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.

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.

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!

Two of the biggest FX Brokers are preparing for the coming increase in capital requirements by loading up their balance sheets.

First, Oanda has landed $100 million in funding:
Oanda Gets $100 Million Venture Capital Investment - 2007-09-18 11:22:59 | Venture Capital News

Meanwhile, FXCM has released its own balance sheet to the general public:
FXCM Group Releases Updated Financial Data - Forum - FXstreet.com

FXCM also commented on the proposed increase in capital requirements and stated:

So what are the smaller firms waiting for? Why haven't we been hearing these kinds of reassuring statements from the poorly capitalized firms under $5 million? Are they going to be able to meet the coming $5 million capital requirement due in just two months? Why aren't these firms releasing their own balance sheets? Many of the firms under $5 million claim to have additional resources they are not reporting. So why don't they tell us about these "unreported assets." The silence from the sub-$5 million fx brokers is deafening. And it should be a warning sign for traders to beware doing business with them until it becomes clear that they actually have a future.

With that huge capital seems FXCM could pay the fines very well.

Don´t you think dear Forexsapior.

For Immediate Release
For more information contact:
Larry Dyekman (312) 781-1372, ldyekman@nfa.futures.org
Karen Wuertz (312) 781-1335, kwuertz@nfa.futures.org
National Futures Association fines New York forex firm
September 27, Chicago - National Futures Association (NFA) has levied a $175,000 fine against Forex Capital Markets (FXCM), a Futures Commission Merchant and a Forex Dealer Member of NFA located in New York. The Decision, issued by NFA's Hearing Panel, resulted from the settlement of a Complaint filed in December 2006. The Complaint alleged that FXCM and certain of its sales solicitors used deficient promotional material, that FXCM failed to mark certain customer accounts (although legally permitted) as high risk, based on the Financial Action Task Force list of non-cooperative countries and territories, and that FXCM failed to supervise.
FXCM has thirty days in which to pay the fine, which is part of the settlement offer to which FXCM agreed, without admitting to or denying the charges. The full text of the Decision and Complaint can be found on NFA's Web site (National Futures Association - NFA is a regulatory service provider for the derivatives markets).
NFA is the premier independent provider of efficient and innovative regulatory programs that safeguard the integrity of the derivatives markets.


Full Link:National Futures Association | News Center

And more complains for Money Laundering:

National Futures Association | News Center
BASIC Case Summary

__________________

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

Remember: Signatures must have three lines as maximum

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)

Oh sorry.

I thought because you was talking and posting about facts without proof It would not not matter to post something with proof and no relation.

I mean, a post or news from FXCM or Oanda does not have any proof about validity until some official (by law) agency or whatever can confirm if they´re telling true, and independant account company could serve as well.

And because accounting could be very very tricky. Accountants could do wonder things, believe me, in my country 3 from the 6 years of Economics Degree are the same of the 3 years to get your Public
Accountant title.

I really know about what I´m talking.

In this way of post by the desire to post only. I can tell some things about another brokers.
IE: FX Sol was capitalized with over 100 million in past April, however they keep the mouth close. And by checking last CFTC report they figure with only 15 Millions.

It´s a perfect example of how accounting is playing an old old game.

Maybe another broker is figure with 25 million but you can´t really know if they´re real.

Another example: Respsol-YPF (Oil company) is selling 20% of the whole conglomerate. Transaction is estimated in 2500/2800 millions of Euro (not dollars).
Wow, a lot of money? not really, less than 10% is cash. The rest is accounting details.

What is true, often, it depends of who is watching eye´s.

__________________

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

Remember: Signatures must have three lines as maximum