Proposed NFA Capital Requirement - page 19
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Breaking News: NFA Increases Cap Requirement to $10 Million
The last few weeks I have been enjoying the NFL season and thus my posts have not been as prolific as they were over the summer. However, it has come to my attention that the NFA has actually increased the minimum capital requirement to $10 million, NOT $5 million. Huh? Allow me to explain.
If you look at the text of this NFA Notice (National Futures Association | News Center) you'll see the nfa says:
A Forex Dealer Member must have $5 million in adjusted net capital as of December 21, 2007. This increase also raises to $10 million the amount of capital required for a security deposit exemption under NFA Financial Requirements Section 12(b). Since this is a significant change to the qualifications for the exemption, Members that are currently operating under Section 12(b) should notify NFA's Compliance Department whether they intend to continue using the exemption.
What is this exemption you say? The exemption allows firms to offer customers margin of lower than 2%. In fact, the standard margin rate for customers in the forex industry is 1% with some firms like Money Garden offering margin as low as .25%.
And so the question is will these firms be able to meet the new $10 million requirement, or, will they have to change their entire business model and dramatically raise margin requirements on all their customers?
It's safe to say if they do not have the mimumn $10 million (and let's not forget there are many other capital requirements forex brokers have to meet in addition to the minimum) they will have to raise margin requirements on all their customers which will in turn result in many, if not most, of their customers to close their accounts so that they can trade somewhere else at a better margin level.
Once again, this calls into question just how stable are these firms? The NFA is turning this industry upside down. There is no way of knowing who will survive in December. Traders need to beware. These are the firms most vulnerable to these coming cap increases:
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)
If you are trading with one of these brokers be sure to ask them if they are going to meet the TEN MILLION DOLLAR REQUIREMENT and if not, when will they start raising their margin requirements on their customers?
Hello,
should we be worry with FXDD ?
they're for second time offering special bonus for new money deposits
for current and new traders before end of December.
Do they need to pile up more money because of NFA ?
Hmmm........
Just a little tiny concern
Sincerely,
ChampionFx
Hello,
should we be worry with FXDD ?
they're for second time offering special bonus for new money deposits
for current and new traders before end of December.
Do they need to pile up more money because of NFA ?
Hmmm........
Just a little tiny concern
Sincerely,
ChampionFxFXDD is not regulated, so the new NFA requirement will not effect them. As a matter of policy I never trade with unregulated firms however.
FXDD is not regulated, so the new NFA requirement will not effect them. As a matter of policy I never trade with unregulated firms however.
Thanks forexsavior ,
then I would have to ask , why the other brokerages that are currently sinking
with NFA requirement should worry with regulations if FXDD saved themselves
from all this brouhaha capital requirements being unregulated ?
Rather than going out of bussines for many brokerages , won't they just want to do the same as FXDD and quite few others brokerages in order to keep them running and not having to shut down their business ?
Is there something going to happen, that there will be no such thing as a unregulated brokerage anytime soon ?
I've read the whole thread but I could have missed probably those answers that someone else did maybe already ask .
Thank you , please , keep us updated
good job !
Sincerely,
ChampionFx
Thanks forexsavior ,
then I would have to ask , why the other brokerages that are currently sinking
with NFA requirement should worry with regulations if FXDD saved themselves
from all this brouhaha capital requirements being unregulated ?
Rather than going out of bussines for many brokerages , won't they just want to do the same as FXDD and quite few others brokerages in order to keep them running and not having to shut down their business ?
Is there something going to happen, that there will be no such thing as a unregulated brokerage anytime soon ?
I've read the whole thread but I could have missed probably those answers that someone else did maybe already ask .
Thank you , please , keep us updated
good job !
Sincerely,
ChampionFxUnregulated Brokers can only operate if their parent company is somehow regulated. It is known as the affiliate loophole. They are using the loophole to avoid regulation but none of the other firms have large parent companies like FXDD
Cftc Cap Update
The New Cap Numbers are out! With the exception of MB Trading (now at $5,190,000) there has been no indication from the poorly capitalized firms on this list that they are shoring up their financials in preparation for the big cap increase to $5 million due in just 6 weeks. In fact one firm, Direct Forex, is reporting that they are in violation of the minimum capital requirement by $276,000!
Meanwhile, the $10 million minimum capital requirement for firms offering 100:1 leverage is proving to be a big barrier as well. How that plays out remains to be seen. But things might really get wild in the forex industry the next couple of weeks.
The following firms, according to the latest CFTC Report, do not meet the coming $5 million requirement:
http://www.cftc.gov/files/tm/fcm/fcmdata0907.pdf
Direct Forex ($762,000)
IG Financial Markets ($1,017,000)
Advanced Markets ($1,216,000)
Wall Street Derivatives ($1,231,000)
SNC Investments ($1,301,000)
One World Capital ($1,408,000)
Hamilton Williams ($1,453,000)
CMC Markets ($2,001,000)
Solid Gold Financial ($2,101,000)
GFS Futures & Forex ($3,078,000)
E FX Options ($3,752,000)
Forex Club ($3,989,000)
Easy Forex ($4,351,000)
The clock is ticking. Are your funds safe?
Deal Desks
When trading with a deal desk, the least of your worries is them qualifying.
Andy
Update on Ten Million Dollar Requirement
The Ten Million Dollar Capital Requirement affects ONLY those firms that trade at a margin level of greater than 100:1
So which firms in the Dead Pool are directly affected by this? Well, not many. IG index would be affected if they actually solicited customers in the U.S. but it appears their U.S. registration is just a shell. GFS Futures & Forex offers 200:1 mini accounts on their website. Thus this rule could have a major impact on their business. But the firm that stands to lose the most is Money Garden. MG Forex is notorious for offering 400:1 "Flex" accounts and this new rule could turn the firm upside down. Here is a quick rundown after looking at each firm's website.
IG Financial Markets ($1,017,000) [700 to 1 leverage]
Advanced Markets ($1,216,000) [100 to 1 leverage]
Wall Street Derivatives ($1,231,000)
SNC Investments ($1,301,000) [100 to 1 leverage]
One World Capital ($1,408,000) [100 to 1 leverage]
Hamilton Williams ($1,453,000) [100 to 1 leverage]
CMC Markets ($2,001,000) [100 to 1 leverage]
Solid Gold Financial ($2,101,000) [100 to 1 leverage]
GFS Futures & Forex ($3,078,000) [200 to 1 leverage]
E FX Options ($3,752,000) [100 to 1 leverage]
Forex Club ($3,989,000) [100 to 1 leverage]
Easy Forex ($4,351,000) [50 to 1 leverage]
Money Garden ($5,507,000) [400 to 1 leverage]
Ikon ($7,562,000)
Thank You Forexsavior!
I am very impressed and glad to see that you read the rules and understood what they were saying. The language in the NFA rules were very confusing, and I had to read it literally 5 times just to make sure it said what I thought it said.
Yes, the $10million requirement, to reiterate what Forexsavior said about them, will affect those firms offering OVER 100:1 leverage.
Good Luck Trading!
Andy
andy@efxgroup.com