The new capital numbers are out. Here is the most comprehensive list available of the industry's financial status. 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. Here is the direct link for the CFTC capital reports: Financial Data for FCMs

Firms Under $5 Million
All these smaller 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 cannot will be anybody's guess. Already one of these firms, One World Capital, is not allowing customers to withdraw money.

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)

Firms Under $20 Million
These medium sized firms all meet the coming minimum adjusted net capital requirement. However, there are other capital requirements that as market makers these firms 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 ($5,505,000)
HotSpot FX ($6,023,000)
I Trade FX LLC ($6,645,000)
IKon ($6,736,000)
IFX Markets ($9,078,000)
CMS Forex ($11,255,000)
ODL Securities ($12,642,000)
PFG Forex ($14,742,000)

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.

FX Solutions ($23,062,000)
Interbank FX ($27,110,000)
Gain Capital (36,679,000)
Forex Liquidity ($38,317,000)
GFT Forex ($48,302,000)
FXCM ($60,268,000)
Oanda ($156,467,000)

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 turbulent 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.

The Boston Business Journal ran another article on the shenanigans going on over at Tradex Swiss Ag:
Immigrants trapped in forex mess - Boston Business Journal:

Like most Swiss firms Tradex Swiss AG is not regulated and customers have been burned as a result. Please note the following Swiss firms ARE NOT REGULATED and should be avoided lest you end up like the poor sods at Tradex Swiss AG:

ACM
Dukascopy
WestCapFX
MIG
GFX Group (Forex.CH)
Crown Forex

Immigrants trapped in forex mess
by Jackie Noblett Journal staff

Z. Song was amazed by the size of her friend's new house.

The Westford resident asked her friend, who never had a full-time job, how she and her husband were able to buy their new home in Acton. The friend said her husband invested money with Tradex Swiss AG, a Boston money manager that specialized in foreign exchange trading. Song recalls being told she should trade, too.

"They would never lose money, always make big money," Song said in an interview.

Little did Song know that her friend's husband, David Qi, was getting paid, according to his lawyer, to refer friends to the unregistered forex trading company. Song also maintains she had no idea that, just three months after her initial investment, her money would be locked up in a legal battle involving Tradex and its regulators. Tradex is now being investigated by governments on both sides of the Atlantic for trading currency without being properly registered, and over $4 million in investment accounts hangs in the balance.

The rest of the article requires a subscription but essentially contains tales of misery and woe from traders whose funds are frozen in the shuttered swiss brokerage. Of interest in this sordid tale are the actions of Tradex salesmen who were STILL soliciting customers to trade even as Tradex was going under!

So basically Tradex was encouraging traders to purchase tickets on the Titanic right after it had struck an iceberg. Talk about a complete lack of ethics.

This is a very important point to remember. Small forex brokers that are in financial trouble rarely let customers know they are in trouble ahead of time. Indeed, as Tradex shows, they will go so far as to cover up that trouble to their own customers and encourage them to keep sending in money even when all is lost.

This is why traders should never invest money with a poorly capitalized/unregulated firm. These firms can unwind rapidly and by the time the average trader finds out it is way too late to do anything about it.

Well the folks over at IKon can't be too happy with the news that the NFA has filed suit against RFXT and accused them of fraud in a new complaint:
BASIC Case Summary

IKon recently merged with former Dead Pool Member Royal Forex Trading and on RFXT's website they are listed as being a "division of IKon Global Markets."

So how does IKon feel about a division of its company being charged with the following:
"CHEAT, DEFRAUD, DECEIVE FOREX CUSTOMERS"

The NFA summarizes their complaint as follows:

Perhaps the most illuminating aspect of the NFA Complaint against RFXT is this doozy about how Royal Forex clears its trades. NFA cites an IB that RFXT uses and in the process reveals how RFXT clears its trades:

Lol! This is another downside of trading with poorly capitalized firms. Firms like RFXT do not have the kind of trade volume needed to get access to the best prices in the interbank market (although that doesn't stop these same firms from exagerrating their access to "interbank pricing.")

As it stands Royal Forex trading is clearing its trades through IFX? How on earth are you going to get good pricing trading with RFXT when they have to go cup in hand to one of their competitors to get their quotes? Why can't RFXT get a line of credit with a bank like the larger players get? The fact that they can't should send up red flags that these firms are far riskier to trade with than the more well established players.

The more you learn about how smaller forex firms operate (the fraud, the insolvency, the lousy pricing) the more traders should thank their lucky stars the NFA has raised capital requirements to $5 million because this industry is badly in need on an enema.

Forexsapior:

When I was talking about "other things", like posting complaints against FXCM an others and not strictly about capitalization, you told me : " 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:..."

Can you explain what are you doing or what is your intention with this post? Is confusing.

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Agree! Forexsapior, did not answere some of my questions any more here or on other forum.

Again, this thread focuses on poorly capitalized firms. Why? Because poorly capitalized firms are the source of most of the industry's problems. What are those problems? As I have demonstrated in this thread poorly capitalized forex dealer members have gone out of business in record numbers this year mainly due to fraud and/or insolvency. Poorly capitalized firms do not have large compliance or accounting budgets which is what scares the NFA and is one of the main reasons the NFA wants to weed them out of the industry altogether.

And as this latest regulatory action demonstrates poorly capitalized firms are in no position to give their customers good prices when they themselves don't get good prices. Of course a lot of the larger firms have been cited by the NFA. But none of those large firms are getting cited for not meeting their capital requirement. Nor have we heard that they are clearing their trades through IFX as we have just found out with Royal Forex Trading! There's nothing wrong with IFX of course, but the point is why the hell would you trade with RFXT when you can just cut them out and trade with IFX directly and save yourself some money?

With each passing day the argument for trading with a poorly capitalized firm is being completely debunked. In fact, it doesn't even need to be debunked anymore since the NFA is going prevent customers from trading with these kinds of firms come December. At this point all I am doing is merely providing the background information as to why the NFA wants to do it.

With two months to go the following firms have still not met the $5 million minimum threshold. The next Cap report comes out the first week of November:

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)

I understand now. Is like "you could post post anything, meanwhile you do not post something against the big firms" .

Btw, why MB Trading is in the list? It´s futures broker, the margin requirements starts with 500k. It´s Nº 93 row in the CFTC report.

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This thread is not about big firms because after the capital requirement passes none of the big firms will go out of business! The problems in this industry all stem from the poorly capitalized firms and that is what I focus on as a result.

All of these firms on your poor list are currently meeting the NFA capital requirement. Am I right?

As a customer of Velocity4X, I received email from them yesterday that they intend to meet the new NFA capitalization requirement of $5 Million dollars.

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