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All Ponzi schemers are disgusting thieves, but some are even worse than that:

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained more than $6.2 million in disgorgement and civil monetary penalties in a federal court summary judgment against defendants Marvin Cooper and his company, Billion Coupons, Inc. (BCI), both of Honolulu, Hawaii. The CFTC charged defendants with operating a $4 million foreign currency (forex) and commodity futures Ponzi scheme that defrauded more than 125 customers, all of whom were deaf.

The summary judgment, entered by the Honorable J. Michael Seabright of the U.S. District Court for the District of Hawaii, stems from a CFTC enforcement action in February 2009 (see CFTC Press Release 5614-09, February 19, 2009). The CFTC’s complaint charged that, since at least September 2007, Cooper, who is deaf, and BCI solicited funds from deaf American and Japanese individuals for the sole purported purpose of trading forex. Cooper and BCI, luring customers with promises of 15 to 25 percent monthly returns, misappropriated more than $1.4 million of customer funds for personal use, including for flying lessons and to purchase a $1 million home, according to the CFTC complaint.

The court’s summary judgment requires Cooper and BCI jointly and severally to pay approximately $3.9 million in disgorgement as restitution to defrauded customers, approximately $2.2 million in civil monetary penalties to the CFTC and $130,000 in civil penalties to the Securities and Exchange Commission (SEC). The summary judgment also permanently bars Cooper and BCI from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from CFTC registration.

The CFTC appreciates the assistance of the SEC and the Hawaii Department of Commerce and Consumer Affairs, Office of the Commissioner of Securities.

The CFTC Division of Enforcement staff responsible for this action are Elizabeth Davis, Kenneth W. McCracken, Michael Loconte, Erica Bodin, Rick Glaser and Richard Wagner.

In order to get things going NFA will start accepting new applications today and which is only 6 weeks before the CFTC deadline. Good luck to all new registrants who will have to stop doing business after October 18th until they get the approval which is expected to take a while due to massive amount of new applications.

The Commodity Futures Trading Commission has issued final forex rules which become effective on October 18, 2010. NFA will begin accepting registration applications from forex firms and individuals beginning Thursday, September 2.

Any retail forex entity that does not complete the registration process by October 18, 2010 will be unable to conduct retail forex business until registration and all necessary approvals and designations are granted.

As part of the reauthorization of the CFTC in May 2008, Congress amended the Commodity Exchange Act to require, with certain exceptions, including a Futures Commission Merchant (FCM) acting primarily or substantially as a traditional FCM, any firm acting as a counterparty to certain retail forex transactions to register as a Retail Foreign Exchange Dealer (RFED).

Consequently, any existing Forex Dealer Member of NFA that is currently registered as an FCM must register as an RFED unless the firm’s business is primarily or substantially that of a traditional FCM. Moreover, even if the firm’s business is primarily or substantially that of a traditional FCM, the firm must access NFA’s Online Registration System (ORS) and request approval as a Forex Firm and designation as a Forex Dealer Member.

The Commodity Exchange Act was also amended to require any individual acting as a forex solicitor, account manager or pool operator to register with the CFTC as Introducing Brokers (IBs), Commodity Trading Advisors (CTAs) or Commodity Pool Operators (CPOs) and become Members of NFA. Also, any Associated Person (AP) soliciting or supervising persons soliciting business on behalf of a forex firm must request approval as a Forex AP.

The rest here.

FXCM just released its formal statement on the new CFTC rules and it seems they are pretty worried about the possibility of not being able to accept US clients in their own non-US subsidiaries. Potentially this means that US based brokers will have to terminate all accounts in their foreign subsidiaries belonging to US residents. This means that many US clients who in the past year shifted their funds from US based brokers to other foreign brokers may have to start looking for a new home – something I discussed yesterday. That’s another huge blow to US brokers.

