IBFX's Annus Horribilis It has not been a good year for Interbank FX. First FXLQ goes down resulting in the firm losing a key liquidity provider. Then FXLQ goes into receivership taking $10 million of IBFX's net capital with it. Now IBFX has just announced to the public that there was a major security breach and that customers who had applied for an account prior to April 2, 2007, had their personal information exposed on a rogue server accessible to anyone on the internet. http://doj.nh.gov/consumer/pdf/interbank.pdf To IBFX's credit they appear to have taken immediate steps to secure the information and are offering those customers who were potentially exposed free membership to a credit monitoring company. I'm not familiar with Corporate Law but it appears IBFX hired Kirkland & Ellis to contact State Attorneys General about this? Pretty Intensive damage control by the folks at Interbank. But considering the news has broken all over the net well outside the forex community best to cover all bases I guess: http://www.google.com/search?hl=en&rls=com.microsoft:*&q=interbankfx+security+breach Let's hope Robert Gray hasn't been lurking around this rogue server all this time...
Swiss Dealer Update Fransesc Riverola is doing a top notch job at FX Street keeping traders up to date about the latest regulatory changes in Switzerland. He has sent out questionnaires to the Swim FX Broker community and several have responded, most recently Crown Forex who has stated they are applying for a banking license. http://weblog.fxstreet.com/2008/04/open-letter-t-1.html Crown Forexâs CEO was quoted as saying: BINGO. He is dead on. This is why I started the Swiss Dealer Dead Pool. The gig is up for the schlock shops in Switzerland. Either get a banking license or in the words of Der Terminator âGET OUT!â Firms will need to have a minimum $9 million in firm capital and meet a whole variety of accounting requirements in order to get a banking license. The CEO of Crown Forex closed his remarks by saying: Here an updated Dead Pool for the trading public. Firms that claim they are applying for a banking license 1) ACM 2) Fibo Group 3) Crown Forex 4) DukasCopy 5) MIGfx 6) GFX Group (forex.ch) Firms that are fleeing Swiss Regulation 1) Masterforex. Their business office is listed in Switzerland but they are registered in the Seychelles and have stated they do not need to get a banking license. 2) forex-swiss. FXCH, despite the fact they are NAMED "Forex Swiss" claim registration in Dominica. This is an odd company that has claimed multiple office addresses over the years including, Switzerland, Austria, South Africa, Iran, and the United States. Today they are claiming they have offices in Dominica and the United Kingdom. Tomorrow who knows, they could claim a mailing address in Tibet. Beware this firm. 3) Prime4X. Their head office is in Switzerland but they have stated they are applying for a license in Cyprus. Firms that are no longer accepting customers or have been shutdown 1) WestCapFX 2) Tradex Swiss AG 3) Finex 4) Aleccohfx Firms that refuse to comment 1) Swiss Direkt 2) Tadawulfx 3) Advised Trading As always conduct your due diligence and make sure the firm you trade with is regulated and legit.
