not allowing customers to withdraw money.
Hamilton Williams ($1,100,000)
IG Financial Markets ($1,014,000)
One World Capital ($1,170,000)
Wall Street Derivatives ($1,237,000)
SNC Investments ($1,247,000)
Advanced Markets ($1,269,000)
Direct Forex ($1,406,000)
Solid Gold Financial ($2,010,000)
CMC Markets ($2,806,000)
E FX Options ($3,055,000)
Forex Club ($3,308,000)
GFS Futures & Forex ($3,403,000)
MB Trading ($4,452,000)
Easy Forex ($4,628,000)
Firms Under $20 Million
These medium sized firms all meet the coming minimum adjusted net capital requirement. However, there are other capital requirements that as market makers these firms will need to meet in addition to the minimum $5 million. Most firms will likely need $10 million to be in compliance with the NFA's rules. Clearly firms like Money Garden are not in the clear just yet.
Money Garden ($5,505,000)
HotSpot FX ($6,023,000)
I Trade FX LLC ($6,645,000)
IKon ($6,736,000)
IFX Markets ($9,078,000)
CMS Forex ($11,255,000)
ODL Securities ($12,642,000)
PFG Forex ($14,742,000)
Firms Over $20 Million
These are the most well capitalized firms in the industry and two years from now may very well be the only firms left in the industry if Dan Roth and the NFA have their way and increase cap requirements to $20 million.
FX Solutions ($23,062,000)
Interbank FX ($27,110,000)
Gain Capital (36,679,000)
Forex Liquidity ($38,317,000)
GFT Forex ($48,302,000)
FXCM ($60,268,000)
Oanda ($156,467,000)
Firms No Longer in Business
These are the firms that have gone out of business since I began posting on the forum. That's a quarter of the industry in just a few months. And one of those firms, Nations LLC, has gone into bankruptcy and customers can't get their money back- and may never get their money back.
Bacera Corporation
Cal Financial Corporation
FiniFX
Forward Forex
FX Option1 Inc.
Nations Investments
Performance Capital International
Spencer Financial
Tradex Swiss AG
Trend Commodities
United Global Markets
Worldwide Clearing
Firms that Merged
These are the firms that could not make the new capital requirement on their own and decided to merge with larger players as a result.
American National Trading Corp (Merged with PFG)
Royal Forex Trading (Merging with IKON)
Summary
It is a very turbulent time in the forex industry. My advice is what it has always been, do not trade with a poorly capitalized firm. And if you must, at least wait until after the December 17, 2007, deadline before putting any money on deposit with any firm that is not meeting the current minimum capital requirement.