The Temorary Receivers Report (Feb. 4, 2008), to the court, has been posted on the Receiver's site: www.http://www.robbevans.com/. In short:

"...As set forth in this report, FXLQ had a practice of not recording its true liabilities and overstating its assets. FXLQ’s report to the CFTC showed an excess net capital of $35,104,791 at April 30, 2007 when it really was undercapitaled by at least $7,769,474. In addition to FXLQ’s capital deficit position, FXLQ was required to maintain records that reflect its assets, liabilities, and capital and that it failed to do so."

The summary of FXLQ’s accounting practices are detailed on the Receiver's site. Unfortunately, the published report does not contain any hoped for recommendations regarding distribution of customer account funds. I have placed calls to the Receiver but have not heard back yet.

I don't know if anybody got this notice:

Notice to Members I-08-03
January 25, 2008

Effective Date of Amendments to the Interpretive Notice Regarding Forex Transactions

NFA has received notice that the Commodity Futures Trading Commission has approved amendments to the disclosure section of the Interpretive Notice entitled "Forex Transactions." The amendments will become effective on June 1, 2008.

The amendments require prescribed disclosure language that makes clear to customers that a Forex Dealer Member ("FDM") is acting as a counterparty in forex transactions and may profit from the market moving against the customer. The amendments require the disclosure to be prominently displayed in uppercase letters in at least 10 point size type and to be separately acknowledged by the customer. The amendments also give NFA staff the authority to approve alternative language in certain circumstances.

FDMs do not need to obtain an acknowledgment from existing customers or persons who become customers prior to June 1, 2008. FDMs must, however, provide the disclosure to those retail customers in a manner designed to ensure that they actually receive it. For example, merely including the disclosure on the firm's web site is not adequate, but sending customers an e-mail with the disclosure would be sufficient in most circumstances.

A copy of the relevant section with amendments marked is attached for your convenience. Additionally, NFA's November 29, 2007, submission letter to the CFTC contains a more detailed explanation of the changes. You can access an electronic copy of the submission letter at National Futures Association | News Center.

Questions concerning these changes should be directed to Sharon Pendleton, Director, Compliance (spendleton@nfa.futures.org or 312-781-1401) or Michael A. Piracci, Senior Attorney (mpiracci@nfa.futures.org or 312-781-1419).

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Not Everything that looks straight is: Until you measure it.

The CFTC has finally released the December 2007 net capital numbers. This is our first look at the forex industry after the increase in capital requirements to $5 million in the United States.

I'm amazed that firms like Advanced Markets and Bacera made the cut, although judging from their paltry capital numbers they are barely treading water. In light of the One World and FXLQ fiascos I would view those cap numbers with extreme skepticism. These are not safe firms in my opinion.

An interesting piece of data as well is the number InterbankFX is now reporting. Their cap number has dropped dramatically from $30 million to $19.2 million in one month. Often times cap increases and decreases can be written off as being part of the forex business cycle. But the fact is over that same period of time the FXLQ scandal ruptured and it turns out Interbank had some $10 million stashed away at FXLQ. Something to keep an eye on here people. http://www.robbevans.com/pdf/forexlqreport01.pdf

Here is the full run down of net capital per firm. Remember the Congress is close to passing a law which would require firms to have a minimum of $20 million to stay in business. Should it pass the industry may only have about a dozen firms left.

The Big Six (Above $20 Million)
1. Oanda $156 million
2. RJ O'Brien $92 million
3. FXCM $75 million
4. GFT $69 million
5. Gain Capital $50 million
6. I Trade FX $34 million

Below $20 Million
7. PFG $19.7 million
8. Interbank FX $19.2 million
9. FX Solutions $17.9 million
10. IFX $15.5 million
11. CMS $13.8 million
12. GFS Futures & Forex $10.2 million
13. CMC $8.7 million
14. Alpari $8 million
15. Ikon $7.9 million
16. Easy Forex $7.6 million
17. Friedberg Mercantile $7.5 million
18. Forex Club $7.4 million
19. MB Trading $7 million
20. ODL $6.9 million
21. Hotspot $6.1 million
22. Money Garden $6 million
23. Bacera $5.4 million
24. Advanced Markets $5.2 million

Thanks again for posting this info ForexSavior. Its always appreciated

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All your pips are belong to us!

