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The NFA’s next scheduled capital requirement is set to kick in on January 17th at $15 million. Firms offering leverage of over 100 to 1 therefore must have over $20 million set aside. Alpari was showing $18 million in their last net capital filing but still appear to be about $5 million short of the amount required to offer leverage greater than 100 to 1. Therefore, Alpari has just announced they are raising their margin requirement: Change to Customer Agreement and Terms of Business
Quote:
Company News – January 8, 2009: Change to Customer Agreement and Terms of Business
Effective January 18, 2009, Section 2 of the Customer Agreement and Section 6 of the Terms of Business are being amended as follows:
In accordance with these changes, effective January 18, 2009, Alpari (US) will increase its stop out level to 100% of the required margin.
Please refer to the following example for an explanation on how this will affect your trading:
Assume that the quote for the EUR/USD is 1.2600, and you have $5,000.00 in your account.
Assume that, today, you open a position of 1 standard lot of EUR/USD. If the price moves against you after you open your position, MetaTrader 4 will automatically close your position around $252.00 (20% of the required margin), with a loss of around $4,748.00.
As of January 18, 2009, you open a position of 1 standard lot of EUR/USD in your account. If the price moves against you after opening your position, MetaTrader 4 will automatically close your position at $1,260.00 (100% of the required margin), with a loss of $3,740.00.
Please note the following: all positions that are left open with insufficient margin after the market closes on January 16, 2009 will be automatically closed upon the market’s re-opening on January 18, 2009, without further notice.
Team of Alpari (US)
With the new cap requirement scheduled to kick in shortly expect more such announcements. Traders who employ high leverage may want to consider winding down their positions if they are trading with smaller brokers to avoid any nasty margin calls.
The CFTC has just released their latest net capital figures. With the $15 million dollar deadline just days away who will make the cut and who will not? Financial Data for FCMs
The following firms have net capital below $15 million
AMIFX, HotSpot and Easy Forex are really behind the 8 ball. They are not even close to the $15 million mark. Sure the CFTC cap report lags about six weeks behind but time is running out and these firms have not shown any kind of gradual increase in their cap numbers unlike their other competitors.
The following firms have net capital below $20 million
IKon Royal $15,013,000
Forex Club $15,823,000
I Trade FX $17,098,000
Alpari $18,158,000
ODL $18,982,000
The following firms have net capital above $20 million
CMS Forex $26,540,000
PFG $27,704,000
Interbank FX $42,954,000
FX Solutions $45,125,000
GFT Forex $73,808,000
Gain Capital $102,959,000
FXCM $131,416,000
Oanda $170,799,000
As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new $20 million capital requirement going into effect in the months ahead.
ODL Securities has developed a nervous reaction to the battery of new regulations in the United States and has officially thrown in the towel. They are closing their U.S. office and shipping all their customers to FXCM. ODL released a fascinating press release making the announcement: ODL Securities Sells US Business
Quote:
ODL Securities Sells US Business
ODL Securities, the leading independent FOREX, derivatives, equity, spread betting and commodity trading house has sold the US division of its profit making US Forex business to Forex Capital Markets LLC (FXCM).
The move follows the current and planned implementation of new and more complex regulatory rules that have made it increasingly burdensome for all Forex Dealer Members to operate in the United States. These include increases in the minimum amount of regulatory capital that a Forex Dealer Member must maintain - up by three times over the past year and due to increase further in May to $30mn.
A strategic decision was therefore taken by ODL to use its financial capital more efficiently to fuel its growth in other parts of the world.
As part of its expansion strategy ODL Securities will open new JV offices in Turkey and Australia in the very near future, and expand its operations in Japan and Canada. In the UK head office, the business has been restructured to improve its offering with a focus on multi-lingual customer service and support (ODL now has clients from over 100 countries).
Announcing the sale, Graham Wellesley, Chief Executive of ODL Securities, said: “This has been a hard decision for us to make, ODL Securities Inc. is a very successful and profitable operation, but we could not justify disproportionately supporting one of our smaller subsidiaries.
“We remain firmly committed to expanding our international reach and to that end we have dramatically strengthened the management and resources of our UK Sales and Servicing Teams as well as developing new ventures in Europe, Asia and Australia. We remain profitable and our strategy will continue to focus on growing the business in 2009.”
Higher capital requirements are clearly squeezing smaller forex brokers and there are sure to be more brokers leaving the industry in the months to come. Traders need to be very wary of opening up long term positions with brokers who have less than $20 million in capital. As we have seen these smaller forex brokers close up shop (or raise margin requirements) with barely any warning to their customers. Traders deserve better peace of mind than that. It is hard enough just trading in these crazy markets let alone having to worry if your broker is about to close their doors and give your account the boot. Money talks in this business. If your broker can’t crow about having lots of capital on hand, beware…
ODL Securities has developed a nervous reaction to the battery of new regulations in the United States and has officially thrown in the towel. They are closing their U.S. office and shipping all their customers to FXCM. ODL released a fascinating press release making the announcement: ODL Securities Sells US Business
Higher capital requirements are clearly squeezing smaller forex brokers and there are sure to be more brokers leaving the industry in the months to come. Traders need to be very wary of opening up long term positions with brokers who have less than $20 million in capital. As we have seen these smaller forex brokers close up shop (or raise margin requirements) with barely any warning to their customers. Traders deserve better peace of mind than that. It is hard enough just trading in these crazy markets let alone having to worry if your broker is about to close their doors and give your account the boot. Money talks in this business. If your broker can’t crow about having lots of capital on hand, beware…
Francesc at FX Street is reporting that the SFBC investigation of Crown Forex continues and that customers still can’t withdraw their funds. However, it appears the blockade may be lifted in a few weeks time.
As I know many of you are highly concerned for the sake of your money at Crown Forex as the firm is currently under SFBC (Swiss Federal Banking Commission) investigation, I’m trying to be in close contact with management at Crown Forex and SFBC in order to keep you as best updated as possible.
Today, I got a phone call from SFBC. My counterpart was not able to confirm me when the investigation will end but from our conversation I got the feeling that we are not far from it.
I had been previously told that we could see the end during this week but it seems that the investigation will still last for some more weeks.
What I do get a confirmation is that it is totally true that SFBC does not allow traders to withdraw their money till the investigation will finish. To get this confirmation from SFBC is definitely a relief for me and I hope it is for many of you.
This is what can happen to you if you trade with an unregulated broker. Beware Swiss brokers that do not have a banking license.
Last year Rosenthal Collins bought MG Forex just as the first capital requirement was set to kick in. RCG then announced that MG Forex was a subsidiary of Rosenthal Collins Securities, which is regulated by FINRA, not the NFA. Thus MG Forex was able to avoid the $20 million capital requirement since FINRA members need only $250,000 in capital.
That was then.
Last week FINRA released a proposal capping the margin level that forex brokers can offer at 1.5 to 1. Essentially, FINRA is saying you can’t trade forex on margin.
The rule will not effect NFA registered forex brokers. But for those forex brokers with FINRA licenses the party appears to be over. Why is FINRA doing this?
Quote:
FINRA has observed a potential migration of retail forex activity from the FCM channel to Broker Dealers…
Hmmm, couldn’t be that forex dealers who didn’t have the capital to keep their NFA licenses were suddenly showing up to get a broker dealer license on the cheap? Well, if that was the case consider that escape hatch to be boarded up.
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