If we do the math another way: Since 1999 there have been 3 failures they paid money on. The combined payout was $15.5 million. Average payout was $5.2 million. If 20 firms go down, that is $104 million. Keep in mind 2 of those "average payouts" were during the stock market boom and not a depression or "market correction".

"12 minutes ago - Associated Press" Stocks skid on lending worries - Yahoo! News
"NEW YORK - Wall Street suffered one of its worst losses of 2007 Thursday, leading a global stock market plunge as investors succumbed to months of worry about the mortgage and corporate lending markets. The Dow Jones industrials closed down more than 310 points after earlier skidding nearly 450."

Once how bad the story actually is on subprime loans comes out, it won't look good. Foreclosure rates are at an incredible high, and that affects subprime loans. All of that subprime loan money failing will take down a large chunk of hedge funds, bond market, etc. Story isn't fully unveiled yet.

Can you provide more information about AMIFX? Thank you so much.

The whole debate is a bit over the top and you are correct in assuming that various regulatory agencies are laughing out loud rolling on the floor as they watch the unknowing advise unknowable. The whole capital issue is really a red herring in that one could be a TV repair man one day and CEO of a Forex Dealer Member (FCM) the next day if only he had sufficient capital. The fact that he would not know the difference between a bid and an offer seems to be lost on far too many people. If one looks at the depth of experience and operational protocols followed by solid companies, their registration or lack thereof becomes a footnote. The NFA could raise minimum net capital requirements to $50m and it would not make any difference. Those who shake the bushes looking for a response to their essays should use their time more wisely. The saviours of the world should find something to do with all their spare hours. Firms who choose to remain private and focus on providing their clients with credible prices, good service and assistance will be around a lot longer than the heavily capitalized firms whose experience is skin deep.

*applaud*

I hope agreeing with you doesn't detract from your message at all, but here is my 2 cents. Having a lot of money in the bank doesn't make a broker honest, good, experienced or decent. I think the NFA should focus more on regular consistent accounting that software should be doing automatically anyway than the amount of extra money in the bank. It appears their focus is to charge *everyone* in the industry for membership dues including a tax on traders.

Healthy Forex Firms ???
FXLQ ($36,000,000 on 5/31) but was $2.8M on 1/31 which is +1185.71%
Interbank ($7,000,000 on 5/31) but was $5.3M on 1/31 which is +32.08%
FXCM ($51,000,000 on 5/31) but was $62.7M on 1/31 which is -19%
GFT ($48,000,000 on 5/31) but was $43M on 1/31 which is -11.63%
Oanda ($44,000,000 on 5/31) was $42M on 1/31 which is fine to me
FX Solutions ($20,000,000on 5/31) but was $10.3M on 1/31 which is +94.17%
Gain Capital ($20,000,000 on 5/31) was $18M on 1/31 which is fine to me
CMS ($10,000,000 on 5/31) but was 7.6M on 1/31 which is -31.58%

My question is do you think that a company is healthy if its financial is up and down some much in 5 months and why it happened like that?

Some brokers rip off their customers more than others. Oanda seems to be a slow but steady profit, which is very refreshing given their large capitalization. FXLQ includes FXSOL, IBFX and Velocity4x is known for a large quantity of signal spikes. The data is identical between these firms because it is the same data. The profits are exorbitant. After doing research into the NFA complaints, the NFA registries, background information and some information on the people involved (especially NFA registered Robert Grey) I stayed away from and advised against the firms listed above.

I believe FXSOL is older than FXLQ butnot same or parents companies. However in the business worlds nothing is white and black

Have you more to read about that?

Strange because FXSOL profits for 2006 was plus 30 million, same as FXLQ grow up .

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Looks like the media is starting to pick up on the undercapitalization story. Both FX Week and Euromoney did recent stories on what I have been saying for several weeks now:

Proposed NFA rules seen as catalyst for consolidation in US retail
FX market: FX commentary, FX news. Weekly FiX: FX this week

US regulators clamp down on retail FX dealers
FX Week - The Global business of foreign exchange lic%2FshowPage.html%3Fpage%3D459830

Subscriptions are required for both but here is the money quote from FX Week:

The NFA said it has been concerned about the lack of protection for FX customers. "From what we've been seeing and the enforcement actions we've been taking recently, for the protection of the customer in the markets, we really need to raise the minimum capital requirement for these firms," said a Chicago-based NFA spokesman.

Since March, eight FDMs have fallen under the NFA's early warning requirement of $1.5 million, and the regulator's worries have been heightened as the amount of retail customer funds held by FDMs has increased to more than $1 billion as of May 22.

The largest FX dealer firms are well clear of the proposed $5 million requirement, according to the CFTC's May 31 report of adjusted net capital holdings, which showed CMS holding $11,512,421, FXCM $55,668,469, FX Solutions $12,650,227, Gain Capital $18,694,143, GFT $47,681,883, and Oanda $35,361,139.

Once again if regulators are going on the record as saying they don't have any confidence in the manner in which undercapitalized firms operate why should retail fx traders have any?

I think NFA should regulate FCMs by monitoring their business activities to prevent bad things from happening to Forex clients, such as trading against clients than do Stop hunting and spiking price. I also think if clients's funds are segregated from FCM's funds is much better than just shutting down smaller firms.

We need more FCMs competing for our benefits instead of letting few larger firms to control the market.

Forexsavior, can you explain why most of your healthy Forex firms have their financial ups and downs so dramatically in the past few months?

In response to Talktome:

1) AMIFX's case is still before the NFA review board. AMIFX itself has not responded to the NFA complaint yet. In my mind the most devastating charge is in regards to the way AMIFX used false data to give off the appearance they were meeting their capital requirement when in fact they were not. AMIFX is doomed. There is no doubt in my mind they will be closed for good by the end of the year.
BASIC Case Summary

2) In regards to the NFA's focus on smaller firms, the reason they are doing so is because smaller firms are going belly up and committing outright fraud in record numbers. While larger firms may have questionable dealing practices at the very least they are not going out of business left and right and running away with customer funds and going off to Vegas to go whoring like the principals of some smaller firms have been caught doing. In regards to the fluctuations in the big firms' balance sheets it is hard to say. Some of these firms have offices all over the world and are constantly moving money around to fund this project or that project. GFT, FXCM, IFX are all firms that are regulated all over the world and so I imagine they are constantly shifting money around as their businesses evolve. Sometimes firms will tell you they made a big tax payout and that brought their capital down. Sometimes fresh investors come in like with FX Solutions and InterbankFX and plop in millions of dollars. But for the most part all of the firms listed in the "Healthy Firm" category are well capitalized and will be able to survive the coming capital requirement adjustment, whereas the dead forex firms walking are in serious trouble and most of them are unlikely to be open come this time next year.