I just came across this thread and now I'm kind of apprehensive with staying with FXDD because of their reported holdings. I've had no trouble with them for the past few years but all of this has me 'thinking' now...


4 Hour MACD Forex Strategy

That is the title of an article by John Jagerson over at PFXglobal:
Profiting with Forex (PFX) - Watch Forex Professionals Currency Trade

The retail forex business is young and relatively unregulated but that won't last. I was surprised that the regulators have not moved faster in the U.S. when the Refco disaster occurred a few years ago but we are starting to see some action. What's coming down the pipeline might affect your dealer so do your homework and check them out.

Because many forex dealers are headquartered in the U.S. they are subject to the NFA and the CFTC. Although registration requirements for FCMs (Futures Commission Merchants) have been loose in the past, they are tightening fast. There are two big changes coming down the pipe. The one I think retail traders should be aware of is the change to the net capitalization requirement. There is a minimum amount of cash (outside of customer accounts) that an FCM has to have to stay in business. That minimum used to be $250,000 then was recently raised to $1,000,000 and it is now going to be raised to $5,000,000 in the very near term. Did you know that if you are working with a dealer in the U.S. you can find out how much net capital they have? Just go the the CFTC's website and look up their financial data for FCMs. In fact, if you google "CFTC" it will give you a link right to the spreadsheet you want to look at. There is a bunch of other interesting goodies in that spreadsheet as well.

The bottom line is that you should know whether your dealer can meet those requirements because if they can't your account could be tied up while they shut down their operations or raise capital. I realize most of us are working with large dealers but smaller boutique firms have a certain appeal and service levels that attracts a lot of traders. Just make sure you are not working with someone that is too small.

Couldn't have said it better myself...

How could one launder money with FXCM anyway ,other than by being stophunted or getting requotes?

Too bad I lost the link of this fxcm platform video on NFP

What will happen to the funds of smaller firm's clients if NFA shut them down? I don't think NFA will do something hurting clients of these firms who are doing nothing wrong but just under capitalization. If so, NFA will be the bad one in this industry.

Personally, I don't think keeping only their bigger firms is a good thing to retail traders. We should have more firms competing for our business.

Many forum users have been asking for a specific link to the National Futures Association website so that they can read the proposal for themselves and hear it from the regulators themselves. Well, here it is:

National Futures Association | News Center

As you can see the National Futures Association has spelled out clearly why they wish to raise the minimum capital requirement to $5 million. They apparently mailed out the formal proposal to the CFTC by Federal Express on August 17, 2007. So it looks like the NFA has fully signed off on the proposal. Now all that is required is the CFTC's approval.

I would strongly encourage everyone to read through the NFA's reasoning for increasing the minimum capital requirement at this link here:
National Futures Association | News Center

Everyone will have their own quotes they will highlight. Here are the ones I found most interesting:

"NFA received sixteen comments regarding the proposal. Eight commenters supported the increased capital requirement and eight opposed it."

"The comment letters that opposed the proposal noted that it will likely eliminate a number of the smaller FDMs. These smaller FDMs will be, obviously, those with less capital. The comment letters in opposition also noted that more capital does not necessarily mean that an FDM is better able to support and properly operate its forex activities. While more capital does not necessarily correlate to "better" FDMs, more capital does mean that they will have, at a minimum, a greater financial stake in running their forex businesses."

"One comment letter also noted that an FDM's risk-management and operational internal controls are more important than the amount of capital an FDM has. NFA agrees that an FDM's internal controls are important and, under separate cover, NFA is submitting for Commission approval a new rule to ensure that FDMs have proper internal controls."

"Several FDMs pointed to the recent MRAs and receivership proceedings as evidence that the current regulations are working. Regulating solely by enforcement proceedings is not the best way to protect customers, however. One of these FDMs claims that staff was unfair in its characterization of the problem with FDMs and forex. Specifically, this FDM pointed out that the number of bankruptcies involving traditional FCMs and FDMs is the same, with two of each.5 What this FDM does not recognize, however, is that the two traditional FCM bankruptcies occurred over a seventeen-year history of regulation, while those for FDMs has occurred in only a little more than seven years. Moreover, the traditional FCM population has average around 250 while the FDM population has averaged around 40."

All those critics who've been saying how "alarmist and irresponsible" my postings are now owe me an apology. The NFA itself is saying that the smaller firms opposed to the measure were telling the NFA the proposal could possibly eliminate themselves! That's right, some of the smaller firms in the Dead Pool we're telling regulators "you know this proposal could put us out of business." Yet when I say the same thing to the trading public the call goes out I'm "scare mongering." I'd love to know which firms opposed the rule and why they did. Wouldn't it be amusing to know which firms are right now telling their customers "nothing to worry about this rule won't have any effect on us" while they are pleading with regulators "please don't pass this or we could be forced to go out of business!"

In any case the NFA has apparently brushed aside the dissenters. They have officially put the rule on the table and all it will now take is the CFTC's signature. Apologies will be accepted in the order they are received

This is the second day I can't get access to Gain capital aka Forex.com website.

From time to time a "web clip" appears on my gmail pointing to forex.com website. And since yesterday I´m trying read the clip.

At first, I thought there was link problem but now I see the web page is dead.

Try forex.com or gaincapital.com

It´s only me? Is that happening to all yours?

Two days!, is like the company is going out of business.

And if is a computer problem, or web site problem, IP problem, whatever, and two days later is not fixed.

I can´t imagine how bad is the brokerage service no matter if they have the required capital.

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Elite Manual Trading | Portfolio | Calendar | Suggestions to improve the forum | My Blog

Remember: Signatures must have three lines as maximum

I just checked and they both work for me. Do you want to try from other computers?

i just checked both sites for you and was able to access them.

Thanks to both.

It work now.

I had to go to the car an pick up the notebook to test from another computer. In the Notebook I just have Avira and everything works ok.

In my PC I have to shutdown Pc-Cillin to access the web page.

Strange, the built in Firewall that comes with PC Cillin is deactivated.
And I can't get access if the antivirus is running.

Excuse me.

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Elite Manual Trading | Portfolio | Calendar | Suggestions to improve the forum | My Blog

Remember: Signatures must have three lines as maximum

With the NFA officially hiking the minimum capital requirement to $5 million (http://www.nfa.futures.org/news/new...?ArticleID=1942) all eyes are now on the CFTC. Look for two things:

1) Some kind of formal statement by either the CFTC or the NFA in which CFTC signs off on the NFA proposal (or the unlikely prospect of the CFTC rejecting it.)
2) The new updated CFTC Adjusted Net Capital Report which will be published here: Financial Data for FCMs

The next updated adjusted net capital report will be particularly revealing. All the firms on this report will have had several months since the proposal was issued to start increasing their reported net capital. While no firm is required to hike their capital yet it will be very telling to see which firms have begun to prepare for the inevitable and which firms continue to hold their cards close to their vest. At this point any firm that isn’t ponying up the dough to capitalize themselves on these reports is really begging the question: is this firm destined to be strapped into the forex dealer electric chair? Or will they get a stay of execution?

My advice to the firms in the Dead Pool is simple: put up the money now and save everyone the trouble of guessing whether or not you will be here a few months from now. If your company capital is tied up and not available at the moment, well, tell the public what it is tied up in and specifically why you are not reporting it. Customers who open accounts with forex brokers are required to detail their own private financial holdings. In light of the seriousness of the capitalization issue, I think forex brokers should be held to the same standard.