The U.S. Commodity and Futures Trading Commission (CFTC) recently announced final rules regarding off-exchange retail forex trading which will take effect October 18th 2010, and FXCM would like to address some questions concerning the new rules.

FXCM has reviewed the new rules and has already been in correspondence with both the CFTC and the NFA in order to obtain interpretive guidance on some of the provisions. Our goal is to provide our clients and the forex community with clear and correct information as to how accounts with FXCM LLC will be impacted. At present, we are still awaiting clarification regarding a particular provision of the Dodd-Frank financial reform statute enacted on July 21, 2010 and the impact it could have on certain accounts held at overseas affiliates.

However, below is the information we can share.

1. Leverage will be reduced as of October 18, 2010

Starting October 18, 2010, the maximum leverage available with FXCM LLC for trading will be 50:1 for major currency pairs and 20:1 for non-major currency pairs.

We believe that the reduction in leverage is a reasonable compromise from the initial CFTC proposal of 10:1 leverage. FXCM does believe lower leverage will be to the benefit of traders as higher leverage can often times result in a few losing trades offsetting many winning trades. FXCM has already implemented 50:1 as the default margin setting on FXCM LLC standard accounts, although traders still have the option to change margin levels upon request to 100:1 leverage with FXCM LLC. As of Oct 18th 2010, FXCM will comply with the new maximum leverage requirements.

Please note: The change in maximum leverage allowed only pertains to accounts held with the FXCM LLC (U.S.) entity.

2. As of October 18, 2010 all referring brokers introducing business to registered FCMs or Retail Foreign Exchange Dealers will be required to formally register with the CFTC as introducing brokers and become NFA members.

In anticipation of this rule, FXCM has already initiated procedures to be in compliance as of October 18th. At present, all Introducing Brokers to FXCM LLC are either registered with the CFTC as IBs or pending registration.

FXCM will continue to follow up with the CFTC and NFA regarding developments related to the implementation of the CFTC’s new rules and provide you with advance notice of future changes.

If you have any additional questions, please do not hesitate to contact FXCM client services staff 24 hours a day.

About FXCM Holdings LLC

Forex Capital Markets (FXCM) is a leading global forex and CFD broker* that caters to both retail and institutional markets. Founded in 1999, FXCM is one of the largest brokers, regulated by several of the world’s most respected financial authorities.

At the heart of FXCM’s client offering is No Dealing Desk forex trading. Clients have market access to some of the world’s largest liquidity providers; which enables FXCM to offer clients spreads as low as 1 pip on major crosses. Clients also have the benefits of mobile trading, one-click order execution and trading from real-time charts. FXCM’s CFD product* offers no re-quote trading and allows traders to trade oil, gold, silver, and stock indices, along with forex on one platform. In addition to currency and CFD trading, FXCM offers educational courses on forex trading and provides free news and research through DailyFX.com.

*Please be advised that CFD accounts are not available to residents of the U.S. or its territories. Additionally, FXCM LTD offers spread betting exclusively to UK residents. Residents of other countries are NOT eligible.

Trading foreign exchange and CFDs on margin carries a high level of risk, and may not be suitable for all. Read full disclaimer.

As first reported by Francesc and according to the latest BIS survey Forex market volume growth is unstoppable. The whole market volume was 20% higher in April 2010 than in April 2007, with average daily turnover of $4.0 trillion compared to $3.3 trillion. In April this year, 53 central banks and monetary authorities participated in the eighth Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity.

What really drove this huge growth in volume is the 50% increase in spot transactions which now represent no less than 37% of foreign exchange market turnover. Spot turnover rose to $1.5 trillion in April 2010 from $1.0 trillion in April 2007.

To us retail forex traders this doesn’t really mean much as this survey is hardly taking our market into consideration. However this does mean that the market is growing in whole, something I’m noticing in the past year or so. The market which I once assumed is pretty much mature is actually still very much growing. My own survey, despite its flaws, is one of the only retail forex market surveys and it shows that this market is also growing at double digits.

