You have not answered a very simple fundamental question. How do you hedge your different customer's exposure at the end of the day?
So if a client has sold £5m and bought dollars it is hedged via your platform with say UBS who were paying 1.9700 for £5m. However at the end of the day this client has not bought his sterling back so he has an interest rate exposure. You have said you dont cover this exposure?
So you do cover it, as I would expect you to. And as such you are not just acting as an ECN but also as a prime broker. And so like all other prime brokers if a client wants to debit his dollar account and credit his sterling then you can cover this exposure in the spot market and not have to charge a 5 cent spread by passing it on to your bank.....
Lon..... MBT does not act as a prime broker but as a self clearing FCM. Therefore any conversion of currencies are done with our bank when it comes to wiring funds. Again, MBT did not charge you the conversion rate. I certainly want to be able to help and seek ways of improvement for all of our customers so I candidly appreciate all of your previous input. Regards, Steve
One final question. You have (at last) admitted if a client has an exposure you roll it over tom/next. This is of course the prudent and sensible approach any bank or prime broker would take. If client A has an exposure of say +$100k in the cable and client B +$1m do you do 2 tom next transactions or one of the net +$1.1m. I also suggest the tom/next rate you get is interbank or damn close to it. Furthermnore if you are carrying out tom/next transactions you can not just have dollar accounts as you suggested earlier but rather currency accounts in a whole range of currencies. Furthermore if a client has say $500k in dollars then so will yourselves, If they request a sterling payment then all you need to is to a tiny cable deal for that amount and thus have a sterling balance yourselves, which you can pay away. There is absolutely no need to rip a client off for 5 cetns and then claim it is done by the bank. You would not allow the bank to charge you that on your own tom/next transactions.
Lon....... "admit"? Half the battle in this was trying to understand the question. Hence, why I asked you to clarify. MBT routes through 3D Forex and 3D Forex charges MBT for each position (not netted). Regardless of this as I have mentioned several times before MBT custodians all funds in US dollars and 3D Forex is the ECN technology (routing and execution) which does not do any banking function (delivering non US dollars). So when it comes to converting currency to accomodate your requests to deliver (in this case sterling) we have the bank in which we hold funds convert then wire to you. Not to confuse this with the banks that execute the spot trades. Those are two separate situations. Hope this helps and glad to put it to rest. Regards, Steve
I have researched forex brokers on countless websites. EFX has some plusses and minuses, overall, better than most of the alternatives, but they have some important shortcomings. I am a customer of theirs, and I have provided enough volume trading with them to fill their pockets with upwards of $1000 in commission fees. I'm not a big trader by any measure. And I'm definitely happy with them overall, but when it comes to brokers I think a shrewd/skeptical trading client is a wise to be, especially with forex and its inherent weakness of being unregulated. In my experience trading on their platform, I have a hard time believing the are using straight-through-processing to "upstream liquidity providers" of customer orders as they claim. If a limit order is placed, it can be filled if they have another customer of EFX who wants it, you will get a fill. If you are "narrowing the spread" by placing your limit order within the quote, I have had mixed success getting fills, and I have concluded this may be because they do not necessarily offer clients access to deal with counter party banks, but rather simply hedge a position you take at the prevailing bid/offer as quoted to the customer. On some pairs, specifically those with wider spreads (I have noticed with GBP/JPY 4-8 pip spread and EUR/AUD 8 pip spread), more popular pairs (e.g. EUR/USD) I can often get my limit orders filled, but I have yet to get a single fill on a competitively priced EUR/AUD limit order until the quoted prices move to where the low offer matches my buy price or the high bid matches my sell price. Of course I could get a fill by taking the current bid or offer, at which point, I presume they turn around and hedge (or not if a particular client falls within the group of gambling (losing) traders). This could be automated. Just because they don't have a dealing desk and just because they don't manually intervene with trades doesn't mean they can't automate the systematic profiteering off of their customers in a fashion similar to the so-called bucket shops, or systematically manipulate their quote feeds like I suspect other forex brokers do. Maybe they just need more clients interested in trading these pairs so we can buy and sell amongst ourselves to give the less popular pairs the added liquidity. I could be wrong (I hope I am)... This is just the opinion of a pion. My bankroll is small (but I've noticed this issue with partial and full-sized lots). I hope I am wrong. I challenge EFX to prove me wrong; any discussion of their "liquidity providers" or their "STP technology" are vague at best, misrepresenting their operations at worst, maybe even flat out lies at the very worst. It is easy to see that technically this platform is setup so all orders go to a third party for execution. So technically, yeah, all that is happening is the orders are being routed through them to another company who is the steward of the actual exchange environment. Ok, so what other brokers uses TDFX what other coporations have access to it? As far as I can tell, it is controlled by EFX themselves or the partnership is so tight, there is no effective difference. TDFX could just be a platform allowing order execution amongst EFX clients and to buy and sell based on the prevailing bid/offer quote feed rates. I think it is a good thing they are proactive in public discussion with the retail trading community (I have found posts from their reps on the Non Dealing Desk forum, forex bastards, and of course ET). I do wonder if they have tried to hype themselves by posting glowing reviews as though they were a client. Their page on forex bastards has a disclaimer that they have received a flood of reviews which the moderators have suspected originated from EFX... seems strange there would even be these allegations from a broker who seems like Mother Theresa standing next to O.J Simpson... If they did indeed do this, I think it is highly dishonest, and damaging to their credibility. If EFX would like to comment (or, frankly, anyone who has read this far!), I would love to hear a response. Unfortunately, in these online community forums, and with the forex market makers and brokers being unregulated, there is no obligation to disclose, no independent third party that could audit a brokers operations to put to ease the platform issues I have brought up and most disheartening, no incentive to be objective to the positions taken by their clients.
Wow, EFX/MBT has really been hammered on... Let's be honest. Out of the "brokers" that exist for smaller traders they are are not that bad. Seems they shouldn't try and sell the "ECN" thing so hard (They won't compare to any of the major ECN platforms) and if they can afford to they need to get their Rollover/Swap/IRD policy fixed so it's not totally screwing all those that hold positions longer than a day. We can't expect them to be anything great compared with true ECN, but for the best banks you must have at least 50k some of the smaller ones will do it for 25k. I guess that's what they provide... Tighter spreads and a sudo "ECN" for the small retail client. So if you have the money trade direct with the major banks or an alternative (even for smaller traders) is to trade Futures if that suits your style. Good Luck everyone.