Hi everyone

Just 15 days after buying ODL Securities U.S. business, FXCM shakes the Forex Retail Industry with today’s announcement of the acquisition of certain assets of the US Forex business of Hotspot FX.

Presse Release - FXCM Acquires Certain Assets of Hotspot FXr’s Retail Forex Business

FXCM’s has started an aggressive buying campaign thanks to its solid financial position and now it is time if others will follow or FXCM will keep its way on its own.

Very interesting move indeed.

Francesc

Hi everyone

Yesterday I published FINRA’s proposed rule to establish a leverage limitation for Retail Forex to 1.5 to1.

To get the insight of the Forex Retail Industry, I contacted to some of the top U.S. executives of this industry to get their opinnion about it.

I want to thank Drew Niv, CEO at FXCM and James Green, Managing Director & General Counsel at FXDD for their collaboration.

I must remind here us all that FINRA is the largest non-guvernmental independent regulator for all securities firms doing business in the United States. We oversee nearly 5,000 brokerage firms, 172,000 branch offices and 665,000 registered securities representatives.

Top U.S. Executive Comments:

Drew Niv, CEO at FXCM
“Recently many FX brokers in the US sought to shelter them selves from the new regulatory requirements of the NFA and CFTC by becoming broker dealers and switching to Finra.  thsi is the regulator’s way of saying that you have to be an FDM under the CFTC/NFA in order to do retail FX.”

James Green, Managing Director & General Counsel at FXDD
“Dear Francesc: At your request I am commenting on FINRA’s new proposed rule to limit leverage in the OTC spot Forex market for transactions conducted with a registered broker dealer to 1.5 to1.
My comments are mine alone and may not necessarily reflect the views of the management of FXDD.
The background set forth in the discussion on the issue is, I believe, accurate from the perspective of a regulator. Their position is to protect customers. However, their justification, again from my perspective, is probably behind the curve.
As we all know, the regulatory function, among other things, is to regulate an orderly marketplace though transparency and to insure that customers are not defrauded. I do not believe that it has ever been a regulatory function to protect customers from bad trading decisions or from their own failure to understand how the market and their dealer functions before they jump in with both feet.
The educational component for the retail Forex market is very deep and very wide thanks to the efforts of participating firms and to the Internet. Good information is free and is accessible by virtually anyone on the planet with a computer and internet connectivity.
The margin call issue, i.e. that a customer would lose their entire investment because they do not receive a margin call from their dealer is, from my perspective, a straw man. Most, if not all, platforms show clients on a mark to market basis the change in their positions and the required margin to hold those positions. Even the most rudimentary trading catechisms include the margin caveat….you must keep your positions properly margined or you will be liquidated. Having said that, positions do get liquidated.
Unlike earlier electronic platforms, where verbal margin calls were made, current platforms are set to liquidate at specific margin : equity levels. To reduce leverage broker dealers can offer to their clients to 1 to 1.5 is, in my opinion, a guaranteed maneuver to keep broker dealers out of the retail spot Forex market.
Whether that is the intended purpose of the proposal or simply a new proof for the law of unintended consequences is irrelevant. However, retail clients want at least 100:1 leverage. Many want 200:1 or 400:1. These levels of leverage correspond to the accepted characterizations of standard size contracts, mini contracts and micro contracts. Thus, clients will go to those firms that offer them what they want. Whether those firms are located in the U.S. or outside the U.S. is becoming, increasingly, irrelevant. Capital goes where it is appreciated and allowed to function.
Along the same lines, the NFA has proposed a new rule to limit leverage in the non-majors to 25:1. If this proposed rule becomes effective I suspect it will have the same net effect as the FINRA proposal. Customers will go where they can get the leverage they want. In both instances (NFA and FINRA) the reference is to that level of leverage that characterizes the futures market. In my view, that reference is outdated and misapplied.
The OTC market is not the futures market and it should be recognized as that. Efforts to squeeze all markets into a one-size-fits-all category by making these markets operate as something they are not is, in my view, counterproductive.
In summary, these types of proposals bear little relevance to how the OTC market actually works. Regulators propose rules so manage situations they believe important. I do not disagree with that standard.
I only hope that both regulatory agencies will listen to their participants and members so as not to drive good clients and their capital out of the USA.
My best regards to you,
Jim”

The New York Foreign Exchange Committee released the results of its ninth Survey of North American Foreign Exchange Volume.

