Todd B. Crosland, Chairman and President at Interbank FX has been the first top executive of the selected 20 FX Brokerage firms to answer the questionnaire we sent this morning regarding new NFA requirements and their potential impact on the FX industry.

I want to thank Todd for such a quick response and wish you and your company Interbank FX all the best of success.

Francesc

Questionnaire

1 - What is your opinion on the recent NFA regulatory changes? How do you view the implementation of these new measures for FDMs?
The NFA’s primary concern is to protect the individual investor. The NFA has been very vigilant in policing our industry. I personally support the efforts of the NFA. By the end of September or October, the CFTC will approve the NFA’s proposed increase in minimum net capital. The new minimum net capital requirement will be $5,000,000. If firms offer great than 100:1 leverage, they will need to maintain two times the required minimum or $10,000,000. Since most all FCM’s offer mini accounts with 200:1 leverage, all FCM’s will need $10,000,000 in net capital. The current net capital requirement is $1,000,000 or 5% of customers funds. Since our customer funds balance is over $100,000,000, we need to maintain 5% of this amount in net capital. Since we offer 200:1 or 400:1 leverage to our customers we need to maintain two times the required net capital. Based on our customer funds balance we need to maintain in excess of $10,000,000 in net capital. So the NFA’s increase in minimum net capital will not affect Interbank FX, since our net capital is over $27,000,000.

I believe that the requirement for FCM’s to have $10,000,000 in net capital is good. This will assure that customers funds will be safer and that firms involved in the industry will be sufficiently capitalized.

2 - The new proposal also calls for the use of proper and uniform accounting methods and tightens internal controls. Do you think this measure could affect your company’s business in some way?
Interbank FX has always have significant financial and operational controls. Requiring this for all FCM’s again is very positive for customers.

3 - Do you consider these measures could be a breath of fresh air that could result in more investors joining the FX Market?
The greater transparency and financial stability for FCM’s and customers will be positive for the industry and will attract new participants to the Forex market.

4 - Switzerland has recently started a similar process, what is your opinion about it?
I am not familiar with the proposed regulations in Switzerland, but again I support this regulatory effort.

5 - Would your company be on the bid side if some firms were not meeting new requirements? What is your company’s policy on acquisitions of smaller firms?
Interbank FX will be interested in bidding for firms that do not meet the new stricter requirements. We are currently actively working on this at the present time.

6- How do you see the M&A market in the Forex industry? Do you expect important corporative movements in the next months?
I do not believe that there will be any M&A activity in the top six US FCM’s, of which Interbank FX is one of these. But the smaller firms with under $10,000,000 in net capital, I believe there will be activity with these firms. These small firms will either have to raise additional or try to sell to a larger FCM. The NFA reported in August that 25 of the 40 Forex Dealer Member FCM’s would not meet the required $5,000,000 minimum net capital requirement. With the required $10,000,000 minimum net capital to offer mini accounts with 200:1 leverage, the number of FDM – FCM’s would be left to less than 10. This means that possibly 30 Forex Dealer Member FCM’s will not meet the new requirements.

7 - For many, the very business model of Forex brokerage firms that needs to be decided is whether or not such brokerage houses can take opposite trading positions to those held by their customers, i.e., trading ‘against them’, which contradicts traders’ well-being. What is your company position on this? How do you hedge your customers’ trades?
Interbank FX does not trade against our customers. We have a pure “agency” model and “back to back” all customer trades with the counter party Bank’s that we deal with. We only make money when our customers trade. The more our customers are profitable, means the more trades our customers make. Our interests our squarely aligned with our customers. Most firms make their money when their customers lose money. I do not support this model. Our goal is to provide free tools for our customers to become successful. In the tracking that we do with our customers, we have found that 49% of our standard accounts have been profitable over the last 24 months. I believe this is an industry high. Other firms that trade against their customers will never have the incentive to provide the tools for their customers to be successful. Could you ever imagine going to Las Vegas and having someone at the casino stop you any teach you how to be successful? The same is true with the firms that trade against their customers.

Please let me know if there is anything else we can help with.

Regards,

Todd B. Crosland
Chairman and President
Interbank FX