Let’s hope this growth continues, even despite the recent regulatory moves which will decrease volumes in Japan and the US.

BIS april 2010 survey

There’s a heated debate across many websites whether the new rules mean that non-US brokers will be able to accept US clients or not.

It seems that the majority of people (check Francesc and Bart’s websites) believe that foreign brokers will stop accepting US clients, even meaning that subsidiaries/affiliates of US brokers themselves will not be able to accept US clients.

I however, have a different opinion as may be seen here in comments: http://forexmagnates.com/cftc-finalizes-forex-rules-leverage-reduced-to-150/#comments. I believe that what is going to happen is the same thing that happened to the US online gambling industry. Although it was banned from the US (for similar, reasons the retail forex industry is under fire now) however continued prospering nonetheless.

First of all, for now, there is no rule that forbids foreign brokers from accepting clients. Secondly, even if it passes, there’s almost no way that any regulatory agency will be able to effectively monitor or prevent this. Thirdly, many offshore brokers will just keep accepting US clients and there’s nothing anybody can do to them, just like there are offshore online casinos who still accept these clients. They realize of course that this means that their execs won’t be able to step on US soil and that if in the future the online gaming industry will be allowed to operate in the US again, they won’t be able to participate. In the meanwhile they are racking up huge profits. There’s a good chance that some of them will take simply because you can always settle these cases, just Google what some online gaming operators did in similar events…

For the sake of US customers I hope CFTC won’t get involved in this and will actually let these traders choose where they wish to trade. I believe that the public in the US will know how to make wise decisions without Uncle Sam telling them what to do in every step.

I would like to welcome to new long term advertisers who found Forex Magnates attractive enough for their business models.  Boston Technologies is taking the 728×90 leaderboard and Tradency takes the central 468×60 banner.

Boston Technologies is a large forex software providers and the biggest provider of liquidity bridges to US brokers. It also provides a ‘Brokerage in a Box’ and recently started providing several new products such BT Prime (own Prime Brokerage), CFDs liquidity and more.

Tradency is a leading automated forex trading solutions provider. Tradency provides a trading platform which integrates with any broker and provides a sophisticated auto-trading solution, as well as many features and monitoring tools, helping retail traders to pick the best performing strategies out of large list of pre-screened strategies while controlling their risk.

I welcome both advertisers and hope they will be here for time to come.

The CFTC has finally released its final regulations concerning off-exchange retail foreign currency transactions. The rules implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Food, Conservation, and Energy Act of 2008, which, together, provide the CFTC with broad authority to register and regulate entities wishing to serve as counterparties to, or to intermediate, retail foreign exchange (forex) transactions. The final rules become effective October 18, 2010.

Most importantly these rules further reduce the leverage which can be offered by US forex brokers to 1:50 and 1:20 on majors and minors respectively. To those with short memory – it’s not the first time CFTC reduces forex leverage as back in May 2009 the leverage was reduced from 1:400 to 1:100.

IBs however were saved, at least for now, as IBs can be guaranteed by a certain broker or remain independent. This however goes to show you that with time CFTC will probably require all IBs to become guaranteed as CFTC seem to deliver its blows in small portions.

An interesting aspect that I think went unnoticed is that SEC/FINRA brokers (like Citi, Deutsche, etc) can keep offering retail forex trading regardless of these regulations, therefore keeping the 1:100 leverage and become more attractive to forex traders than CFTC forex brokers (like FXCM, IBFX, etc).

“These rules of the road will help protect the American public in the largest area of retail fraud that the CFTC oversees: retail foreign exchange,” CFTC Chairman Gary Gensler said. “All CFTC registrants involved in soliciting and selling retail forex contracts to consumers will now have to comply with rules to protect the investing public. This is also the first final rule that the Commission has published to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act. We look forward to publishing additional rules to protect the American public.”