Shark Hunting in the Caribbean With all these bogus claims from small time brokers claiming they are regulated because they hold a âcertificateâ they managed to pull out of a cereal box it is hard to know what to believe these days when a firm states they are âlicensed.â And perhaps no firm straddles the line between licensed and unregulated more than a firm by the name of GCI Financial. A reader asked me to provide some background on GCI recently and after doing a quick Internet search I found myself once again swimming in the deepest, darkest, murkiest depths of the Forex Ocean in search of that most dangerous dorsal finned predator of all- the offshore FX boiler-room. GCI appears to have been started back in the 1990âs and used to be a U.S. based company with its CEO, Mitch Vasquez, living in Wilton, CT. It didnât take too many clicks of the mouse to discover that GCI had been busted by the CFTC under the headline âCFTC CRACKS DOWN ON FOREIGN CURRENCY SCAMS NATIONWIDE.â http://www.cftc.gov/opa/enf02/opa4611-02.htm The complaint itself charged GCI for violating the Commodity Exchange Act. In short, the CFTC was taking GCI to court because they had not registered with the NFA (Hello FXDD! This could someday happen to you!) http://www.cftc.gov/files/enf/02orders/enfgci-order.pdf Also cited in this lawsuit was Vazquez. In 2002, Vazquez and GCI settled the suit and as part of the settlement Vazquez paid a $100,000 fine and agreed to Sounds pretty clear to me. Basically, Vazquez and GCI were expected to close their doors and get out of the FX business. But apparently GCI didnât see it that way. Instead, they submerged beneath the water and headed to Belize. Well at least their âState of the Artâ dealing room fled to Belize. But Vazquez doesnât appear to have gone anywhere as a FEC filing showed he contributed $2000 to George Bushâs Presidential Campaign in 2004 where he listed an address in New Canaan, CT. http://fundrace.huffingtonpost.com/neighbors.php?type=name&lname=VAZQUEZ&fname=MITCHELL Meanwhile in Switzerland (cue up Jaws music)⦠According to the gossip on the bulletin boards Vazquez had apparently branched out into the notorious Swiss Market. Rumor has it that GCI and GFX (Forex.CH) are the same firm. This was news to me. But several people have stated that Vazquez is also a director at GFX and also points out that the websites of GCI and GFX are remarkably similar and also housed on the same servers? http://www.elitetrader.com/vb/showthread.php?perpage=40&pagenumber=1&threadid=76386 http://www.forexfactory.com/showthread.php?t=7884 http://www.forexpeacearmy.com/public/review/www.gfxsa.com?page=0&perpage=10 Also, it appears that GFX has recently gotten into some trouble with the Swiss Government according to one trader who cited this (translation welcome if anyone speaks Francais): http://rc.geneve.ch/rc/consultation/consultationcomplete.asp?no_dossier_fed=CH-660-1425005-9 As for GCI, it claims registration in Belize and you can actually verify they are in fact licensed by the regulatory authorities there: http://www.ifsc.gov.bz/licensed_provider.html#f Strangely, GCI doesnât provide this link on their website which would allow traders to verify this independently which I just did as the Savior is nothing if not fair and balanced. The reason GCI may be quiet about their regulatory status with Belize officials is because the IFSC does not actually do much aside from collect fees and provide âguidelinesâ to businesses. In fact, they state on their own website: http://www.ifsc.gov.bz/about.html Bwahahaha! As if a forex firm that has been driven out of the United States for being a âscamâ is going to properly âself-regulateâ itself. This tells you about all you need to know about the quality of Belize regulation. So what should traders take from all this? Common sense would dictate that traders avoid GCI. Their compliance history is poor and their current regulators in Belize clearly donât give a damn what they do so long as they pay their bills on time. At the end of the day GCI is just another shark in the water. Hereâs hoping someone harpoons them and sends them to the bottom of the ocean from whence they can never be dredged up again.
eToro: All Hat, No Cattle This is going to be a post rife with Texas sized clichés. How can it not be with a company with a name like âeToroâ that has a logo with a pair of bull horns jutting out of it? First of all who are these guys? Well they are one the newest FX brokers in the market who are taking a very novel approach to currency trading. They also have ties to the online gambling rackets as their CTO is David Ring who was a key R&D leader at Israeli-based 888.com (a major online casino and poker operator) according to this feature article that came out last fall: http://www.techcrunch.com/2007/11/27/etoro-makes-forex-trade-childs-play But this Israeli firmâs ties go much deeper than to just an Internet gambling website (and please spare me the term âgaming.