Forex Magnates

[miko432]

When you hear the word ‘regulation’ what immediately comes to your mind? Is that something good or bad? To me, that is always something grey, bureaucratic, NFA, cumbersome, rigid, etc. Now we have one more reason to frown when we hear that word.

So how many US brokers do you think have survived the NFA requirements tsunami which swamped the Forex industry in the past year or so? Given the competitiveness in the market and the abundance of online and offline ads you might say 50 or maybe 30 or even 20 if you are a real skeptic.

Actually it’s closer to 14. Yes, that much.

Back in October 2008 there were at least 29 of them. That’s a 60% decrease in 6 months…
With NFA inventing new impractical requirements every couple of months and FXCM acquiring one broker’s customer base after another the US Forex industry is undergoing a significant consolidation process. What used to be thriving and very competitive industry is now becoming more and more regulated and centrist and this is really bad news for consumers. The less competitive the market the worse is the bargaining power of the consumer.
NFA failed in its bid to make the markets better and made them worse by making all the wrong moves that were possible.

The Forex survivors, so far, are (registered with NFA as of March 2009):

Oanda
FXCM
Gain
GFT
FX Solutions
IBFX
PFG
CMS FX
IG Markets
Forex Club
MB Trading
Alpari – Just entered the US market
Ikon (Tradeview)
Easy Forex
I-Trade – sold its retail business to FXCM
ODL – sold its retail business to FXCM
ACM – Withdrew its NFA registration
GFS– announced its exit from US market
FXDD - is in registration process, though it might encounter few problems…

Give the NFA a few more months and the number of brokers goes below 10. Guaranteeed.

Michael

 

[miko432]

New Chairman of CFTC sworn in, promises new era of agressive regulation…

New Obama appointed controversial CFTC Chairman Gary Gensler was sworn-in yesterday and basically promised “strong, intellectual and aggressive regulation” (Oh God…).

Gensler also stressed the need to “urgently close the gaps in our laws to bring much-needed transparency and regulation to the over-the-counter derivatives market to lower risks, strengthen market integrity and protect investors.”

My guess is that the Anti-Hedging and the Anti-Pricing requirements were only the tip of the iceberg and that soon I’ll follow my article about the declining number of US Forex brokers with another, shorter one…

 

[miko432]

How Forex brokers gamble with your money: The CFTC wants YOU to comment on new requir

CFTC issued a statement (scroll down) where it asks for Public (that means YOU) commentary on whether YOUR funds which are deposited with Forex brokers can be invested in risky assets..

So first of all, go ahead and email David Stawick at [email protected] telling him that this time the CFTC got it right – we don’t want brokers to gamble with our money.

What this means is that up until now brokers could take the money you deposited and invest it in whatever instrument they wanted in order to make more gains while hoping for you to lose money or make a lot of trade volume (commissions).

What I find ironic is that CFTC/NFA sought Public commentary on this issue – which beyond any doubt is for the traders – and not on other key issues such as Anti-Hedging and Anti-Pricing which would have ignited a much heated debate. Someone clearly wanted to avoid any open debate on nonsense requirements AND leave an impression of supposed transparency with issues people find a no-brainer to vote for, such as this one.

Who can claim now that CFTC/NFA isn’t listening to the public?

CFTC Seeks Public Comment on Possible Changes to Regulations for Investment of Funds Deposited with Clearing Organizations and Futures Commission Merchants
Washington, DC – The Commodity Futures Trading Commission (CFTC) has approved for publication in the Federal Register an advance notice of proposed rulemaking seeking public comment on possible changes to its regulations regarding the investment of customer funds segregated pursuant to Section 4d of the Commodity Exchange Act and funds held in an account subject to Regulation 30.7.
Regulation 1.25 provides that a derivatives clearing organization or a futures commission merchant holding customer segregated funds may invest those funds in certain permitted investments subject to specified requirements that are designed to minimize exposure to credit, liquidity, and market risks. The CFTC is considering proposing amendments that would revise the scope and character of these permitted investments.
Additionally, in conjunction with its consideration of possible amendments to Regulation 1.25, the CFTC is considering applying the investment requirements of Regulation 1.25, including any prospective amendments, to investments of funds held in accounts subject to Regulation 30.7 (accounts for foreign futures and options).
The CFTC seeks public comment on this action before issuing any proposed rule amendments. The comment file will remain open for 60 days following publication in the Federal Register. Copies of comments may be obtained by contacting the CFTC’s Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581, 202-418-5100 or by accessing the CFTC’s website, www.cftc.gov. Interested parties may submit their comments electronically at [email protected]. All comments received will be promptly posted on the CFTC’s website.

