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Looks like I Trade FX is throwing in the towel. With the NFA fining them $250,000 over the Olint affair and the $20 million capital requirement set to kick in I Trade FX is officially calling it quits: FXCM Acquires Clients of i-Trade FX
Quote:
New York―May 4, 2009―Forex Capital Markets LLC (Forex | currency trading | forex trading | forex broker) today announced it has reached an agreement to acquire the U.S. and international retail forex clients of i-Trade FX. Subject to regulatory approval, accounts are expected to be transferred from i-Trade FX to FXCM on May 8, 2009. Like several other forex firms, i-Trade FX has decided to cease offering service to US retail clients. Other firms that have decided to exit the U.S. retail business include ODL Securities, Hotspot FX, and CMC Markets. To offer retail forex trading services under NFA rules, Forex Dealer Members (FDMs) will be required to have a minimum of $20 Million in firm capital as of May 16, 2009.
The U.S. industry consolidation should continue in the months to come as cap increases and a battery of new regulations continue to squeeze the market.
Francesc at FX Street is hearing that the NFA’s rule banning the use of stops/limits as part of the NFA’s new FIFO edict will not be enforced until July 31st:
On April 30th I published here that the NFA will not be allowing stop and limit orders on open positions as this conflicts with their FIFO - first-in, first-out - new policy.
This had to go into effect may 17th along the announced prohibition of hedging.
At this time, the only update I’ve got so far is that due to the strong opposition of forex brokers, FIFO is being delayed to July 31st.
Francesc at FX Street is hearing that the NFA’s rule banning the use of stops/limits as part of the NFA’s new FIFO edict will not be enforced until July 31st:
WTF!? banning limit and stop orders??? AND HOW DO WE TRADE?
Dear Customers:
Interbank FX, along with all FCM's, has received information from the NFA that we want to pass along to our customers.
All registered FCM's have received a new Compliance Rule 2-43 regarding forex trading. On May 15, 2009, forex customers will no longer be allowed open "hedged" positions in their accounts. If you are currently using hedging as a trading strategy, we would encourage you to use the Interbank FX Demo accounts over the next month to help modify your trading strategy. Also, for those of you who utilize hedging strategy with your "Expert Advisors", we would encourage you to modify your code and test your advisor on the Interbank FX Demo servers as well. In order to assure a smooth transition for our customers to the new NFA Compliance Rule, Interbank FX has set May 8, 2009 as the last date that customers will be able to hedge open positions.
For customers trading on the MetaTrader 3 platform:
Due to the fact the MetaTrader 3 platform is no longer supported by MetaQuotes and they do not have the available resources to make the MetaTrader 3 platform compliant with this new rule, Interbank FX has decided to move all MetaTrader 3 customers to the MetaTrader 4 trading platform. This action will take place after the market closes on May 8, 2009. This action will require that MetaTrader 3 platform users download the MetaTrader 4 trading platform from our website. Instructions will be provided in future notifications explaining how to log into your MetaTrader 4 trading account
FXDD encourages you to continue to trade as you always have. We have always had solutions to the new NFA hedging rule that will not cause you to change your trading strategies. We will keep you advised.
CMS Forex wants to inform clients of two important changes to our trading terms, due to forthcoming regulations proposed by the National Futures Association (NFA).
Hedging
The first new NFA regulation, effective May 15th, will prohibit the trading feature of "hedging." Hedging was offered as an added flexible trading tool due to high demand from our clients. However, the NFA believes that traders who are unaware of how to effectively use hedging can incur additional costs without added benefit. The NFA has also uncovered certain practices by money managers and others that indicated abuse of the "hedging" feature. Therefore, starting May 15th, CMS Forex will no longer be offering the hedging feature, in order to comply with NFA regulations.
Although hedging will no longer be allowed within one account, those who feel that hedging is an integral trading tool, can simulate hedging by using two separate CMS Forex trading accounts. You can place an order in one direction in your first account and place a trade in the opposite direction with your second account. This method presents a greater risk of being margin called, as the positions do not offset each other in the same account. However, having two accounts with CMS Forex may work as a solution for your hedging needs.
