The Commodity Futures Trading Commission recently released its latest report on financial data for Futures Commission Merchants. This contains the numbers as of May 31st 2009, "from reports filed by June 30th 2009". This report is particularly interesting because on May 16th the NFA's minimum net capital requirement for Forex Dealer Members increased from $10,000,000 to $20,000,000. The CFTC helpfully allow you to download monthly data going back to 2002 too. It's interesting to discover which brokers have fallen by the wayside over recent months as successive increases in regulatory capital requirements have weeded out the weaker players.
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I received an email this morning from Forex.com promoting the benefits of opening a MetaTrader account with their FSA regulated UK operation. The headline read:
Total control of your trading strategies. – Don't let hedging restrictions affect how you trade your account.
When I clicked on it I didn't receive lots more information about how hedging restrictions might affect my trading. Instead I found myself looking at an online application to open an account at Forex.com UK
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As we reported back in May, FXDD still allow "hedging" on their MetaTrader 4 accounts. Presumably they feel able to do this because their application to become a member of the NFA is still pending. The announcement that we linked to in our May article was removed from their website some time ago, but yesterday a new take on the NFA hedging ban appeared in its place:
More on FXDD Say No Hedging Doom and Gloom Highly Exaggerated
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An email from the Forex MegaDroid team was waiting for me in my inbox this morning. It seems they will be releasing a new version of their robot before the end of the month, which is when the first-in first-out provisions of NFA compliance rule 2-43(b) finally come into force.
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In the second of our series of interviews with senior figures from the Forex industry, I spoke earlier today with Marc Prosser, Chief Marketing Officer of Forex Capital Markets. I started off asking the question on everyone's lips these days about the new "hedging" ban. We then talked about the relative merits of "straight through processing" versus "dealing desk" business models, and then briefly touched on the regulatory aspects of transatlantic transfers of client cash.
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I've just put the phone down after a long conversation with George Tchetvertakov, head of market research at Alpari UK. We started off talking about the new NFA "hedging" regulations and their effects on the retail foreign exchange business. Eventually we moved on to discuss some other topics, including using hedging as a means of reducing risk, and George's opinions about markets in general.
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Gain Capital are another foreign exchange broker who are now promoting their MetaTrader platform through an FSA regulated UK company. Gain have long used the FOREX.com brand in the United States. According to the press releases section of their website:
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As zero hour approaches FXCM are taking a different approach to the NFA ban on hedging. If you go to their website today, and wait for a while the banner will change to promote their new UK based website.
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In an announcement on their website forex broker FXDD say that:
In our effort to provide the best solution for your trading regarding the NFA’s new rule on hedging, please know that we have been in contact with the NFA and have offered several solutions which we believe will accommodate almost all types of trading strategies and comply with the NFA rules. Our discussions with the NFA are ongoing and we will keep you advised. In the mean time, know that FXDD is making no immediate changes to any platforms and that you will be fully advised prior to any proposed changes.
In the Frequently Asked Questions section on their website FXDD still say that:
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As we suggested it seems as though some forex brokers have complained to the NFA that they cannot implement the programming changes necessary in time for the original deadline of May 15th for the now notorious compliance rule 2-43(b). In their new notice I-09-12 the NFA say that:
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