 

[miko432]

Crown Forex: finished, caput, done… This time it's the final notice.

Just like it was anticipated, Crown Forex is finished.

In the following statement sent to Crown Forex’s clients, FINMA announces the final liquidation of the Swiss broker and asks clients for their balance statements and any claims they might have towards Crown.
All this despite the pathetic and bogus Crown’s claims for innocence.

Dear clients,
The Swiss Financial Market Supervisory Authority (FINMA) has rendered on May 18, 2009 a decision opening the bankruptcy of CROWN FOREX SA as of Tuesday May 19, 2009 at 08:00 am (Swiss time).

The decision will be published on May 29, 2009 at 10:00 am (Swiss time).

Philippe von BREDOW and Laurent WINKELMANN have been appointed as bankruptcy liquidators by the FINMA.
Effective immediately, as of the date and time of the bankruptcy opening, the activities of CROWN FOREX SA are suspended, the company, its Directors and officers are forbidden to make or receive payments, and all the clients’ open positions are closed.

We thank you to communicate to the liquidators, until June 30, 2009, in writing the following :
1. Account Number and relevant details;
2. Open positions as of Tuesday 19 May 2009 at 08:00 (Swiss time), together with supporting documents thereof;
3. Any additional claim you may have toward CROWN FOREX SA;
4. Any debt you may have toward CROWN FOREX SA.

Sincerely
Philippe von BREDOW - Laurent WINKELMANN
NOTTER MEGEVAND & PARTNERS
Place Edouard-Claparède 3
1205 Genève
SWITZERLAND
[email protected]
[email protected]

Chers clients,

L’Autorité fédérale de surveillance des marchés financiers (FINMA) a rendu en date du 18 mai 2009 une décision ouvrant la faillite de CROWN FOREX SA le 19 mai 2009 à 8 heures (Heure Suisse). La décision sera publiée le 29 mai 2009 à 10 heures (Heure Suisse).

Dans la même décision, Messieurs Philippe von BREDOW et Laurent WINKELMANN ont été nommés liquidateurs de la faillite.
Avec effet immédiat, à la date et à l’heure de l’ouverture de la faillite, les activités de CROWN FOREX SA sont suspendues. La société, ainsi que ses organes ont l’interdiction de faire et de recevoir des paiements. Toutes les positions ouvertes des clients sont liquidées.

Nous vous remercions de communiquer aux liquidateurs par écrit d’ici au 30 juin 2009 les informations suivantes:
1. Numéro de compte et coordonnées;
2. Positions ouvertes à mardi 19 Mai 2009 à 08:00 (Heure Suisse), avec les documents justificatifs;
3. Toutes autres créances que vous pourriez avoir contre CROWN FOREX SA;
4. Toutes dettes que vous pourriez avoir envers CROWN FOREX SA.
Cordialement,
Philippe von BREDOW - Laurent WINKELMANN
NOTTER MEGEVAND & PARTNERS
Place Edouard-Claparède 3
1205 Genève
SWITZERLAND
[email protected]
[email protected]

 

[miko432]

Top Forex Brokers report over $105B in daily traded volume

I know you’ve been expecting it so here it is: The largest and most up-to-date report detailing the average trading volumes by retail Forex brokers. The report shows that all prior estimates were far from the actual figures. Retail forex volume doubled itself in less than two years and the total average daily volume is well above $100B.

Largest retail Forex broker, as you probably already know, is FXCM with Oanda coming in at a distant second place. It looks like FXCM’s world Forex domination is all but complete and all that is left for others is the competition for 2nd and 3rd places. Good luck Oanda, Gain, Saxo and GFT.

The numbers as were officially, and to some extent unofficially, released by the brokers themselves: Read More

Michael

 

[miko432]

FINMA warns that Crown Forex might not be the last Swiss broker to fall

As it was extensively reported in the past few weeks Crown Forex is being liquidated and today a Swiss court had declared it bankrupt, as expected. Crown Forex’s assets will be liquidated after the company’s appeal against an earlier ruling was rejected.

FINMA then went ahead and warned that more Forex brokers could follow given the new Swiss regulations. While these regulations are not as stringent on the technical side (no Anti-Hedging or Anti-Pricing yet) they still require almost 5 times more Net Capital than the NFA requires, making it extremely difficult for some Forex brokers to comply.

Currently there are only 5 approved Swiss Forex brokers, but there are still several more pending an approval.

Michael

 

[miko432]

Beware of brokers offering Zero spread!

New FX Pulp promotion - Trade with ZERO spread AND ZERO Margin. Opa!

