The CFTC releases details of actions it has taken against a variety of miscreants in the retail forex industry on a fairly regular basis. They have just released another one, which caught my eye because the sums of money involved are somewhat larger than usual, and also somewhat unusually:
The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against Rosenthal Collins Group, L.L.C. (RCG).
Notice that the charges against Rosenthal Collins Group were filed and settled "simultaneously", although presumably negotiations have been going on in private for quite some time. RCG have had a variety of adventures into retail forex, the most recent coming to an end when MG Forex shut up shop following the confirmation of the final CFTC rules post Dodd-Frank and transferred clients to GAIN Capital, who are much better known by their FOREX.com brand.
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Following on from last week's announcement of their deal with Alpari (US), I spoke yesterday with James Friedman, who is Chief Operating Officer of FX Bridge Technologies Corporation. Our talk was largely concerned with how FX Bridge got to where they are today, that deal with Alpari, and the future for OTC FX options in general, and FX Bridge in particular.
James told me FX Bridge was founded by Joe Cunningham back in the final days of the dot com boom. He himself had joined them in 2002, and he has been "evangelising" about forex options ever since! In 2008 Steve Reich (cofounder of Hotspot FX) arrived as CEO, and the decision was taken to improve the user interface of FX Bridge's flagship product, ProTrader, to make it more attractive to retail traders.
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The CFTC has just released a brief statement by Commissioner Bart Chilton. We reproduce it here in full:
Landmark financial reforms were passed by the Congress and signed by the President earlier this year. The new law will ensure more efficient and effective markets, better protect consumers and cast light upon current "dark" markets that have been out of view of regulators — markets which led, in large part, — to the economic calamity that began two years ago.
The implementation of that good and historic law is in jeopardy if the CFTC doesn't have increased resources. Level funding, as it appears will be approved as part of the continuing resolution, is insufficient to move forward on implementation of the new law as Congress intended. Implementing the most significant financial reform law ever will plainly require a spending anomaly. There is bipartisan support for moving ahead with funding this important effort — a rarity in Washington, and an indication of the widespread acknowledgement of its necessity.
This is a serious and substantial issue and I hope it will be remedied in the very near future.
As we have reported here previously, the CFTC was complaining about lack of resources long before the Dodd-Frank Act was passed. It sounds as though they are going to have a lot of trouble keeping on top of their domestic commitments, let alone pursuing overseas forex brokers that may choose not to send large quantities of greenbacks back to their rightful home in the United States of America.
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Ray The Random Robot
Only a few short days ago we took the momentous decision to enter several automated trading competitions simultaneously. We've been burning numerous barrels of midnight oil here at Trading Towers ever since, and for the second time in as many weeks late last night we managed to successfully shoehorn some of the dumbest trading technology ever invented into our old friend Ray the Random Robot™. Then we managed to get him entered into another automated trading contest at the very last moment.
In this case it was the MetaTrader 5 Automated Trading Championship 2010, and we weren't helped by the fact that we had to reprogram Ray's artificially stupid electronic brain several times in order to try and circumvent a number of lingering "issues" with the MetaTrader 5 platform itself. We managed to upload our latest code to the contest site with slightly more than five minutes remaining until the latest (and final!) deadline was reached. At that point we'd only had a chance to run one single backtest on the latest revision of Ray's trading tournament toolkit (TTT for short). We had no time to do even one distributed optimization run to help select the angle of the dangle for Ray's control knobs, so we guessed. In the Dukascopy JForex Strategy Contest Ray has been struggling recently, getting whipsawed to death with his take profit and stop loss levels set to 50 pips. We decided to double those, dialled in 100/100, then pressed the "Save" button, committing the unfortunate Ray to use those settings for the duration of the competition, which starts in a week's time and ultimately finishes just before Christmas.
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In the second in our series of interviews with senior figures from the Forex industry following the release of the final version of the new CFTC regulations, I spoke yesterday with Jason Rogers, FXCM's Brand Ambassador to online communities. I started off asking my standard $64,000 question at the moment about the effect of those new regulations on the forex industry. I asked numerous other questions too, many of which Jason was compelled to answer with "no comment" because of restrictions imposed by FXCM's forthcoming Initial Public Offering. Despite that you will be able to read about FXCM's views on a few other topics of the moment below.
FXCM have recently announced the repatriation of their US domiciled customer's accounts back to the United States from offshore here in the UK. I suggested to Jason that those customers would now be hopping mad about the fact that their hard earned moolah would once more be flying across the Atlantic in a great hurry, for the second time in less than a year! Jason told me that this was very unfortunate, but FXCM had to abide by the law. After consulting with the CFTC, FXCM were clear that the new laws boiled down to "US traders must trade with US brokers". It was equally clear that FXCM therefore had no choice but to bring those funds back home to roost in the United States before the October 18th deadline imposed by the Dodd-Frank Act.
