November FCM Data Shows FXDD & GFT Fall Below Net Capital Requirements


Yesterday we saw the publishing of the CFTC’s Q4 account profitability report, today we take a look at net deposits from FCMs as of November 30th 2012. In the past we have compared monthly ‘Adjusted Net Capital’ and ‘Retail Forex Funds’ figures and ignored the ‘Excess Net Capital’ number as firms were adequately capitalized (at least in their reports –ie. PFG Best), and there was rarely much of a surprise. However, for this time around we have replaced the month over month ‘Net Capital’ number with the ‘Excess Net Capital’ figure.

As can be seen below, both FXDD and GFT fell below their Excess Net Capital requirements at the end of November. The drop in FXDD was previously documented in the NFA’s memorandum they issued to the broker which had been disputed by FXDD. However, the GFT net capital drop is a huge surprise and apparently this was the point of contention between the CFTC/NFA and the broker. Based on numerous sources, we wrote in the past that the NFA had embarked on enforcing ignored accounting principles in regards to the pooling of funds from foreign subsidiaries. As can be seen below, the new accounting calculations had severe effects on both GFT and FXDD. It’s worth noting that among large brokers, with the exception of Oanda, firms experienced a drop in their ‘Adjusted Net Capital’.

In addition to the drop in Net Capital, during November US brokers also saw a huge fall in Retail Forex Funds. Account funds dropped over $75 million to $742,103,740 from $817,134,898, with FXCM responsible for 2/3 of the decline. Other than FXCM, the other notable drop in funds occurred from GFT. Overall, the drop in total retail account funds follows the negative trend in the US where the Forex industry has been contracting due to an exit of brokers, the MF Global and PFG scandal, a renewed interest in equity trading among retail customers, as well as fewer foreign clients due to the lack of CFDs and high margin requirements.

nov fcm asset data

TAGS: , , , , , , , ,

Related posts:

More information on this subject is found in the latest Forex Magnates Quarterly Report

6 Comments on this post


  1. Michael Greenberg said:

    that’s NFA’s way to show that they were ‘right’ and GFT was wrong, but what actually happened is that NFA changed a rule overnight which overnight made GFT fall below capital requirements and then reported GFT as being undercapitalized…

    January 15th, 2013 at 9:03 am
  2. Ohmygosh said:

    Wow….ILQ is just $64K over capital requirements.. Looks really scary.
    Seems if one month they get a bigger utility bill they might go under…

    January 15th, 2013 at 3:03 pm
  3. Michael Greenberg said:

    not really, remember that they keep 20+ mil frozen and with less than 1k clients this capital alone is probably x2-3 times the customer obligations

    January 15th, 2013 at 3:20 pm
  4. Ron Finberg said:

    Re: ILQ – In the previous month’s report, the had a slightly larger capital requirement with net capital of $21 mil+. With a $900k in excess capital they may have been doing some shifting of funds around.

    January 15th, 2013 at 3:55 pm
  5. A. said:

    It’s not ILQ that attracted my attention, but Interactive Brokers. 1.4 billion? Are you sure there’s no mistake? It’s 7 times more than the next one, Knight Capital Americas. This is huge, mind-blowing!

    January 16th, 2013 at 7:13 pm
  6. Ron Finberg said:

    IB is a huge company. It’s also split between its option market making division (Timber Hill I belive its called) and the brokerage business. Being well capitalized has been one of their strengths for years.

    January 16th, 2013 at 7:20 pm

We do not store your information and we do not disclose our sources.

Leave your name/email (not required) if you'd like to be contacted about this story (will not be disclosed):

Digital Currencies

Expert Articles

Fintech, Startups & New Products

Christian Martin

TeraExchange Enhances Bitcoin Offering – Launches New Platform and Price Index

US-regulated Swap Execution Facility, TeraExchange joins the Bitcoin bandwagon. The multi-asset regulated venue has launched a new price index and trading platform for the trading...

Coinkite runs Obelisk full bitcoin node and data server

Coinkite has revealed that it is employing Obelisk, a technology that functions as a full bitcoin node and data server. Coinkite says that “there are not...

WSJ report: Satoshi e-mail hack story probably a hoax

Wall Street Journal reports that the story of alleged hacking into Satoshi Nakamoto’s e-mail is most likely “one big, nasty prank”. In any event, Bitcoin’s...

More Digital Currencies

Hugh Taggart

News Volume as a Filter For FX Carry Trades

There’s a growing realization in the ‘Big Data’ world, of which sentiment analytics is a small part, that you can’t expect to hire any data...

charlie trumpess, Ariel Communications

Making the Most of Mobile

It makes sense for FX brokers to offer a consistent brand experience from desktops, tablets, and smartphones. However, you must resist the urge to simply...

natural gas

Natural Gas Locked In Tight Range

Natural Gas has been trading in a relatively tight range since July of this year. After experiencing a massive rally, followed by massive sell off.......

More Expert Articles

IG Group Launches Stockbroking in the UK and Ireland

Stockbroking gets launched in the UK and Ireland by IG Group. The new platform offering follows earlier statements from the broker of their intention to launch real stock trading and increase their product base.
Read more

exitround logo

Exitround Capital Launched Connecting Private Equity Firms with Sellers

Expanding its M&A marketplace, Exitround has announced the launch of Exitround Capital. The new division matches private equity firms with profitable businesses generating $3M to $100M in annual revenue.
Read more

More Fintech, Startups & New Products

Binary Options

Forex Research

Recent Comments


Japanese Binary Options Trading Continues to Recover, Volumes up 28% in August MoM

Second month of trading volume increases for binary options in Japan. During August 2014 the trading reached ¥68,828,888,822. The figure is a complete recovery to the May 2014 trading volume level.
Read more


Special: Sneak Peek at Forex Magnates’ Interview with CySEC Chairwoman Kalogerou

Demetra Kalogerou, the leader of the retail FX industry’s most influential regulator, speaks exclusively with Forex Magnates about restoring Cyprus’ credibility, regulating Binary options and Social Trading.
Read more


Alpari Russia Starts Offering a New Type of Spread Attached Binary Option

The new binary options type offered by Alpari Russia is called Spread High/Low. It is essentially adding a spread to the market price of the asset and providing higher returns at the cost of higher risks.
Read more

Note: Copyright © 2014 Forex Magnates. All rights reserved.

All materials contained on this site are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of Forex Magnates. You may not alter or remove any trademark, copyright or other notice from copies of the content. All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you.Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at Forex Magnates are those of the individual authors and do not necessarily represent the opinion of Forex Magnates or its management. Forex Magnates has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur. Any opinions, news, research, analyses, prices or other information contained on this website, by Forex Magnates, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. Forex Magnates will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

©2014 "Forex Magnates Inc. - Home of the Forex Elite" All Rights Reserved.