Question on financial data for GAIN Capital

Discussion in 'Retail Brokers' started by CALLumbus, May 1, 2018.

  1. CALLumbus


    Hi all,

    I have a question on financial data for GAIN Capital. If you look at the CFTC website with monthly data for all the registered FCMs (, you will find the following data for GAIN

    GAIN Capital.PNG

    As you probably know, GAIN Capital is not only a futures trading FCM, they are also one of the larger (retail) Forex brokers.
    So the question is now, the numbers on the CFTC website, especially the Adjusted Net Capital and the Customers' Assets in Seg, are those numbers just for their futures business division, or for GAIN Capital as a whole, including their Forex brokerage ? If you compare the amount in customers segregated account with the same number for FCMs like Dorman or Advantage Futures, the number seems pretty high, I dont think that OEC (from which they aquired the futures business several years ago) was that large ?

    Thanks for any input !

  2. tiddlywinks


    I am not a financial compliance officer who has taken a test about nuanced terms and responsibilities of each.

    I do know the footnotes contain important distinctions.
    In combo with footnotes, I think the last column is "an" answer to your question.

    Sorry for sounding vague, but the FCM data sheet is far from transparent.

    What might assist is looking at a pure FCMRFD like Oanda (I think they are only forex), and see how/what the data sheet represents.
    Last edited: May 1, 2018
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  3. CALLumbus


    Thans for your input, tiddlywinks.
  4. CALLumbus


    Found some pretty interesting data on the GAIN Capital website: upload_2018-5-1_17-13-9.png

    You can find the full document in the attached "March 2018 Metrics".pdf file.
  5. CALLumbus


    Correct me if I am wrong, but isnt the fact that GAIN capital is listed on NYSE and therefore falls under additional regulation and reporting obligations compared to a privately hold FCM (like for example Dorman trading, or Transact Futures) adding an additional layer of control/ security for us traders with our futures trading accounts ? Are there other exchange listed FCMs besides GAIN Capital and Interactive Brokers ?
  6. tiddlywinks


    You mean like the banks, mainstream brokerages like schwab, etrade, TD, and large FCMs like FCStone and the like?

    If you think being public is a good thing then it is. Im not in that camp however. I don't think FCMs (or exchanges) should be public entities. At a simplistic level, it adds significant costs counter productive to customer needs and has no bearing (imo) on the "security" of the business or customer accounts. But that's me.

    I had an OEC account twice. Once way back, when they were based in Ohio. Another time, relatively short lived, about 4 years ago. Gain IMO, PRETENDS they are for active day-traders, but they are ridiculous with moving the goal post with no notice other than windows message boxes seen only through their platform, and usually very slow to revert any changes in policy or procedure. I found myself waking up "wondering" what game plan I would be allowed to use for that day. It was just ridiculous. I moved on from OEC with absolutely zero regret.

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  7. CALLumbus


    Tiddlywinks, thank you very much for that interesting insight.

    I agree with you that being public itself does not have to be good. What I think might be good is the additional reporting/ regulation that comes with it. But I have not very much experience with that kind of stuff.

    Interesting what you say about GAIN Capital moving the goal post, do you have an example ? Like changing margin rates or something like that ?
    May I ask who is your FCM now, since you seem to be pretty satisfied for the moment ?
  8. tiddlywinks


    I have accounts with 3 FCMs... Diversification of MY money.

    My primary account is with AMP. I also have an account with TradeFutures4less which is Dorman, and an account with Schwab, via optionsxpress, now fully integrated with Schwab.

    As for OEC/Gain, yes, daily margin changes were a big part. Other issues included changing times of margin availability, changes in time when day-trades needed to flattened, and changes to product availability altogether. There was a period of time OEC/Gain disallowed trading in the meat complex. Or maybe it was closing orders only, whatever... It was not exchange related, purely OEC/Gain, and lasted for like a week. I lost all interest in waking up just so I could determine what and how I was going to trade that day. I want consistency and confidence in the rules.

    I fully understand changing rules to meet market environment expectations, whether right or wrong. I'm OK with that idea. I am not OK with promoting business based on certain "features", and then at the very times those features are most desirable, eliminating or changing those features. Can't have it both ways... either they are interested in day-trading business, or not. OEC/Gain clearly was not, imo.

    I don't trade forex, only futures contracts, so I cant speak for
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  9. CALLumbus


    Tiddlywinks, thanks for your feedback.

    I like your choice of trading partners, I think AMP offers a fantastic combo for an excellent price. Same for Dorman, I think they are doing a good job. The question for me is, how much cash should you keep on your margin account with an FCM of that size ? I like AMP very much, the question is just, how could they stomach if something goes really wrong, with their 3 million net capital. Same with other small FCMs like Ironbeam, Transact (York) and even Dorman. How much money should/ can one keep with them without being too worried ? 10,000 ? 100,000 ? 1,000,000 ?
    You are doing it right with spreading/ diversifying over several FCMs. The problem is, the cash in the account with the backup/ secondary broker/ FCM is usually dead capital, since it is not used for trading except in case of an emergency ?
    I dont have a solution for this, I was just thinking a bit about this problem today, capital preservation, protecting yourself against an imploding FCM... but probably there is no perfect protection. Even if the numbers on the CFTC sheets look great and an FCM has lots of clients and plenty of net capital, there can still something go wrong.
  10. tiddlywinks


    You are asking good questions @CALLumbus.

    How much is appropriate is based on how, what, and the size you trade. I keep the "minimum" (determined by me) necessary to do what I do. I also "sweep" accounts regularly and frequently, sometimes multiple times a week, depending on my income needs, trading activity/progress, and what my minimum account value needs to be. FWIW, I have never "reloaded" accounts due to a significant loss. Losses are factored when determining the minimum. Of course, money that is swept is merely stored (or spent) elsewhere, with full and unfrettered (at least for now) access. However, really, there is no "correct" answer. What works for you is what is correct.

    As for dead capital, ehh, sortof. Yes, it's a safety valve of sorts for sure. But it also allows segregation of specific types of trading, or specific instruments. Just saying. I might do a little shortterm swinging(maybe up to a week) of softs or meats, and I might do currency trades in the overnight hours. Neither of which have much to do with my bread and butter intra-day index trading.

    Capital preservation is how to survive. Through diversification of FCMs, and through fully tested strategies that you are comfortable with in executing, and confident in with results.

    Good trading to you.
    #10     May 1, 2018
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