[WhipSawFX]

Originally Posted by forex scholar

Oh but you are discredited Whipsaw. The NFA has vindicated all of my points about the dangers of being poorly capitalized:
http://www.nfa.futures.org/news/new...?ArticleID=1942

And they have taken action. The minimum capital requirement has been raised to $5 million. You are indeed discredited...

Your too funny forexsavior,

you obviously missed the bulk of my post so here it is again



Additionally contrary to your belief, the regulators do believe that the multiple is important. This is highlighted with reference to NFA Financial Requirements section 12(b) in which if your multiple is not greater than 2x your required net capital you cannot claim exemtion to NFA Financial Requirements section 12(a) about margin (which effectively limits margin to 100x for majors, and 25x for most exotics as I understand it- but please correct me if Im wrong). Infact, from the link you posted in your previous post :

National Futures Association | News Center

Of the eight comments favoring the increased capital requirements, five also inquired about the effect this requirement would have on the security deposit exemption under NFA Financial Requirements Section 12(b). Financial Requirement Section 12(a) provides that an FDM must collect and maintain a minimum security deposit for each forex transaction, which is either 1% or 4% depending on the foreign currency. Financial Requirement Section 12(b) provides an exemption from this requirement for FDMs that maintain at least twice the amount of required minimum capital. The Foreign Exchange Industry Association and an FDM suggested that in light of the higher capital requirement the exemption be available to those FDMs that maintain greater than 150% of the required minimum capital. This is the same amount at which an FCM must file written notice with the CFTC pursuant to CFTC Rule 1.12(b), commonly referred to as the early warning requirement.

a number of the larger FDM's were concerned about not being able to remain 2x the net capital requirement after the changes, and asked for this multiple requirement to be reduced to 1.5x.

On looking at the multiples I provided in previous posts, and the historical ones for the past year, you could see that the only companies which clearly have had no problems with maintaining this level are GFT and FXSOL.

Strangely FXCM dropped to 1.35x last July !! Perhaps yourself or David could comment upon that ? Anyway, you could imagine that they would find it relatively easy to find the capital to maintain it at the required level. Here's the historical net capital, net capital requirement, net capital excess and multiple for FXSOL, GFT, and OANDA as well as FXCM for the past year according to the cftc website.

GLOBAL FOREX TRADING

34,470,133   750,000 33,720,133  45.96x  06/06
37,122,971   500,000 36,622,971  74.24x  07/06
34,736,561   750,000 33,986,561  46.31x  08/06
35,490,645   750,000 34,740,645  47.32x  09/06
38,008,401   750,000 37,258,401  50.68x  10/06
42,518,852   250,000 42,268,852 170.07x  11/06
41,926,086   250,000 41,676,086 167.70x  12/06
43,064,023   250,000 42,814,023 107.66x  01/07
49,230,861   250,000 48,980,861 196.92x  02/07
46,729,805 3,318,347 43,411,458  14.08x  03/07
48,424,627 7,274,431 41,150,196   6.66x  04/07
47,681,883 7,315,539 40,366,344   6.52x  05/07
49,664,118 6,904,864 42,759,254   7.19x  06/07

FXSOL

 6,480,899 1,524,162  4,956,736   4.25x   06/06
 6,156,536 2,681,586  3,474,950   2.29x   07/06
 8,220,570 3,185,346  5,035,224   2.58x    08/06
 7,570,191 3,779,373  3,790,818   2.00x    09/06 
 9,709,092 4,559,789  5,149,303   2.12x    10/06
16,996,071 3,325,075 13,670,996  5.10x    11/06
12,605,276 2,219,070 10,386,206  5.68x    12/06
10,346,288 3,421,031  6,925,257   3.02x    01/07
12,958,768 4,089,908  8,868,860   3.17x    02/07
15,838,819 2,147,927 13,690,892   7.38x   03/07
20,267,861 2,152,994 18,114,867   9.41x   04/07
12,650,227 2,367,978 10,282,249   5.34x   05/07
17,295,130 2,064,386 15,230,744   8.38x   06/07