If Mr. Gensler thinks that making the US forex industry uncompetitive is making the American public safer then let’s see where the US money will be deposited from now on. I bet that most of it will go offshore. In Japan the leverage was reduced to 1:50 exactly a month ago and there are reports of a huge drop in volumes (nothing not expected) meaning that brokers are now making less from same number of transactions/traders which will necessarily lead some of them to go out of business.

Read more here and here.

cftc final forex rules

Better enforcement of high-frequency and algorithmic trading is required, said a commissioner at the Commodity Futures Trading Commission, The Wall Street Journal reports. More appropriate rules and regulations need to be developed to police the high-speed nature of computer-aided trading styles, added Scott O’Malia.

New rules are needed instead of conforming pit trading enforcement methods to today’s markets. O’Malia has urged new rules in response to CME Group’s probe of Infinium Capital Management’s computer problem that led to a sudden spike in oil prices in February. “The market was tainted and prices plunged as a result,” O’Malia said in a statement, responding to a Reuters story describing how the algorithm ran amok on February 3, incurring a million-dollar loss in about a second.

Will this be applied to high frequency trading in the OTC forex as well? I find it hard to believe as OTC forex price fluctuations do not affect the actual forex prices (still, the market is much much bigger than the retail forex part of it) and CFTC will probably focus on much larger and important markets such as stocks, futures and commodities which actually affect the economy.

Interbank FX just announced that its Australian subsidiary obtained an ASIC license and will shortly start operation in Australia. This signals what everybody knows by now – Australia is the next hot spot for retail forex.

SALT LAKE CITY, UT, USA—August 25, 2010— IBFX Holdings LLC, parent company of leading U.S. off-exchange retail foreign currency (forex) broker Interbank FX LLC, announced today the opening of its Australian subsidiary, IBFX Australia Pty. IBFX Australia Pty. Ltd. has obtained a license with the Australian Securities and Investments Commission (ASIC) and will offer comprehensive services for retail and institutional customers beginning September 1, 2010.

“I am eager and confident as we launch our Australian offering, furthering our global expansion,” said Todd Crosland, chairman and president of IBFX Holdings LLC. “Our ASIC registration will allow us to continue to deliver world class technology solutions and exemplary customer experience to retail traders worldwide.”

Located in the heart of downtown Sydney, IBFX Australia Pty. Ltd plans to follow in the footsteps of its sister company, providing transaction transparency and improving industry standards for foreign exchange.

“We bring with us to Australia our transparent business model and focus on customer care, something we feel sets us apart from competitors,” said Crosland. “As always, we find it vital to provide the best possible trading experience for our customers. That’s how we want do business. That’s our culture. That’s our technology.”

As the popularity of forex trading rapidly grows around the world, IBFX Holdings LLC recognizes the need for increasing levels of access and technology. For more information about IBFX Australia Pty. Ltd please visit www.ibfx.com.

About IBFX Holdings LLC

Headquartered in Salt Lake City, UT, USA, IBFX Holdings LLC is the parent of the Interbank FX group of companies; including Interbank FX LLC, Interbank FX UK Ltd. and IBFX Australia Pty. Ltd. Interbank FX LLC is a provider of online forex trading services, offering individual traders, money managers and institutional customers proprietary technology, tools and education to trade spot foreign currency online. Interbank FX LLC has distinguished itself among industry leaders with its unique multi bank liquidity feed, proprietary tools and services, and remarkable focus on customer care. Serving more than 35,000 clients from more than 140 countries around the world, Interbank FX LLC is regulated as a member of the National Futures Association and the Commodity Futures Trading Commission as a Futures Commission Merchant.

Trading in the off-exchange retail foreign currency market is one of the riskiest forms of investment available. Full risk disclaimer can be found here: http://www.ibfx.com/Legal/RiskWarning.aspx.

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PR Contact:

Abigail DeGraff

Interbank FX

Abigail.degraff@ibfx.com

(801) 930-6833