As traders look overseas for less restrictive alternatives, Forex Dealers based in the United States and registered with the National Futures Association (NFA) have struck back to protect an industry that is seeing business unnecessarily eroded.

I’m sure many of you have voiced your opnion – if you haven’t and if you haven’t visited the Forex Dealers Coalition website, do so today. Let your thoughts be known.

Foreign Exchange Dealers Coalition (FXDC) is a post from the TradingMetro blog, PipStop. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

An industry source has told me that it’s the former owners of iTradeFX – who couldn’t hack doing business in the United States – who have set-up shop off-shore. Having personally visited iTradeFX – it was for all intents and purposes a bucket shop and now the same owners have set up shop in a jurisdiction with no transparent oversight.

iTradeFX, Becomes eForex? is a post from the TradingMetro blog, PipStop. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

So FXDD, Forex.com, and all other MT4 brokers, why not spare me the potential future pain of “INVALID ACCOUNT?!?”

Drives me nuts.

Metatrader Account Expirations is a post from the TradingMetro blog, PipStop. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Weeks go by with no or relatively little news from Forex brokers, then in the days leading up to US Thanksgiving, a number of things come out.

Yesterday Interbank FX sends a notice out that it has officially announced plans to open a United Kingdom office (Interbank FX UK Ltd.) – finally. But the release is typically vague, with no indication of WHEN. It was a no brainer that IBFX needed to make this move. I can’t for a second believe that its business hasn’t been hurt by it’s inability or unwillingness to expand sooner. When IBFX? When?

IBFX CEO Todd Crossland said:

"The Forex market, as part of the overall Interbank market, is one of the largest financial markets in the world," said Crosland. "Our London company will provide additional features and support for traders in this region, and we’re pleased to be a part of this dynamic marketplace."

Really, though, I guess this is to retain as much of their fleeing US accounts, as Forex.com UK and FXCM UK with months of a head start on IBFX. The National Futures Association (NFA) has rules, sure, but traders will find ways around it to find what they need to support their trading, and the brokers – have to this point – seemed to adjust to meet the demand.

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At the same time FXDD sent out two notices. One which threw down the gauntlet of “we’re going to be very strict in our compliance” was a major theme, along with the news that maximum leverage was going to be decreased to 100:1.

FXDD has been in the throes of becoming officially registered with the NFA for years it seems like (they have been pending for over a year), and from personal experience I can say that they have been more stringent than any other broker that I have had dealings with.

FXDD is also having a special party for a maximum of 50 people on Dec. 12 at Madison Square Garden in New York City. It’s a training mixed with food and a New York Rangers game afterwards. It’s $200 but the total amount gets credited to a traders live account. Cool and unique experience to be sure – and it’s FREE!

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My general thoughts are that despite the efforts of the NFA which seems counter intuitive to the wants and needs of many traders who I know, Forex brokers in the United States are continuing to set-up offshore to continue to afford its state-side traders access to the resources that they deem necessary to trade with.

I understand the concept of lowering maximum leverage. But before gamblers head into a casino are they given a limit of how much they can lose? Will they have their ATM card taken away from them after the second losing trip to it? Most successful Forex dealers have deep pockets, but they don’t build massive structures like Las Vegas hotels do they? Am I the only one to see some sort of weird standard?

Interbank FX UK, FXDD, and other Broker News is a post from the TradingMetro blog, PipStop. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Somehow I think FXCM has allowed its RB driven business to come as far as it has – instead of scare its RBs in taking its business elsewhere – it has allowed business to be conducted status quo, even though this is something that has been brewing for years. I’ve got to give it to FXCM, though, as they seem to be on the ball as far as getting this type of word out – and even months ago, when the no hedging, FIFO trading rules were enacted by the NFA, FXCM did well in funnelling business to its UK operation.

So one way to get around this whole thing is to become an official RB with a US-based dealers offshore operation and drive US-based traders that way – isn’t it? At least that’s what it felt like FXCM was saying months back.

Dear Referring Broker,

FXCM strongly believes that the Commodity Futures Trading Commission (CFTC) will soon issue additional rules relating to retail forex. These rules are expected to require all Referring Brokers (RBs) that solicit U.S. customers, regardless of where they are located, to formally register with the CFTC and become members of the National Futures Association (NFA). RBs that refer self-traded U.S. customer accounts will have to register as Introducing Brokers (IBs). RBs that manage U.S. customer accounts will have to register as Commodity Trading Advisors (CTAs) unless they qualify for a recognized exemption.

The forthcoming CFTC registration rules bring greater integrity and increased oversight to the forex market and its participants. As such, FXCM encourages all RBs to immediately apply for IB or CTA registration if they currently solicit U.S. customers and plan to continue doing so. If you currently solicit U.S. customers but do not intend to seek IB or CTA registration, please note the following timeline for conducting business with FXCM. We understand that NFA registration is not an easy decision and requires ample preparation. Therefore, we are allowing RBs four months to prepare.

Effective March 31, 2010, FXCM LLC and FXCM LTD will discontinue compensation payments generated by U.S. customer accounts to any RB that has not obtained NFA registration or is not in the process of registering. Further, FXCM LLC will no longer accept business from any U.S. based RB that has not obtained NFA registration or is not in the process of registering. FXCM LTD will accept business from unregistered U.S. based RBs for non-U.S. clients only.

With this in mind, FXCM is fully prepared to assist all existing RBs in the registration process and, in anticipation of the new rules, has established an NFA Registration Team.

