Proposed NFA Capital Requirement - page 4
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
forexsavior,
You would make a much better tabloid writer or newsletter provider than a trader. Now you've found your true calling.
I just want to make 2 comments...
1) Not many if any of the firms you first posted as "Dead Firm Walking" have shown up in your obituaries.
2) There *may* be a high CORRELATION between undercapitalization and fraud, but there is no logical link of certainty as you seem to think. Just because a firm is small doesn't mean it commits fraud, and just because a firm is big doesn't mean it is honest. I say *may* because anecdotal evidence is not sufficent to prove anything. A study would need to be done. This is just as true in our choice of trading partner as it is in our backtesting.
If traders learned anything from the whole Refco debacle, it should be that a large firm does not guarantee safety of funds.
Personally, I'm with LinuxUser on this one. If the NFA really wanted to make a difference they would find a way so that client accounts would be excluded from bankruptcy, or at least given seniority over all other creditors. I believe that if client accounts were kept in a segregated bank trustee account, that would accomplish that end. Also, I think I'll check out the whole Canada angle myself as he is correct about that, from what I recall hearing/reading about the Refco event. (I'll have to check out the link later.)
Finally, we should all make our own decisions about who to trade with; and such decisions should be made after a *RATIONAL* sifting of the information available to us. Keep in mind that your information will always be complete. So certainty is probably not possible
, but rationality certainly is (think hard about that).
The fundamental condition of human beings is trust, not suspicion. Be wise as serpents and innocent as doves. If you can keep the tension between these two statements, then you'd be a pretty decent decision maker. I'm a full-time trader, and that approach has worked just fine for me.
BW
To fairly disclose:
1) I'm a private retail trader
2) I want to see other people make rational decisions, because there is too much craziness in the world
3) I work with two other traders, and would like to influence them to be rational (they might read this), and
4) I hate sensationalism...if I wanted that I'd watch what passes for 'News' on TV...which I don't
My point is...everyone has an agenda. That's mine. What's yours?
BW
To fairly disclose:
4) I hate sensationalism...if I wanted that I'd watch what passes for 'News' on TV...which I don't
BWBW you remind me of one those old ladies who is constantly complaining about "the tabliods" but as soon as the National Enquirer comes out can be seen sprinting down to the newstand to gobble it up. If you don't like sensationalism the best thing to do is to ignore it. As for me, I gobble up the Enquirer- with no shame at all
Helloooooo, is there anybody in home?
So, after all this shake in forex world with US brokers.
The best choice seems to move the money to Canada and trade with a company secured by Canadian Investor Protection Fund: Choose our English or French website
anyone on their list offer MT4?
Another one Bites the Dust
Queue up the Queen music. The NFA has slapped another padlock on the front door of another teetering, undercapitalized forex firm. And the winner is... Cal Financial Corporation.
BASIC Case Summary
Who? Well, to be honest Cal Financial wasn't exactly a dead forex firm walking (if only they were that lucky). Cal was more like a vegetable on life support- and the NFA finally decided to pull the plug. But with net capital of only $790,000 you wonder how they managed to even stay comatose all these years?
We pick up the story in the summer of 2004. Ah remember those days? A confident John Kerry was introducing a beaming John Edwards to the world and proclaiming the glory of having "good hair." England was eliminated from the Euro Cup in heartbreaking fashion to Portugal. Usher was at the top of the pop charts and Catwoman was bombing at the box office. And in Thousand Oaks, California John Indelicato had a dream: to conquer mainland China and get rich gloriously.
Cal's goal was "to develop its forex business overseas, and based on the level of success, determine whether it should take on U.S. customer accounts." To that end Cal had two principals located in China where they recruited customers under the name of the "Shanghai Carewell Financial Planning Company." But the going was tough. In a 2006 NFA audit Cal was cited for not collecting any proof of employment information for SCFP accounts. Cal responded that Chinese customers did not like to give out this kind of information so Cal instituted a don't ask, don't tell policy. Needless to say the NFA was not amused and to Cal's credit they voluntary liquidated the accounts.
But in the end it wouldn't matter anyway. On March 1, 2007, the NFA issued a complaint against Cal citing it for a variety of accounting violations that essentially finished them off.
http://www.nfa.futures.org/basicnet/CaseDocument.aspx?seqnum=1069
But what stands out in the complaint are the NFA's accusations about the shoddiness of Cal's bookkeeping. The NFA charges that Cal:
a) failed to maintain, at all times, a record of customer deposits and withdrawals
b) include approximately $92,000 of its customer accounts balance in its ledger, resulting in an understatement of the amount of customer funds on deposit
c) maintain an equity run and/or similar report aggregating all balances for the firm's forex customers, including cash, open positions, and realized profit/loss
What's my point in listing all of this? It's simple: running a forex broker dealer is not easy. It requires talented, trained professionals with accounting, compliance and administrative backgrounds. It can't be done by Willie Loman alone. And the simple fact is if you are a small firm, with limited resources and limited capital on hand you just aren't going to invest your money in these things when you also have to pay for servers, sales staff, office space, etc... So you try to do the administrative stuff on the cheap. Well, you can't. John Indelicato couldn't. And the NFA by raising its capital requirements is making it clear it doesn't think anyone under $5 million can, else it wouldn't be making this proposal in the first place.
In all fairness to Indelicato, he is no fraudster. By his own account he has been in the futures business for 35 years. He's just not very good at it...