Francesc’s Weblog » NFA: Tough times ahead….

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NFA: Tough times ahead….

Posted on January 14, 2008 at 23:00 in NFA new requirements by Francesc

Tough times ahead….

I´m reproducing here an e-mail I just got from one of my sources.

Things are moving and things won´t ever be the same… I think changes will be for good, but the path will be tough for everybody.

I´ll keep you posted

Francesc

"Francesc,

Both U.S. house and senate have passed the CFTC reauthorization act as an attachment to the farm bill. It should take a few weeks to reconcile the two versions of the farm bill and be sent to the president of the United States to sign.

Even though it could die in one of these steps, odds are greater then 50% that it will pass.

The two biggest changes impacting the U.S. Forex industry will be:

1. All IBs will be required to register with NFA and CFTC.

2. Minimum capital requirements will jump to 20m for FDMs or any FCM offering Forex.

Once the bill is passed the CFTC and NFA will have wide lattitude in implementing the specifics and we expect them to make it even tougher for the industry.

The industry is now under the gun publicity wise due to the collapse of One World and FXLQ - Forex Liquidity - with customers there ending up with less then total balances.

We expect more bad news in coming months with many of the still living marginal FCMs expected to fold and its fairly certain there are more disasters looming within the small FCM community as many share the same traits with failed FCMs of having little money for proper accounting, compliance and other essential functions."

8 Responses to “NFA: Tough times ahead….”

on 21 Jan 2008 at 3:39 am1FranFx

WOW this new bill knocks out most retail FX players, even the big guys like FXCM, Gain and oranda will not qualify, to my knowledge they are not licensed nor dealings in on-exchange business so are no longer qualified for FX retail status. Here is the passed bill http://agriculture.house.gov/inside/Legislation/110/sbsCFTC.pdf already passed House committee of agriculture, so looks to be right around the Conner to becoming realty now..
on 21 Jan 2008 at 11:26 am2Francesc Riverola

Thanks FranFX… Great contribution!

I made a post about this

Thanks indeed!

Francesc
on 23 Jan 2008 at 4:49 am3Jimmy Mayer

The larger brokers were directly involved in the lobbying for this bill.. I am perfectly qualified but it looks like a new designation, ‘newly defined retail foreign exchange dealers’ for these brokers. Also, Gain is solidly involved in equities so would not be affected in anyway
on 23 Jan 2008 at 1:34 pm4Jimmy Mayer

edit: ‘NOT perfectly quailifed’
on 23 Jan 2008 at 2:15 pm5FRiverola

Thanks Jimmy for the clarification

Francesc
on 15 Feb 2008 at 7:25 am6X IBFX Clint

Another great article on the new CFTC bill at euromoney , It looks to me like the current big FX guys are starting to shake. IMHO they wouldn’t have come public if it wasn’t serious.

http://www.euromoney.com/Article/1859012/Category/16/ChannelPage/8959/Regulation-An-uneven-regulatory-playing-field-.html

Francesc would love to see a story from you, if you decide to blog a story please remembers to get all sides NFA, CFTC, current off-exchange retail FX brokers and on-exchange futures FX brokers’ point of view as any unbiased reports should.
on 15 Feb 2008 at 8:02 am7X IBFX Clint

Jimmy were did you read gain is involved in equities? I’ve searched everywhere and can’t find a thing on gain being registered to conduct business in futures or equities’ in fact I called them directly yet they were inclined to respond, strange!!! for my understand and what I learned they are not involved in any on-exchange business, in fact none of the more popular FX firms are, So according to the NFA spokesman in this article they are not fully regulated and unsafe to deal with. Wow this is realy starting to look like they are loosing their foothold as FX kings
on 17 Jun 2008 at 1:35 am8Rob

Wrong. FXCM currently has much more than the required funds. I think we will start seeing a lot fewer IBs though.

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