US FCM Data May 2012 Mixed Figures

9 Comments on this post

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1. Marco said:
   So, which one is the safest? I’ve tried capital/obligation ratio, but not sure how relevant that is.

   July 13th, 2012 at 10:33 am
2. Michael Greenberg said:
   hard to tell, but probably the most capitalized once, but this is what they report to nfa – not what nfa verifies

   July 13th, 2012 at 11:44 am
3. FXinfoGuy said:
   @Marco – capitalization does not equate to safety. FCMs are require to carry $20M in cap plus client deposits.

   Look at how firms manage client funds and check their track records on the NFA BASIC site.

   July 13th, 2012 at 12:00 pm
4. Paul H said:
   Marco,

   I tend to come at it from a different angle, leave as little as you can with the broker, in order to trade according to your method, without risking margin calls.

   Example..

   So you have twenty grand of savings, but you only trade the EUR USD on a daily timeframe and only risk 1% of your account per trade. So that’s 200 risk per trade, why risk leaving twenty grand with your broker, they don’t pay interest? Not that anyone else does mind..

   So despite the fact you have perhaps 20k to trade with, only leave the minimum you need with the broker and just keep topping it up if nec. Maybe transfer 2k, you’d need a ten percent drawdown of your 20k before being wiped out. You could position trade the rest of your fund in Swissys or Yen perhaps..

   Hope this makes sense, wrote an article on this a while back.

   July 13th, 2012 at 12:22 pm
5. Marco said:
   hehe good argument

   July 13th, 2012 at 1:44 pm
6. Forex Guy said:
   As long as the money exists that they say exists (contrary to PFG), all these companies are safe. The NFA requires $20 million minimum, on top of the amount of customer funds being held, plus additional capital to account for open currency exposure. Given this extreme capital requirement, it would be impossible for any of these companies to go bankrupt as long as they are not doctoring statements or faking reports. So the real concern should be on the NFA to do their job ensuring brokers aren’t cooking the books. No RFED has ever gone bankrupt (remember, PFG was/is not an RFED, rather an FCM). And no RFED will ever go bankrupt if the NFA does their job (big if).

   July 13th, 2012 at 2:39 pm
7. Andy said:
   A RFED can could still go bankrupt, even if they maintain adequate capital according to nfa. For example if one of their counterparties fails its easily conceivable that the rfed itself goes down too.

   I do what Paul H does, and additionally only use UK firms with their deposit guarantee scheme. I dont see a compelling reason to go with a US firm at all. The London retail market is more competitive in terms of spreads/commissions too. My guess is the US firms only advantage is the home bais of american retail clients.

   July 13th, 2012 at 4:00 pm
8. lup said:
   Hi Andy,

   I agree. Customer funds must have the protection of segregated accounts. I encorage everyone to call the NFA, CFTC, and Senators, and demand this protection.

   In the past 5 days, many have been blaming the NFA with regards to PFGBest, however I think it unfair. The CEO of PFGBest conned people very closed to him – a whole town in Iowa.

   Not protecting forex customer funds – regulation 101 – would prove outright negligence, and a strong argument for incompetence.

   July 14th, 2012 at 2:15 pm
9. 4x said:
   To Paul H: 100% agree with everything you said problem is with firms in futures especially with bonafied hedgers and investors with managed accounts, they usually allocate more than enough funds to a CTA or Financial Advisor. For a CTA or Fund Manger having a minimum of 1 million adds credibility to the investment. So these are unavoidable circumstances.

   Andy: A failing counterparty would not necessarily bring down and RFED. The only way actual money would be lost is if the counterparty was the prime broker RFEDs hold margin with a PB and trade on leverage like a client with a firm. The net cap is not tied 100% to PB margin, usually they will have around 2 to 10 million, unless the bank holding the firms regulatory capital and client funds fail. That can happen to literally any firm that holds reg cap and client funds at a tier 1 bank, however highly unlikely.

   July 14th, 2012 at 7:32 pm