Unregistered FX IB’s out and 20million cap FX FCM in

Discussion in 'Forex Brokers' started by BigGun, Jan 17, 2008.

  1. BigGun

    BigGun

  2. Pippi436

    Pippi436

    Interesting, thanks for the link. I guess in round two the list of registered FDMs will shrink quite a lot again.

    Does anyone understand what the paragraphs in section "SIGNIFICANT PRICE DISCOVERY CONTRACTS" mean?
     
  3. BigGun

    BigGun

    Not 100% sure of that meaning myself, are their and legal eagles here at the forms that can put this in laymen’s terms for us?

    From what I understand here this bill destroys most Retail FX players at least as I know them, Looks like the banks and future firms are only ones qualified even the big FX firms like FXCM, Gain and Oranda will meet these qualifications, none are licensed or dealings in on-exchange business to my knowledge!!!! Here is the passed bill http://agriculture.house.gov/inside/Legislation/110/sbsCFTC.pdf already passed House committee of agriculture, so looks to be right around the Conner to becoming realty now.
     
  4. BigGun

    BigGun

    Found theses links on forex factory on the same topic, very good reads especially This 1sest and 2end ones

    NFA President urges House Subcommittee to address forex regulatory issues in CFTC reauthorization bill
    http://www.nfa.futures.org/member/newsLetter2.asp#Testimony

    http://www.nfa.futures.org/news/newsTestimony.asp?ArticleID=1968

    NYMEX Supports Commodity Futures Trading Commission Reauthorization Act of 2007
    http://www.marketwatch.com/news/sto...3-4376-97D1-090D7CF42CB4}&dist=TQP_Mod_pressN

    House moves CFTC reauthorization forward
    14/12/2007
    The House Committee on Agriculture passed a measure to reauthorize Commodity Futures Trading Commission (CFTC).
    http://www.fow.com/Article.aspx?ArticleID=1787472


    FOR IMMEDIATE RELEASE December 12, 2007
    Commodity Futures Trading Commission Reauthorization Approved
    http://www.house.gov/apps/list/press/agriculture_dem/pr_121207_CFTC_reauth.html

    http://overcriminalized.com/lu.cfm?PrettyID=4605

    http://agriculture.house.gov/inside/Legislation/110/CFTC.pdf
     
  5. The big forex firms - Oanda, FXCM, GFT, Gain - will still be able to operate under the new rules.

    the bill would apply new requirements to Futures Commission Merchants, to affiliates of Futures Commission Merchants, and to the newly defined retail foreign exchange dealers, each of which would have to maintain adjusted net capital of at least $20 million in order to qualify for certain regulatory exemptions under the Act. Futures Commission Merchants would also have to be primarily or substantially engaged in on-exchange business to qualify.

    The requirement "to be primarily or substantially engaged in on-exchange business" will apply to futures commission merchants, NOT to "newly defined foreign exchange dealers" such as the big four.

    The new regulations in effect reclassify registered forex firms as "foreign exchange dealers" so they have to meet the new capital requirements but do not have to do any business on-exchange.
     
  6. cashflos

    cashflos

    I tend to agree here.
    I am not a lawyer, so I am not going to post an unqualified, half-baked interpretation of some legislation that was buried in a farm bill. However, the legislation was meant to bring legitimacy and safety to the industry not crush it... and I don't think it could stop firms like Oanda (150 mill) or FXCM (75 mill, and that is just their US branch) or GFT from doing business. In addition to this, I had an account with Gain, and it was not FX it was equities, so not sure why they were mentioned here. This will close the bucket-shops and the fly-by-nights, period.
     
  7. BigGun

    BigGun

    Not so sure of that, read closely,, the bill states the FX firm would need to have 20m in cap and primarily or substantially engaged in on-exchange business to qualify. and I know for shore none of the firms you presented have on-exchange licensing, if the bill passes, looks to be going strong http://financialservices.law360.com/Secure/ViewArticle.aspx?id=42130 they will ether need to reregistered as an on-exchange business witch also requires acceptance by the exchange or take a back seat ( sort of an IB) to firm already licensed to conduct on-exchange business.

    Retail foreign exchange dealer” is a newly defined term under this bill. Under the bill, retail foreign exchange dealers must register with the CFTC and are subject to CFTC rules and to the same anti-fraud authority as are Futures Commission Merchants that engage in retail foreign exchange transactions. In addition, the bill would apply new requirements to Futures Commission Merchants, to affiliates of Futures Commission Merchants, and to the newly defined retail foreign exchange dealers, each of which would have to maintain adjusted net capital of at least $20 million in order to qualify for certain regulatory exemptions under the Act. Futures Commission Merchants would also have to be primarily or substantially engaged in on-exchange business to qualify.

    The 20m not so much of hurtle for anyone of these firms it’s getting registered to conduct business on an exchange that’s hard one, firms wait years to by a seat on any exchange, not an easy task.
     
  8. BigGun

    BigGun

    Wait I take one back “GFT” is the only one in your bunch that would meet the new laws qualifications at this point, why because they already have business in the futures market. , theirs actually a lot more qualified well capitalized banks and futures firms now offering retail FX for instance FC-stone, Barclays, UBS, RCG/TradeView just to name a few.

    At this point I would steer clear of any FX brokers thats not also licensed to conduct on-exchange business, no mater how much thay have under cap, CFTA has proclaimed all firms without on-exchange business are illegitimately licensed as FCMs and go’s on to explain CFTC has limited power neither rulemaking nor legal authority over them!! Theirs no doubt big changes for Retail FX coming soon.


    Source http://www.nfa.futures.org/news/newsTestimony.asp?ArticleID=1968
     
  9. Paliz

    Paliz

  10. cashflos

    cashflos

    go to http://www.cftc.gov/files/tm/fcm/fcmdata1107.pdf

    if it ain't got 25 mil or more I would suggest you send in the withdrawal form now.

    As for the big forex dealers being ousted because they do not have on-exchange affiliation or registration... all due respect Biggun but i think that is rediculous. And even if it were the case, the top 5 would probably set up a registration just to maintain their current business not to mention enjoy the overflow when the bucketshops go under.

    Paliz, get with one of the big guys and you will be fine.
     
    #10     Jan 24, 2008