It is worth to highlight that average daily volume in spot transactions was 27.0 percent higher than in October 2007, more than offsetting declines in the average daily volume in foreign exchange options
and swaps of 35.4 and 16.4 percent, respectively.

View Full Report

Good morning everyone

I just got this from our compliance officer Mr. John Putman

“FINRA is proposing changes in max leverage for its members. It’s a little unclear right now how many of the current US based brokers would actually fall under this proposed regulation but it could definitely have an affect.

http://www.finra.org/Industry/Regulation/Notices/2009/P117744

Regulatory Notice 09-06

FINRA Requests Comment on Proposed Rule to Establish a Leverage Limitation for Retail Forex; Comment Period Expires: February 20, 2009

Executive Summary

FINRA is requesting comment on a proposed rule prohibiting any member firm from permitting a customer to: (1) initiate any forex position with a leverage ratio of greater than 1.5 to 1; and (2) withdraw money from an open forex position that would cause the leverage ratio for such position to be greater than 1.5 to 1.”

Thanks John!

Francesc

Hi everyone

Finally!!!! after too many delays we are working on the Pip Rebate Program and we plan to have it online on the second or third week of February 2009.

The idea is very simple and it is not new: FXstreet.com will share the rebate brokers pay the company with those traders that will add it as their referral agent when opening their trading account.

We have prepared a very attractive sharing scale that will give traders most of the rebates received - usually rebate equals to 1 pip per round turn.

This program will initially be for Non-US traders as we are not regulated as an IB by the NFA. We will also not accept traders of countries we have doubts we could be breaking the law.

Our idea is that if the program works well we will start the regulation process on all countries needed, starting with the US. All will depend on traders interest in the program.

Rebate Scale Proposed:

• $300 - $650: 50% Rebate Participation
• $650-$1000: 65% Rebate Participation
• +$1000: 80% Rebate Participation

Participating Brokers:

• ACM
• FXCM (Mini & Standard accounts)
• FXCM UK (Mini & Standard accounts)
• FX Solutions
• Gain Capital
• MF Global UK
• MG Financial
• Nord Markets

I hope this program will be of your interest

Stay tuned

Update (02/09/09): The service is available now at Pip Rebate Program

Hi everyone

On Janary 23rd, NFA fined San Francisco’s based Zoco LLC and its president Mr. Damien Barrett with a fine of $20,000 each for cheating, defrauding or deceiving another person or attempting to do so; failing to establish and implement an adequate anti-money laundering program; failure to develop and implement required business continuity and disaster recovery procedures; and failure to observe high standards of commercial honor and just and equitable principles of trade.
The Complaint also charged Zoco and Barrett with failure to supervise.
Full Story

Website: http://www.vipfutures.com/

Francesc

Hi everyone

I just wanted to update the info I gave you last January 19th. Back then we were talking about 536 traders registered to our FX Trader of the Year 2009 Demo Contest

Well, on Friday NordMarkets informed us that we had already 620 traders registered to the Demo Contest and 50 traders to the Live (real account) contest.

Remember that you can register to both contests at will.

Demo account contest will start February 2nd while real (live) account will get started on May 4th

Register here

Francesc

Hi everyone

FX360.com has been just released a few days ago.

After having a big role in the success of FXCM’s Dailyfx.com, now Kathy Lien and Boris Schlossberg are trying to do the same at GFT with FX360.com.

Check it out.

Good luck Kathy & Boris.

Francesc

Hi everyone

An interesting short article appeared on Traders Journal Magazine (December 2008).

Why the U.S. Dollar is still ‘King of the currency world’? by David Waring, founder and community host of www. InformedTrades.com

Hi everyone

More good news.

So far January 2009 is being an excellent month for FXstreet.com in terms of average time on site at FXstreet.com.

From January 1st to 21st 2009 the average time on site has grown an excellent 33.54% from the same month previous year. The site has grown from an average of 4:01 minutes to 5:21 minutes.

I’ll keep an eye on this to see if we can keep these great numbers at the end of the month.

Francesc