Proposed NFA Capital Requirement - page 3
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The sad SAD part about all of that is, FXCM the biggest scammer in the FX industry known to date, have the most capital 56 mill.
That is capital they have taken/stolen from there customers by directly trading against them or even using there capital to trade themselves and just fixing the results of customer trades.
FXCM been fined many times by NFA have they ever even paid it?
Then you have IBFX which has only 7 million yet they are for the traders making money from the spread and not trading against them, I know alot of people whinge about the spreads at times, even if you look at an ecn the spreads arent much better even worse.I cant see how IBFX could make only there revenue from pip spread though, imagine if they had mostly carry trade customer who have positions open for months then they only get pip spread once, they would make nothing.All scammers in my opinion all of them.
I think the bottom line is that you're on your own in judging a broker. If you feel safe with a company that has a lot of capital, go with FXCM. They have nothing to offer me, but that's a personal choice.
The only meaningful change the NFA (or whoever) could impose would be if the accounts of forex traders would not count as assets in case of bankruptcy. We all remember Refco: the futures traders were fine, the forex traders were screwed.
I also feel that rules and regulations have to be meaningful and I have my doubts about the NFA in that regard. Wait until they feel they need to have a say about anything and anyone concerning forex; soon you will not be able to post a chart without a disclaimer.
I think the bottom line is that you're on your own in judging a broker. If you feel safe with a company that has a lot of capital, go with FXCM. They have nothing to offer me, but that's a personal choice.
The only meaningful change the NFA (or whoever) could impose would be if the accounts of forex traders would not count as assets in case of bankruptcy. We all remember Refco: the futures traders were fine, the forex traders were screwed.
I also feel that rules and regulations have to be meaningful and I have my doubts about the NFA in that regard. Wait until they feel they need to have a say about anything and anyone concerning forex; soon you will not be able to post a chart without a disclaimer.FXCM dont work man they are a scam insider info etc etc ETC for years, saying how your positions aren't even traded its all a setup.
4 years ago I used them for about 3 months and lost about 90% due to odd things happening.Friends who had years in the biz told me to report them and I did and I never got a reply.
A guy just reported and filed a claim with the NFA against Farr Financial INC an ecn in California registered commodoties broker, and he received his payout.
WHy?Because they are a registered commodoties broker NOT just an FCM.
So if you trade the currency futures, at minimum margins etc, then you are protected, if you trade OTC you ain't got jack shit no matter who its through.
Buyer Beware
Seems simple to me. If you are trading with a broker who is, well, pretty much broke, then watch your wallet. Why people send their hard earned money to these tiny little outfits I'll never understand.
Seems simple to me. If you are trading with a broker who is, well, pretty much broke, then watch your wallet. Why people send their hard earned money to these tiny little outfits I'll never understand.
If they are not broke, you still have to watch your wallet. See FXCM...
http://www.nfa.futures.org/basicnet/...px?seqnum=1251
The link is dead too...
disturbing
they're dropping like flies...
The Case of One World Capital
As I continue to update the dead forex firms walking list I'm amazed how many people think fraud and undercapitalization are completely separate issues. Often times they are not. The reason is quite simple: firms that are committing fraud are not known for having legible books. And Vice versa. Firms that have a hard time maintaining their capital requirements will often cut corners and commit fraud to keep their firms from going under. Finally, smaller firms simply don't have the money to maintain the kind of large legal and compliance staffs necessary to keep up with the battery of regulations being issued by the NFA and CFTC. And of course some firms are just plain incompetent. All these factors have come to a head with Forex Dealer Dead Pool Member One World Capital, who is now in serious trouble with regulators.
To see the full report on One World's misdeeds you can click on the NFA's report yourself: http://www.nfa.futures.org/BasicNet/CaseDocument.aspx?seqnum=1190
I have highlighted some of the worst allegations below. After reading through them I think you'll understand why One World is on the dead firm's walking list and why that should be serious cause for concern for anyone who has an account with them or any firm like them.
"One World lacked an understanding of, or was inattentive to, regulatory requirements and was ill prepared to accept customer business as either an FDM or an FCM. The firm had not established adequate systems to enable it to handle customer funds or comply with customer reporting requirements."