FXCM Referring Broker Notice is a post from the TradingMetro blog, PipStop. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

There are two different announcements it sent out to its US (or FXCM LLC) customers and its FXCM UK customers. Both requirements will be raised, but what the FXCM UK requirements are being raised to FXCM LLC is DOUBLING that. If FXCM truly believed with the extent of the NFA’s regulations, don’t you think that the changes made would be the same no matter what the jurisdiction? Interesting to me, anyway.

The raising of margin isn’t a popular move amongst those who enjoy the high leverage and high risk/reward of Forex trading, but is something that other firms such as MFGlobal Canada has had in place for quite sometime.

In the words of FXCM …

… FXCM’s experience in Hong Kong, where significantly lower leverage levels (higher margins) are mandated by law, suggests that trading with lower leverage may assist clients in trading more successfully over an extended time period. The new margin requirements are intended to reduce risk by restricting traders from using excessive leverage.

Take a look below at the comparison shots …

FXCM LLC

FXCM UK

FXCM’s New Margin Requirements is a post from the TradingMetro blog, PipStop. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

The option of transferring ones account to MF Global Canada (MF Global FX) – judging by the feedback I am receiving – doesn’t seem to satisfy traders. Indeed, when traders who are used to the margin levels they have been trading at, look at the margins offered by MF Global FX (which I personally don’t think are unreasonable at all – the whole purpose is to protect traders) they start looking elsewhere.

So what is elsewhere? If you’re a BC resident what do you do? Who do you open an account with? The global nature of the Forex market has reputable forex dealers doing business around the world. We only have to look south of the border to see some of the largest dealers not doing business in BC for one reason or another – only the BCSC truly knows.

As someone mentioned to me the other day, “The BCSC must be looking at things and think, if we can get all the Forex dealers to LEAVE BC, then the problem of people losing money in Forex goes away.”

In the past few years we’ve seen a number of dealers TRY to get into BC – FX Solutions and Forex.com being two – and both ended up white labeling their offerings through Questrade – which is a dubious dealer, devoid of any type of helpful customer service. I can only imagine that both of those big dealers are disappointed with the arrangement they have with Questrade.

So enough of the riff-raff, who are the ones who are registered with the BCSC you ask? Well, not only is the BCSC registration important here, but IIROC registration is a necessity. In December I posted Part I of Opening a Forex Account in BC, and this is the revision to that.

Registered with IIROC and BCSC:

- Interactive Brokers
- MF Global Canada
- Trade Freedom
- Questrade

All have its pros and cons. Some offer higher margins than others, they have differing minimum account openings (Interactive Brokers is $10,000 USD), and most have negligible customer service – as has been reported to me.

The significance of a dealer being registered with IIROC is that gets them automatic membership with the CIPF which insures trader accounts to upwards of $1 million, for a variety of causes. Registration with the BCSC just allows those dealers to solicit and accept accounts from BC residents.

Nothing the BCSC does restricts a BC resident from opening a dealer account with anyone in the world. If you open an account with a dealer that will take you as a BC resident then it’s your risk, and you have to be aware of what those risks are.

What is most important is for a trader to know his/her trading profile. What tools does a trader need? What functionality in their trading does a trader need? Once a trader understands what their needs are, they will be in a better position to determine what dealer they open an account with.

Add your comments, I’d love to hear them. I’m always learning more about the needs of traders and the original post in December had 37 comments. I’ll revise this post and add additional thoughts as time goes on, but the dialogue with traders is most important.

Opening a Forex Broker Account in BC, Part II is a post from the TradingMetro blog, PipStop. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

FXCM Canada was never really fully vested in this market anyway – it was a BCSC registered, but not IIROC registered firm. Meaning it could take BC accounts, but not offer the individual account protection of CIPF. 

Over nine months ago, I authored one of the most popular posts directed at BC residents who wanted to open accounts with BCSC registered dealers. Unfortunately since then the already small list has been pared further. I will write an updated post to that in the coming weeks.

FXCM cites new regulations as the reason, which is true. The BCSC is making it further constricting for dealers in the FX space to solicit BC residents.

We regret to inform you that due to new regulations in British Columbia, FXCM Canada Limited (FXCM) has decided to cease doing business in Canada as of September 19, 2009. We do however have a solution that will allow you to continue trading on the same platform with your positions intact. Our dedicated team will be available around the clock to help you throughout this transition.

What is most damning about this is that it further pushes BC residents to the fringes of the industry. More traders are looking past the potential protection of CIPF to open an account with a dealer that provides the best trading experience for them.

With the departure of FXCM there are no longer any BCSC registered dealers who carry the wildly popular MetaTrader 4 platform.

The BCSC places the onus on dealers not to solicit BC residents. When it comes to National Futures Association (NFA) registered dealers the BCSC can work in collaboration to have its members comply, but when it comes to some of the more visible offshore FX dealers there is seemingly little the BCSC can do to stop them from taking BC accounts.

The bottomline is business is being pushed out of BC. Accounts are going elsewhere, and at the end of the day something unexpectedly negative will happen. What that is I don’t know.

What I do know is that FXCM lost me with its arrogance a little while ago. I was a fan, but not anymore. My recommendation to traders is to look for a dealer that is NOT FXCM.

FXCM suggests a move to MF GlobalFX. I know of a couple of traders who are happy with MF Global – but the Canadian operation has always been on a small scale. I just hopped by the website now and there isn’t anyone manning the live chat (granted it is 3 a.m. PT) – in an era where most major dealers will give you 24 hour all-around support. 7icypgr4dn

FXCM Pulls Out of British Columbia (BC) is a post from the TradingMetro blog, PipStop. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.