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In the first of our series of interviews with senior figures from the Forex industry following the release of the final version of the new CFTC regulations, I spoke yesterday with Daniel Skowronski, recently installed Chief Executive Officer of Alpari (US) as well as Chief Commercial Officer of the Alpari Group. Daniel was also Managing Director of Currenex before moving to Alpari. I started off asking the question on everyone's lips these days about the effect of the new regulations on retail forex in the US, including their impact on introducing brokers. We then went on to discuss Alpari's plans to broaden the range of it's product offerings, whilst also expanding into new areas of the globe.
Firstly I pointed out that FXCM had just announced the repatriation of their US domiciled customer's accounts from offshore here in the UK back to the United States. I was slightly surprised when Daniel told me that Alpari (US) would be doing the same thing for a small number of their customers, and that this would also take place before the CFTC's October 18th deadline. It seems that some time after my interview with Alpari (UK) around this time last year a few of Alpari's US customers had insisted on moving their accounts offshore, and Alpari had acceeded to those requests. I imagine those very same customers are now extremely unhappy to find their funds flowing westwards once more. I expect FXCM's customers feel that way too. The question is who will they blame!
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We burned a lot of midnight oil here at the Trading Gurus last night trying to make sure our shiny new multi-currency upgrade to Ray the Random Robot™ wouldn't fall at the first hurdle in MetaQuotes entry into the 2010 Great Object-Oriented Robot Wars (GOORW for short). The deadline for entries into the MetaTrader 5 Automated Trading Championship 2010 is later on today. At least that's what we thought when we finally got to bed! This morning we awoke somewhat later than usual, only to discover that MetaQuotes have just extended that deadline:
The peak of applications occurred at the end of Automated Trading Championship 2010 Registration period. Unfortunately at the same time we had problems with automatic testing of Expert Advisors, and all Expert Advisors need to be repeatedly tested in automatic mode. This is the reason why we decided to extend the Registration period till September 25, 2010.
I wish they'd told me that last night, because then I wouldn't have been sitting here so bleary eyed writing this! Actually those problems with automatic testing of EAs haven't been the only ones during the final countdown as MT5 prepares to enter the arena to join Dukascopy's JForex platform in the war to end all those "robot" wars. Perhaps in all the circumstances it's just as well we've been given a little more time to fine tune Ray the Random Robot's state of the art multiple artificial stupidity?
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I've just received an email from Alpari (US) informing me that they will be demonstrating a new retail FX Options platform at the Las Vegas Futures and Forex Expo at the end of this month, where Alpari are the "platinum" sponsor. It seems the new platform is being provided by FX Bridge Technologies, and is presumably a white label flavour of their ProTrader Plus platform.
Alpari have already branched out from OTC forex into exchange traded futures using the Ninja Trader and Strategy Runner platforms, and the new options platform will allow them to offer a more complete portfolio of currency products to their customers. Note that Alpari's forthcoming FX options are not the simple binary options that have been more common in retail forex up to now, these are "exchange style" (but presumably not exchange traded!) vanilla options of the sort familiar to stock and futures traders. According to Alpari:
[Vanilla] options can provide more trading and risk management strategies than spot trading. Options trading and risk management strategies can be customized for high volatility, low volatility, bullish, bearish, neutral – virtually any market conditions.
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As anticipated I received an email from FXCM last night, but it did seem just a touch impersonal. It started out by saying:
Dear Trader:
Code and Compete for a chance to win cash prizes in the FXCM Automated Trading Challenge. Sign up for a contest demo and put your automated strategy to the test with zero risk to your own money.
A bit further on it posed this rhetorical question:
ALREADY CODED A METATRADER 4 EXPERT ADVISOR (EA)?
If you prefer not to recode your current EA, you can contact the FXCM Programming Services team who are standing by to convert existing EAs.
As luck would have it here at the Trading Gurus we have already coded quite a few MetaTrader 4 Expert Advisors, but for a variety of reasons we have no interest in contacting the FXCM Programming Services team about them. Where recoding is necessary we prefer to do it ourselves. As we reported yesterday, the object-oriented "robot wars" are starting soon, and we figured we'd better get involved and try and find out what all the fuss is about. As more luck would have it the deadline for Dukascopy's September JForex Strategy Contest is today. As you might well imagine, that doesn't leave us with an awful lot of time to produce a new robot or to do much recoding of an existing one, so we aren't going to bother. We'll just enter one of our existing MT4 EAs!
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In a flurry of press releases FXCM have just (re)launched their new Strategy Trader trading platform. The headline reads:
FXCM Strategy Trader Delivers the Next Evolution in Automated Trading.
Despite this their Strategy Trader home page (now retitled "Automated Forex Trading") is still at pains to point out that:
Please be advised that this is a beta version. Beta testing is designed to pinpoint inherent flaws in the software. For this purpose, participation in beta testing is completely voluntary.
From my own tests it certainly doesn't look like FXCM have delivered a reliable automated trading platform just yet. Evolution is a fairly time consuming process, after all!
That press release doesn't mention it, but coincidentally a new tab has appeared on FXCM's Strategy Trader page, entitled "$20,000 Challenge". FXCM have sponsored other automated forex trading contests in the past, including the forthcoming MetaTrader 5 Automated Trading Championship which starts on October 4th. MetaQuotes contest is apparently a:
Great Robots War for 80,000 USD!
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