As far as that list goes, I have not used them all but I have used most or at least checked them out and all I can say is good riddance to bad rubbish! I thought what you were hoping for was for all the little guys to get squeezed out so that only the biggest crooks were still in business. Sounds like you have realized that bigger does not mean better, especially when it comes to retail Forex dealers. Most of the firms who have a lot of capital today made it by screwing their customers out of their money. FXCM, GAIN, GFT and "Interbank" are prime examples of this. Sadly the firms who employ the business model of trading against their customers 95% of the time make the most money and end up with lots of excess capital because 95% of their clients lose money while trading against them. The only orders they actually put through to their liquidity providers are the orders from their customers who are the most successful traders. If they traded against these folks they would be liable to lose their shirts like FXLQ, especially when it is a big order the client is placing. On the other hand the firms who actually match client orders up with other client orders and offset any positions they can't match up with their liquidity providers only make the spread. They don't cash in every time their clients lose like the others and as a result make much less money because sadly most of their clients end up losing money anyways. So in the end for most firms it is the business model of trading against most if not all clients which prevails, because the primary motivation of the people running the company is greed and they can make a lot more money this way. That is of course unless their clients actually make money, in which case they just declare bankruptcy and walk away ala Refco and FXLQ. So the new rules requiring higher net capital often force firms who are doing business the right way out of business and leaves you with a choice between different firms that trade against you. Now I am not saying that some of these firms which were forced out of business because of the new capital requirement didn't deserve it. Quite a few of them like One World Capital certainly did deserve to get shut down but you also take out the good guys. It's kind of like a medieval battle where your archers fire arrows at all the guys in the sword fight and you end up killing your own soldiers as well as the enemies. If the NFA really wanted to clean up the industry they would put the guys who trade against their clients out of business. Of course if they did that there would be no one with enough money to pay the enormous fines that a good deal of the NFA employee salary comes from. Since they ARE NOT a government entity and only a members organization all their income is derived from fines and "dues" paid by their members on every position traded.

I wouldn't be too concerned about this bill getting passed in Congress anyways, if you look at it closely you will notice that it not only calls for increased capital for Forex dealers but also calls for big off exchange players to report their positions in instruments which ultimately effect the price of the futures being traded on the exchange. I highly doubt that Citigroup and Credit Suisse will let that happen, they don't want every Tom, Dick and Harry knowing what they are doing. If for example they were cornering the silver or gold markets they wouldn't want to have to admit it. I am sure the calls to your congressman won't be necessary, the bribes from the bankers should be sufficient.

Scott Kuehne, President
Forex Traders Incorporated
Toll free at 1-866-432-4658
934 North University Drive # 313
Coral Springs, FL 33071
Fax:954-719-2450
website:ForexTradersInc.com - Use Us As Your Introducing Broker

I heard so much about MBT not making the cut all last year, especially from those associated with market maker types. I am glad to see that MBT has plenty of money and made the cut with flying colors. They wrote me a letter last year stating their financials where in very good condition.

I think they are one company that has not opened their books as some have said. I have no idea about that.

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Thanx,
Have a Great Day !
Craig Weaver

Been doing well trading recently so I haven't had much time to post (gotta love volatility!)

In any case the shysters are busy as ever out there so beware. Forex Fraud is happening all over the world. The trading public really needs to be careful about who they trade with. Again, I recommend sticking with firms that are regulated, have good track records and have a healthy capital number. Above all I STRONGLY recommend that you not trade with a firm that is unregulated.

All the crooks busted below were unregulated rogues (especially Zimbabwe's dictator Robert Mugabe. lol.) As a guide it should be noted the following firms are not regulated and as a customer you have no rights in a dispute or if the firm gets into trouble and goes bankrupt:

Unregulated Brokers
Finex
Tradex Swiss AG
ACM
WestCapFX
MIG
DukasCopy
GFX Group (Forex.CH)
Crown Forex
GCI
Northfinance
FXDD

And with the Congress set to raise minimum capital requirements for forex dealers to $20 million these numbers are once again taking on greater significance.

Above $20 Million
Oanda $157 Million
RJ O'Brien $91 million
FXCM $82 million
GFT Forex $76 million
Gain Capital $50 million
I Trade FX $33 million
Interbank FX $23 million

Below $20 Million
PFG $18.6 million
FX Solutions $17.3 million
CMS $13.3 million
ODL $11.9 million
GFS Forex $10.4
IFX $9.3 million
CMC $8.7 million
Alpari $8 million
Ikon $7.9 million
Easy Forex $7.7 million
Hotspot $7.7 million
MB Trading $7.6 million
Friedberg Mercantile $7.5 million
Forex Club $7.4 million
Money Garden $6.3 million
Bacera $5.3 million
Advanced Markets $5.2 million

Financial Data for FCMs

I have been hearing a lot about FXDD and people have been asking me about their regulatory status. So what's the scoop?

FX Direct Dealer is a New York City based broker located in Manhattan . FXDD used to be affiliated with Tradition Securities. However, today Tradition only owns a small percentage of the firm. Thus FXDD is in no position to claim Tradition as a parent company for regulatory purposes.

So aren’t they then required to register according to the law? Not according to FXDD. Here is a response I got from a customer service rep over at FXDD when I asked them this question on their chat:

Uh, someone should let FXDD Know that OTC spot forex IS regulated in the United States and they ARE subject to regulation by the CFTC.

I have put the question to FXDD by email but have yet to get a response. Customers need to be aware that this firm is swimming in some very murky regulatory waters. The CFTC could crash through FXDD’s door at any moment and demand the firm shut down their business because they are not regulated. Every retail forex dealer in the United States has accepted the CFTC as their regulator but FXDD is claiming they have no jurisdiction? This firm in my opinion is a very risky place to put your money. Buyer Beware.

With at least $525

National Futures Association | News Center

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