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Velocity Excess Net Capital Requirement
Started:August 12th, 2011 (05:12 PM) by sysot1t Views / Replies:3,889 / 24
Last Reply:August 13th, 2011 (10:54 PM) Attachments:4

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Velocity Excess Net Capital Requirement

Old August 13th, 2011, 07:21 PM   #21 (permalink)
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ThinkOrSwim is doing this too, closing UK accounts that is. I doubt you would question TD Ameritrade's solvency, right? I don't know why Velocity or ThinkOrSwim is doing that, but I would guess it is something to do with new regulation in UK and they don't have enough UK business to justify the cost.


we are going off topic now, but I wanted to respond to this one.. I dont know if TOS is closing accounts, or if VF is doing the same.. I dont see why they would unless due to regulatory requirements that they perhaps dont want to comply with any longer, etc... (there is a reason why a lot of FX shops closed US based accounts after all, due to regulatory requirements)...

in any event, asking if one would question TDA is a bit strange... first, I would question them, absolutely... but at the same time if anyone has a question about TDA solvency it is rather easy to answer that, so I would not ask their sales rep in a forum or even over the phone ...

#1.. close to $300MM excess capital, same source as every thing else on my data stream with this thread (CFTC site)
#2.. they are a BD.. a bit more stringent regulations (a lot actually, and they are SIPC insured..) ... and
#3... they are a public company.. (AMTD) which means you can look at their filings and understand their balance sheet, measure and assess the health of their books, and make a decision if they are solvent or not...

I have TDA, since they bought Datek back in the days... that is how I know... comparing them to VF is not really looking at apples to apples.. but more like apples vs. carrots... they are not even peers.. or same category.. only available information on VF is the CFTC data they report, nothing else.

Last edited by sysot1t; August 13th, 2011 at 09:24 PM.
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Old August 13th, 2011, 07:24 PM   #22 (permalink)
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Dale Box View Post we're closing UK accounts.

Completely false.

glad to know that is not the case; I would have found such rather weird, nothing more...but usually that would have been a business decision not to service a given market if the regulatory reporting/requirement costs proved to be greater than the derived business profits..

Last edited by sysot1t; August 14th, 2011 at 07:04 PM.
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Old August 13th, 2011, 07:33 PM   #23 (permalink)
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The whole "Max and Dow" thing I think was just an innocent mistake. I was guilty as well. I saw the volume these guys were doing, and someone somewhere (can't remember who/where) told me they were hedge funds, and it seemed logical.

I think it is just an innocent mistake.

With regards to UK accounts, it seems Velocity is in fact not closing UK accounts. so perhaps there is confusion there from @Trafford or his friend.

Anyway, trying to get back on topic --- excess capital --- maybe its just a bit of a private topic to be making such a public deal over it. If someone asks me how much money I make trading, or how big my savings account is, I'm not likely to tell them - especially in a public place


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Old August 13th, 2011, 08:59 PM   #24 (permalink)
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I don't want to get in the middle of something here, but I wanted to say that I think @sysot1t asked a legitimate question. When I was doing some research on a broker for a back-up account a few months ago, I too found the excess capital of some of the firms to be less than comforting.

But I do not claim to fully understand the mechanics of the various firms' risk control, and therefore I would also find more information on the subject to be of value. It would seem logical that firms involved with proprietary trading, having extremely low margin requirements etc, could ultimately be more "risky", despite having a larger amount of excess capital.

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Old August 13th, 2011, 10:54 PM   #25 (permalink)
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Velocity Futures Growth

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before I sign off this thread given the rep for VF wont respond any longer to my inquires, I figure I post the analysis I said I would do earlier... and a bit more.. you will find on the attached picture the following information

- Velocity's Customer Fund Growth as reflected on the reports to the CFTC...
- detailed by month from Dec 2009
- annualized customer growth from inception (which was 12/2002 or 1/2003 depending how you look at it)

all the data is public on the CFTC, so you can verify it and play with it as well.

what I did find is that VF basically just keeps, and has kept, for the most part a total firm capital of under $2MM... and based on the past history, I kind of doubt it will ever go any higher.. so if excess capital is a requirement for your evaluation of an FCM, then look elsewhere as there are other peers within the same group with somewhat stronger firm capital.

One other interesting fact was raised by the news release that Dale brought to my attention.. the fact they measured performance with a 16 month timeframe.. it struck me a bit as it is unusual to evaluate or measure 16 months to April (vs March which is a quarter end, or 12 month rolling or year to date, or current period to prior period... I mean, normal accounting measurements for performance)... specially when the report was done on August with 4 month old data.. perhaps it might have to do with the slowdown they might be experiencing on 2011 given only 10% growth for the past 6 months? who knows.. I am only speculating now.. so please dont take the statements as fact but merely as what goes through my mind when I see a report like that..

also, keep in mind the data does not separate new accounts, or accounts growth, or new funds transfers from current accounts, or redemptions and redemption rate, etc... so take the metrics with a big grain of salt.. VF is not a public company, so all that data is internal and they are of course under no obligation to report it..

if there is something I have learned from working within corporate is that news announcements are meant to attract attention and hopefully enlist new customers and show a company on a beneficial light that will foster new customer acquisition.. which is why I always verify them with my own data as well.. but I try to read in between the lines.. the in between the lines tells me they might be facing some headwinds on the customer acquisition front..

lastly, do your own homework... and determine your own mind... I am not offering advice to anyone as to how to pic an FCM or am I making any representations on the financial health of any FCM (specially that of Velocity)... so whatever here is merely my opinion formulated from publicly available data from the CFTC ... arrive to your own conclusions.. and keep in mind that VF has great technology and great people (what I call overall business resources) so no excess capital does not mean in this case a bad FCM.. it just means there is some "risk" depending on your definition of risk..

they are still more than fine for my purposes even if I dont get a clear picture as to why the low excess capital.. they must be able to get a better ROI on that capital than to have it sitting there, and as such they just maintain what is required plus a little bit just in case.. who knows... we might never know.

Attached Thumbnails
Velocity Excess Net Capital Requirement-vf-cf-growth.png   Velocity Excess Net Capital Requirement-vf-fcm.png  

Last edited by sysot1t; August 13th, 2011 at 11:18 PM.
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