OANDA's

31,542,422 2,634,634 28,907,787 11.97x  06/06
33,861,650 2,826,559 31,035,090 11.98x  07/06
38,473,911 1,000,000 37,473,911 38.47x  08/06
31,010,821 1,000,000 30,010,821 31.01x  09/06
29,553,939 1,000,000 28,553,939 29.55x  10/06
32,812,412 5,024,673 27,787,739  6.53x   11/06
19,211,631 1,000,000 18,211,631 19.21x  12/06
11,680,636 3,248,460 8,432,176   3.60x    01/07
36,194,560 4,918,687 31,275,873  7.36x    02/07
18,263,754 8,975,243 9,288,511   2.03x    03/07
44,156,965 9,667,173 34,489,792  4.57x    04/07
35,361,139 9,472,640 25,888,499  4.73x    05/07
49,222,317 9,172,410 40,049,907  5.37x    06/07

FXCM's

22,922,036 7,230,261 15,691,774  3.17x 06/06
20,224,347 15,000,000 5,224,347  1.35x 07/06
37,829,727 9,694,267 28,135,460  3.90x 08/06
36,369,280 9,034,472 27,334,808  4.03x 09/06
34,216,549 13,752,269 20,464,280 2.49x 10/06
33,866,745 12,430,298 21,436,447 2.72x 11/06
27,398,735 7,996,230 19,402,505  3.43x  12/06
62,730,650 10,449,076 52,281,574 6.00x 01/07
55,233,641 13,086,888 42,146,753 4.22x 02/07
65,845,152 11,440,213 54,404,939 5.75x 03/07
51,155,872 11,863,500 39,292,372 4.31x 04/07
55,668,469 12,428,930 43,239,539 4.48x 05/07
44,626,492 12,977,713 31,648,779 3.44x 06/07

Clearly GFT forex is heads and shoulders above the rest for Net Capital, and its ability to cover the regulatory requirements for net capital. However, on looking at them myself just now, the spreads arnt very attractive compared to OANDA. I think as with anything, its a balance between the cost to trade, the platform and the risk you take with depositing your money with them. I guess thats why a lot of people are attracted to the lower capitalised companies in the first place. They need to offer smaller spreads to attract customers from bigger more established brokerages.

here's some resources so you can see the actual prices you would get with each company :

GLOBAL FOREX TRADING QUOTES
eur/usd
3pips

FX Solutions Spreads, Currency Pairs and Premiums
eur/usd
3pips

OANDA FXTrade - Comparing the Spreads of Different Forex Brokers
eur/usd
1.2 pips

FXCM | Why Choose FXCM | Better Trade Execution
eur/usd
can't find any mention of specific spreads except a statement
spreads as low as 2 pips. However, OANDA has them as 3 pips on eur/usd
through - from the previous link

All the spreads I found online are consistent with the summary on OANDA's spread page :

http://fxtrade.oanda.com/spreads/com...r_spreads.shtm

An interesting point is that EFX/MBTRADING has zero pip spreads ($5 on $100k commissions instead) but currently is in your dead pool. However there are plenty of happy customers there. . . Infact Felix of forexbastards.com has a pretty strong positive opinion of MBTRADING and a pretty negative one of most of the other companies I have mention in this post.

Check out Felix's commercial here :
YouTube - Forex Brokers And Their System of Screwing Forex Traders

and Felix's comments on some of the brokers I covered here, that he likes to call bucket shops :
YouTube - Forex Brokers (ECN Forex Broker vs. BucketShop Forex Broker)

and his email which he sent out regarding the change in the requirements here :
The NDD Forum - Savvy Traders Want to Know - View Single Post - NFA is a Joke

It would seem to me that, EFX/MBTRADING are clearly a serious challenge (with zero pip spreads at times) to the larger FDM's which at first glance appear to benefit the most from these changes. I will be opening an account there myself. Also, they have a perfect record with no regulatory action from their regulatory body according to the NFA basic website.

ln anycase, thanks for visiting my webpage, I need all the traffic I can get.