"The firm was unable to properly account for its liabilities to its forex customers." (Insert appropriate jaw dropping sound. This is the text book definition of a firm destined to go bankrupt.)
"In addition, NFA's audit found that One World and Walsh [Principal] provided false and misleading information to NFA auditors concerning an individual names Charles Martin and his role at One World. Walsh said Martin had no involvement in the firm. However, NFA subsequently learned that Walsh's claim was untrue and that Martin was, in fact, heavily involved in the operations of One World and solicited customers on its behalf." (Who is Charles Martin you ask? The NFA states Martin was turned down to be a principal before because of a "felony drug conviction and a misdemeanor theft conviction.")
It goes on and on, misleading promotional materials, outright lies to regulators, failure to report capital and maintain any semblance of book keeping standards. In short, One World is a classic Dead Forex Firm walking. Firms like One World are the reason the NFA is going to raise capital requirements. And when they do, does anyone honestly believe the One World's of the world will survive?
The Comic Collapse of Forward Forex
Another day, another small forex broker dealer shuttered. But before we start throwing dirt on the coffin of forward forex let's take a peak inside and perform an autopsy on the cadaver. For some its old news but for those concerned about the fragile state of the forex industry I think a proper examination is in order. For starters, why and how did this firm get shut down by regulators?
Forward Forex was granted a NFA license in January of 2006.
BASIC Details
On June 18, 2007, the NFA began its examination of Forward Forex and met its CEO, Onelio Manuel Murias. Murias stuck around for an hour after the NFA arrived and then apparently slipped out the back door. He has not been seen since. That's right. As soon as the regulators showed up at his door to look at his books the CEO of the company fled! It's like an episode of "To Catch a Predator" where Chris Hansen breaks out the cameras and the perps go running. So the NFA goes over and speaks with another AP/Principal of the firm, Marshall David Wertheim. Wertheim then tells the NFA that he didn't even know he was an Associated Person and just entered trades in the dealing room. And this guy was legally listed as an AP of the firm?! The rest of the audit consists of the NFA desperately trying to get basic book keeping information only to be told by clueless employees that "we know nothing." Finally Murias' lawyer followed up with the NFA and after a round of Monty Pythonesque negotiating conclude that Murias will not be responding to queries. Hard to believe right? See it all for yourself:
http://www.nfa.futures.org/BasicNet/CaseDocument.aspx?seqnum=1269
This goes right to the heart of what I have been saying these past few weeks. The National Futures Association has been inundated with this kind of activity amongst smaller, undercapitalized broker dealers (for the record Forward Forex had only $1.8 million according to the latest CFTC report.) When you don't have any capital you skimp on things like, oh, well, accountants, compliance staff, Associated Persons... This company was a complete farce. But if you are an ordinary trader how can you really tell? Before this scandal broke they were registered with the NFA and were meeting their minimum capital requirements. I'm sure they had some smooth talking salesmen spinning stories about how well regulated they were. So from the outside it looked ok, right?
Wrong. This is why the NFA is dramatically raising capital requirements. They are tired of dealing with these flimsy, undercapitalized firms. The very fact that the NFA is raising capital requirements should tell you that they have very little confidence in firms with net capital below $5 million. This isn't my opinion. This is the NFA's own opinion. And if a regulator thinks that then the average trader needs to think long and hard before putting their hard earned money in the bank accounts of any of the dead forex firms walking.
One last point. It has been said by some that after the NFA decides to raise capital requirements that there will be an orderly process for unwinding the smaller brokers who can't make the cut. Really? What's to stop the Murias' of the world from bolting with the company's funds and fleeing the state or country once they know the jig is up? The NFA couldn't even get the CEO of forward forex to answer some simple auditing questions and they're going to be able to keep some of these bucket shops out there from fleeing with customer assets? This whole Capitalization issue has the potential to be a real train wreck. So do yourself a favor and keep a sharp eye out on the dead forex firms walking.
P.S. To those firms on the dead forex firms walking list just put up the money now. Why put your customers through the agony of not knowing whether or not your firm is going to make the cut?