How safe are my funds with a (US) futures broker?

Discussion in 'Index Futures' started by bankroll, May 29, 2013.

  1. EPrado

    EPrado

    It was a huge Swiss Franc Rally. It moved something like 30% in a few minutes. Was the day the Swiss gov't lifted the cap on their currency. Some FX firms got obliterated (FXCM), and some while not getting finished off, took a large hit. IB came out of it with losses, but nothing catastrophic.

    NEW YORK (TheStreet) -- Shares of Interactive Brokers(IBKR - Get Report) were falling 6.8% to $26.34 Friday after the investment broker issued a statement about customer losses after Switzerland removed the cap on the Swiss franc's value.

    Investment Brokers said that several of its clients "suffered losses in excess of their deposit" due to the "sudden move in the value of the Swiss franc." The company said that the debits amount to about $120 million, less than 2.5% of its net worth.

    The Swiss franc grew about 28% against the U.S. dollar after Switzerland removed the cap on the currency's value against the euro, according to






    When I traded through IB you had to use their software to execute.....I looked at their site and I believe that hasn't changed. You can't use TT with them. Listen they are a good firm, they just are too limited in ways for someone like me.
     
    #41     Jun 21, 2015
  2. EPrado

    EPrado


    The 500 is for day trading only. Do I think it's smart to trade ES with only 500 in the account? No. But if someone wants to give it a try it's a nice option for real small traders to give live trading a shot instead of a simulator. In my opinion trading on a simulator is a waste of time. It's not real. Unless you are risking real money, you will never know what it's like to trade.
     
    #42     Jun 21, 2015
  3. EPrado

    EPrado


    Yeah, they had to wait a LONG time to get their cash back. I'm sure a lot of Hedge Funds went under or had huge redemptions because of this. Please don't try and paint a picture that The MF Global thing ended up being ok, because it wasn't. Was a disaster. Seems like you are making an excuse/defending them....which is pretty friggin bad.
     
    #43     Jun 21, 2015
  4. J.P.

    J.P.

    And it doesn't just benefit small traders. Traders who do size can keep a large portion of their account elsewhere (and wire some in if necessary) rather than having a large cash deposit sitting idle for protracted periods. This makes a huge difference at the end of the year, especially during higher-interest-rate periods.
     
    #44     Jun 21, 2015
  5. EPrado

    EPrado

    I agree with you 100%. Personally I don't do a ton of trades each week, but when the set up is there I am aggressive at times with size (especially during good trading periods). I also have very strict risk parameters and use stops so I know where I'm wrong and get out. So for me being able to size up and use some of the leverage is very important. Leverage in the right hands can be a great thing, as long as you have solid risk management. So for the right kind of trader going through a firm that offers leverage is a huge plus.
     
    #45     Jun 21, 2015
  6. Llxa

    Llxa

    It's Interactive Brokers NOT Investment Brokers. Just saying.
     
    #46     Jun 21, 2015
  7. i960

    i960

    Well you're probably just saying it to the wrong guy. TheStreet wrote that.
     
    #47     Jun 22, 2015
  8. Llxa

    Llxa

    So what happens when you have a seat on the exchange? Do you trade directly with the other seat-holders on the exchange? What's different from when I trade through an FCM? I keep my money in my own bank account instead of depositing with the broker? What are the benefits of having a seat on the exchange?

    If the only difference is being able to trade with my money in my own bank account instead of with a broker, this is like trading from an escrow account with min. startup balance of $600K.
     
    #48     Jun 22, 2015
  9. Llxa

    Llxa

    I did more research about AMP Futures which is now called AMP Global Clearing since they become their own clearing firm and is a registered FCM with CFTC/NFA in 2009. Financially, they are one of the smaller Futures firm comparing to other firms like Interactive Brokers, RCG, Dorman (clearing firm for Ninja Traders) and etc. with $2.663 million adjusted net capital as of April 30, 2015:

    http://www.cftc.gov/ucm/groups/public/@financialdataforfcms/documents/file/fcmdata0415.pdf

    and $58 million in customer segregated funds held as cash in a depository facility that is NOT an affiliate of the firm.

    https://www.nfa.futures.org/basicnet/FCM_seg.aspx?entityId=k17Ne6qLDo8=

    BUT taking a look at their profile at NFA, they seem to have the best record at NFA with 0 regulatory actions by the NFA or CFTC and only had 1 arbitrage action.

    https://www.nfa.futures.org/basicnet/Details.aspx?entityid=k17Ne6qLDo8=&rn=N

    If you look at other clearing firms, they are all bigger, lot bigger but they all have lot more regulatory actions by the NFA and lot more arbitrage actions:

    Dorman: https://www.nfa.futures.org/basicnet/Details.aspx?entityid=Ob5YmG8UdiE=&rn=N

    RCG: https://www.nfa.futures.org/basicnet/Details.aspx?entityid=a/cFPfflnOo=&rn=Y

    Interactive Brokers: https://www.nfa.futures.org/basicnet/Details.aspx?entityid=QHPcC3ptg/I=&rn=N They even had regulatory action by NFA AND CFTC.

    I don't know if this is any indication of their operation quality so perhaps someone who's more experienced with the Futures industry and how NFA/CFTC operates can comment on this.

    Overall, I don't know. Whether it's better to go with the smaller underdog while facing higher going concern risk or to go with bigger firms that had more history of disciplinary actions.

    Really tough to call...
     
    #49     Jun 22, 2015

  10. Some of the regulatory actions are more administrative than sharp practice, eg failure to keep a required record. You have to look at the detail.

    Larger firms will have more complaints simply because they have so many more customers. Since we don't have those numbers, calculate serious actions per million dollars of customers funds. It took me 6 weeks of research to identify the broker I wanted. I was sending my money to an account listed on a website by a company I knew nothing about.
     
    #50     Jun 22, 2015