Leverage*
In addition, the NFA will likely implement a regulation to reduce the maximum leverage that Forex firms can offer. In order to support the NFA's efforts, our US regulated FCM entity, will be preemptively lowering our maximum leverage on major pairs from 400:1 down to 100:1 on May 15, 2009. Having reviewed our clients' trading activity, we've noticed that the vast majority of clients' accounts used leverage does not exceed greater than 100:1. Currently, Forex brokers may offer up to 400:1 leverage, but what they are offering is actually the maximum leverage that you can trade with, or the minimum amount of margin required to maintain a position. A better representation of how leveraged your account actually is would be your used margin, or the size of your position(s) divided by the total amount of equity in your trading account. On average our clients' used leverage is only about 12:1, much less than the maximum leverage offered.
As of May 15th, clients will have to maintain a minimum of 1% of the notional value of their positions.
The stampede of small brokers out of the U.S. market continues. GFS Forex and Futures has announced they are shutting down their U.S. forex operation. GFS has purchased City Credit Capital in the U.K. and is relocating their business to London. However, they are no longer allowing U.S. customers to trade forex with them:
GFS Forex & Futures, Inc. is pleased to announce that we will be expanding territorially with the anticipated merger of City Credit Capital (UK) Ltd. ("CCC"), a United Kingdom based brokerage firm registered with and regulated by the Financial Services Authority ("FSA"). As part of this expansion, GFS is moving its trading operations for over-the-counter products to our London operations.
Because this move means that our US operation will no longer be able to handle your forex trading account, you will need to transfer or close your GFS forex account. You should, therefore, decide which course of action you want to pursue. You can liquidate your open positions at anytime and close your account simply by completing and submitting the GFS Fund Withdrawal Form available on GFS' website. We will also assist you in transferring your account to a forex broker of your choice.
If you have questions about these matters or wish to deliver your transfer or liquidation orders personally, you can contact Mr. Alan Ho at GFS Forex and Futures, Inc., One Post Street, Suite 2550, San Francisco, CA 94104, (415) 321-7188, closeaccount@gfsforex.com.
You need to understand that the last trading day for your GFS forex account will be Friday May 8, 2009. If you have not already closed or transferred your account before this date, by 4:00 pm East Coast Time on 8th May 2009, all open positions will be automatically closed at that day's closing price and any funds remaining in your account will be sent to you. Please recognize that we may need to verify a current wire transfer address for receipt of your funds and may need to contact you to obtain this information.
On April 20, 2009, GFS posted a notice on its website which could be taken as an offer for GFS to transfer your forex account to CCC. While CCC is registered with the FSA in the UK, it is not registered in any capacity with the CFTC nor is CCC a Member of NFA. Pursuant to the Commodity Futures Modernization Act (the "Act") and NFA Rules, GFS may only transfer forex accounts and positions of its US retail customers to certain enumerated entities to act as the new counter-party for any such transferred forex positions. CCC is not such an enumerated entity under the Act or NFA Rules.
Consequently, if you are one of our US retail customers, GFS may not transfer your forex positions or account to CCC. GFS regrets any confusion this posting may have caused.
Once again, the moral of the story is to stay clear of these smaller U.S. based forex dealers until they can clearly meet the $20 million capital requirement and demonstrate that they can adapt to the NFA’s new rules and regulations. Having your account forcibly liquidated with barely any notice should not be part of the bargain when you open up an account with a forex dealer.
The CFTC should be releasing their new financial data any day now. It should be required reading for anyone with an account in the U.S.
The CFTC has just released their latest net capital figures. With I Trade FX and GFS Forex departing the U.S. market that leaves only a little more than a dozen firms left standing.
The following firms have net capital above $20 million
Forex Club $21,354,000
CMS Forex $29,360,000
PFG $30,444,000
Interbank FX $38,393,000
FX Solutions $45,032,000
GFT Forex $87,169,000
Gain Capital $95,879,000
FXCM $113,463,000
Oanda $161,723,000
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 that is about to go into effect.
NFA regulated a new rule -NO MORE HEDGING POSITION + new order
As a result NFA Compliance Rule 2-43(b) Accounts in a hedged position currently do not have the ability to open any new positions involving the same pair has the hedge.
When one part of the hedge is closed the ability to open positions in the same direction as the remaining position shall be restored.
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