â) They also have connections to none other than Shimon Peres, the President of Israel. It appears Shimon Peresâ son, Chimi Peres, is one of eToroâs private investors: http://www.pitango.com/team_member.asp?ID=25 So how is eToro standing out in the marketplace aside from their exotic resume? Well they have created the first forex video game. You have to see the screen shots to believe them: http://www.techcrunch.com/wp-content/etoro_match.jpg http://www.techcrunch.com/wp-content/etoro_marathon.jpg But aside from the cute cartoon characters inhabiting its software (which led one trader to state eToro should rename itself âeTardedâ) the truth is eToro is just shoveling the same old Bull at traders. What makes me say that? Well, when I asked them if they were regulated they gave me the olâ Texas Two Step. Check out this chat transcript below: eToro is an Israeli company with a Cyprus address and a British Virgin Islands Registration. Now what kind of business arrangement is that? That is about as unaccountable as you can get. When I asked their chat representative if they have a Cyprus SEC license (which they should have if they have an office in Cyprus and are soliciting customers from Cyrpus) the rep says âof course.â When I point out that eToro is not listed as having a license at the Cyprus SEC website Iâm directed to another company that supposedly has a license, retailfx.com, I find they donât have a license either. At which point the customer service rep breaks down and blabbers about their arrangement with IFX. Clearly eToro talks the regulatory talk but they donât walk the regulatory walk. So what about this link with IFX? Well it turns out that eToro canât accept U.S. customers. Hmmm. Thatâs strange. Plenty of offshore forex brokers accept U.S. customers. Why not eToro? Instead, eToro has to rely on IFX who is apparently white labeling eToroâs Sony Playstation, er, forex trading software. Itâs pretty obvious why eToro canât accept U.S. customers. Itâs because they are nothing more than a gambling shop and online casinos outside the U.S. are not allowed to accept U.S. customers. eToroâs lawyers are obviously worried that Uncle Sam will come after them with a vengeance if they start soliciting customers (not to mention the MGM Grand, Powerball, Pat Robertson, Ralph Reed and Mike Huckabee.) What does that tell you about the kind of dealing desk these guys are running? The firm is a straight up casino- they only make money if you lose money. It is market making on anabolic horse steroids. In short, it is every currency traderâs worst nightmare come true. By the way I sent eToro an email asking for clarification on their regulation. Of course there was no reply. Lord somebody fence these guys inâ¦
New CFTC Numbers Are Out Here are the latest adjusted net capital figuress for U.S. based forex brokers: http://www.cftc.gov/stellent/groups/public/@financialdataforfcms/documents/file/fcmdata0308.pdf Above $20 Million Oanda $163,000,000 FXCM $87,000,000 GFT Forex $76,000,000 Gain Capital $73,000,000 Interbank FX $28,000,000 I Trade FX $27,000,000 Below $20 Million PFG $19,000,000 FX Solutions $17,000,000 ODL $14,700,000 CMS $13,900,000 GFS Forex $11,000,000 IFX $10,600,000 Ikon $8,800,000 Alpari $8,800,000 CMC $8,300,000 Friedberg Mercantile $8,000,000 Forex Club $7,900,000 Hotspot $7,700,000 MB Trading $7,700,000 Easy Forex $7,200,000 Money Garden $6,600,000 Bacera $5,500,000 Advanced Markets $5,100,000
lol... look at those tiny numbers!!!!!!!!!!! Seriously you people are crazy to have money with those companies.... think about it.. how much money does a large trader run? Hedge funds.. 2-8 billion..... cta's 1 million to 500 million? Fund of funds.. billions .. I would say that almost no one who has any real large accoutns would ever put it at risk in those dinky retail FX firms... a 100,000 dollar accouotn is pretty large for most fo those firms.. LOL..
lol, what do you think Oanda is http://elitetrader.com/vb/showthread.php?s=&postid=1905361#post1905361
Incorrect. Clients of FSA regulated UK financial services companies accepting client funds, including spot FX marketmakers, are afforded a level of protection up to GBP35k provided the account was set up correctly in the first place.
We're not hedge funds or CTA's though, we're just private traders. These firms offer a reasonable deal as far as I can see, there's nothing fundamentally wrong with retail bucketshops as long as they stay solvent.
cabletrader Incorrect. Clients of FSA regulated UK financial services companies accepting client funds, including spot FX marketmakers, are afforded a level of protection up to GBP35k provided the account was set up correctly in the first place ******************************* Thank you ,but was informed two week before about that from another ET member . Sorry ,but personla experience of the author with FSA is not good young female and long processing time For companies IPO London is good place ,as LSE is not so restrictiv as SEC But it is dialecticaly connected with investors . SEC evaluated from author better for retail sector as London with FSA Your respectfully