So you are asking yourself what’s wrong with not paying for trading? The answer is simple: everything is wrong. In this cruel and competitive brokers’ world - nothing is for free, so if something is offered completely for free you should ask yourself why?
The answer is given by FX Pulp right away: we are the only broker that lets you gamble with your money AND lose more than you invested. Yes that’s what ZERO margin means my friends: “we give YOU the opportunity to be left with ZERO money and pay ZERO commission for that opportunity ”…

Michael

 

[miko432]

CMS is enroute to become one of the largest brokers, and ponders a UK subsidiary to a

In an email sent to its clients few days ago CMS celebrated its 10th anniversary as well as announcing a plan to open a UK office which doesn’t make any sense unless it will serve hedging clients efforts to escape the NFA’s reach.

All in all it seems CMS is on the right path to become one of the more dominant Forex brokers in the US due to its strong trading platform and millions of cool features that it offers. CMS must become much more aggressive in marketing and acquisitions just like FXCM in order to dominate the Forex market.

Michael

 

[miko432]

Forex MegaDroid Hits a Losing Streak

Over at Trading-Gurus.com we’ve been running tests on Forex MegaDroid since it launched with the assistance of an army of Clickbank affiliates and a vast quantity of hype at the very end of March.

I don’t know if you remember, but this Droid (actually a MetaTrader 4 expert advisor) can apparently “see into the future” with the aid of some new “artificial intelligence technology” confusingly entitled “Reverse Correlated Time And Price Analysis”. For comparison purposes we’ve been testing it alongside a robot of our own, which doesn’t use any intelligence whatsover. In fact it’s so dumb it does everything wrong! It uses random entries, then it stays in the market 100% of the time and finally it uses Martingale style position sizing. In addition to this long list of “faults”, you can also download our “Robot” from our website completely free of charge, solely for educational purposes.

Here’s how the “Droid” has been doing throughout April and May:

Michael

 

[miko432]

FXCM explains its execution model, Dealing Desk gone

Following my request for more information about FXCM’s execution model, Jacklyn Sales from was kind enough to write the following detailed explanation.
Many of us heard conflicting reports and stories about FXCM’s Dealing or Non Dealing desk due to some bias and much ignorance. It became time for FXCM to set the record straight and we learned officially what their model is:

Clarifications on FXCM’s Execution Models:
FXCM uses No Dealing Desk execution for our Standard accounts as well as other account types, such as Mini and Active Trader, which constitutes 90% of our trading volume. Every “No Dealing Desk” trade is executed back to back with one of the world’s premier banks or financial institutions, which compete to provide FXCM with bid and ask prices. The best spreads available to FXCM are streamed to traders with a small markup, which is generally one pip or less for major currency pa...

Michael

 

[miko432]

Is FIFO The Elephant In The Room No One In Forex Is Talking About?

There are less than 60 days remaining for U.S. Forex dealers to modify their platforms to comply with the new "hedging" requirements.

However, while NFA-registered brokers are busy offering creative hedging alternatives to get around the new regulation; and the U.S. trading public is crying out that NFA has no business interfering with how a person chooses to trade; no one is shining any light on the part of the new regulation that may have more significant implications than the hedging controversy. The NFA has stipulated that brokers must close out offsetting positions each day and that those positions must be closed on a first-in-first-out (FIFO) basis.

Tom

 

[miko432]

Craziest promotion yet - trade without depositing...

Forex marketing techniques become more and more competitive and with the lack of new and effective marketing channels Forex brokers are required to become more creative.
Some brokers like FX Pulp take it to the extreme while others, like the newly established Swiss Dealing, think that all traders are idiots - its new and wildly original promotion is to offer a no-deposit dealing… Don’t they call it Demo Accounts in other places?
Anyways, here is the promotion and I would personally recommend traders to avoid brokers who don’t even list their phone numbers on the contact us page.

Michael

 

[miko432]

FXCM Holdings LLC Releases Financial Data: Explains the drop in Net Capital

New York, June 4, 2009: FXCM Holdings LLC continues to make a public release of its balance sheet. The numbers reflect the firm’s financial strength and status as of April 30, 2009. Highlights of the (unaudited) balance sheet include the following: $114,985,838 In Capital (Assets Minus Liabilities) $130,307,551 In Operating Cash (Excludes Client Funds) Please Note: In April, there was a significant drop in the firm’s net capital. This decrease is related to FXCM fulfilling its tax obligations. Last year was a terrific year for FXCM with the firm hitting all-time volume highs, and as a result, the ownership of FXCM made payments of nearly $50 Million towards fulfilling taxes due..

Michael

 

[miko432]

Gain (Forex.com) charged with fraud, false reporting or deception (market making)?

In a typically laconic statement CFTC has announced that it established that Forex.com violated Section 4b(a) ofthe Commodity Exchange Act, and that this violation caused $22,231 in damages. 1 Accordingly, Gain Capital Group LLC, d/b/a Forex.com is ordered to pay to David Ni $22,23 i, plus post-judgment interest on that amount at 0.52% compounded annually from the date of this order to the date of payment, plus $50 for the cost of the filing fee.
Why is this important and what is Section 4b(a) you ask? According to the Security Exchange Act (here it’s called 6b not 4b) it’s:

Michael

 

[miko432]

Tradency scores a deal with ODL to offer automatic Forex trading

High five to Tradency for scoring a deal with ODL - one of the largest UK brokers and to ODL itself for understanding the needs of newbie Forex traders and capitalizing on them.
Another High Five to ODL is for offering a drop-dead simple registration process - in less than a minute I was inside the demo account and managed to select AND activate a trading strategy on EURUSD called Base-Hit with a promised 91.92% win ratio without reading any instructions. Let’s wait to see how it performs today .

Michael

 

[miko432]

Tradeview Announces Availability of MetaTrader 5

Tradeview Forex announced today, the availability of MetaTrader 5 will be coming soon. The long awaited MetaQuotes platform features:

5 order types and 4 execution modes available for trading
Implements practically any trading strategies
Built-in reports on all trading activities
Built-in indicators and graphical objects
Allows quicker analysis of quotes and trade decision making
3 chart-types, 21 timeframes and over 70 analytical tools
High performance and outstanding speed
Strategy tester MetaTrader 5

No one has actually given a date of availability and MetaQuotes is not saying anything either. I’m waiting to see if it handles modifications necessitated by changing regulations more gracefully than MT4 did. So soon is SOON?

Tom,

 

[miko432]

Yuan For All and All For Yuan

I have been following what China has been doing with its currency since the head of China’s central bank proposed replacing the dollar with an international reserve currency at April's G20 meeting. Today the chairman of China's second largest bank, China Construction Bank, said that he is exploring offering renminbi-denominated trade finance credit that could make the Chinese currency more widely used internationally. More...

Since December, China has signed currency swap agreements with seven of its trading partners including Argentina, Belarus, Brazil, Hong Kong, Indonesia, Malaysia and South Korea which enables these countries to pay for Chinese exports in yuan rather than dollars. This means that 95 billion, in what would normally be dollars, will now be transacted in 650 billion yuan over three years.

Tom,
http://www.forexturtle.com/Blog/post/2009/06/Yuan-for-All-and-All-for-Yuan.aspx

 

[miko432]

SEC and CFTC to merge or not to merge?

It appears that not only the Forex brokers are undergoing a massive consolidation but that the regulation agencies are in a similar process as well. It’s been widely speculated that CFTC and SEC might merge in order to create one leading regulatory agency that will oversee all derivatives and off-exchange products (Forex for instance). However, this move might have just been cancelled: The new Treasury Secretary Timothy Geithner was rumoredto have said that the move won’t happen.
Whether it’s a good or a bad thing is a matter for debate, but it is clear that the change is logical because both agencies oversee financial instruments:

Michael

 

[miko432]

IG Group reports a strong fiscal year, Forex growth in UK slows down, Japan is becomi

IG Group issued the following trading update relating to the financial year ended 31 May 2009. While IG is not a major Forex player it is still medium sized and is one of the largest UK brokers.
The Group expects to report revenue of around £257m (2008: £184m) and adjusted profit before tax of around £125m (2008: £97m). Excluding the impact of FX Online Japan
KK (“FXO”), which the Group acquired during the period, organic revenue growth for the year was 25%. For the final quarter organic revenue growth was 18% year on year, compared to 12% in the third quarter. This improvement in rate of growth was achieved despite significant reductions in the level of market volatility.

Michael

 

[miko432]

And yet another Forex Ponzi scheme! This time targeting Korean-Americans

I’m constantly trying to warn naive (and sometimes the most sophisticated) investors that people promising unthinkable returns but refusing to disclose all the financial details are rip off artists. If you do not have a clear cut description/prospectus/term sheet of what products are being invested in, where the assets are being held and who is monitoring the performance (like KPMG, E&Y, etc.) – chances are good that you have been approached by a scammer looking to part you from your hard earned money.
Transparency is key in the investment arena.
We already had a Texan Professor as well as a Florida money manager charged with running a Ponzi scheme but this time the scam was more targeted: it was used to rip off Korean-Americans.
Full release:
CFTC Charges California-Based SNC Asset Management, Inc., SNC Investments Inc., CEO Peter Son, and CFO Jin K. Chung in an $85 Million Forex Ponzi Scam
Defendants Targeted Korean Community in the San Francisco Bay Area

Michael