Composite Score: Velocity is 41, with the highest being 83 and the lowest 34. Just as concerning is that the ranking has a 12 month delta of about -20, meaning that a year ago the score was 60.
Net Capital Ratio is the ratio of excess net capital to its net capital requirement. Velocity's ratio of 83 seems quite high, but then again PFG's was 90, so I'm not sure what to make of it. The trend given is 68, but I do not have a metric to put this into context.
Customer funds flow is 50, and adjusted net capital trend is 48; again, I do not know whether higher is better or lower, but the scale seems to be 1 to 100 so I will take this as a middle of the road number (Atlas does not do a good job on their PDF of describing the metrics in a detailed enough way IMO)
Global exchange penalties is 1, a seemingly good number, but then again PFG's was also 1.
CFTC/NFA disciplinary actions is 90, third highest on the list. A bit disconcerting.
Arbitration awards agains is 100, highest on the list. To put it in context, about 80% of the FCM's have a value here of "8.3" which I do not understand. But the top 50 are largely this number, so 100 does not sound like a good number in this context.
Segregated funds bank health is 37 which seems to be on par with most others on the list.
So let's cut to the chase--is the Atlas Rating kind of like the "Who's Who" scam where you have to pay to play? Or the U.S. News & World Report's college rankings, which is hardly indicative of what kind of education a student can expect? Or are these rankings genuinely indicative of the health of these FCM's? PFG was near dead last, and MF Global was ranked 115 out of 126 on their list. So obviously being at the bottom of the list does not guarantee failure, and being at the top does not mean my money is 100% secure with them, but the fact that Velocity is 112 out of 117, in the bottom 5% of all FCM's rated, does not give me warm fuzzies.
@Dale Box or @bobk, could you address any of this? Obviously you do not know all the ins and outs of the Atlas Ratings, but perhaps you could comment on some of the specific metrics like the CFTC and NFA disciplinary actions.
The following 6 users say Thank You to josh for this post:
Ok, so if you accept the Atlas rating.... which rules out any broker clearing through Dorman, Rosenthal Collins or Velocity..... which Broker are you going to use ...Interactive Brokers, TD Ameritrade or Tradestation?
I'm just a simple man trading a simple plan.
My daddy always said, "Every day above ground is a good day!"
I am not Josh but.. I believe this is the wrong question. If you accept Atlas rating you stop trading. The question is what do all this information mean and how can it be used. It is all about confidence. This is why the brokers/FCM should answer/explain. Not the traders.
-- The rest is silence
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Again, I have not heard of Atlas Ratings before today and do not "accept" the rating. But, it brings to light things I was not aware of, and so I'm only asking for clarification from the source. I am approaching the subject with logic and objectivity, neither making false accusations, nor turn a blind eye from concerns. I have an account outside of Velocity and only have a small amount of money with them anyway; so, no panic, just seeking out the facts so that we can all make informed decisions.
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I simply can't imagine why someone from Velocity would feel obligated to comment on this. Legal ramifications and potentially personal job jeopardy obviously are two things that come to mind.
As I stated on the PFG thread, who is Atlas Ratings? Who are their analysts? What resources are they using? What is their track record? It would be naive to assume what they say is correct given they've provided no evidence of their findings. Furthermore, the PFG situation was fraud. This is something that you simply cannot find within a ratings review and is an unforeseen event.
Velocity appears to have had some arbitration awards against them in the past but I don't see anything else too concerning (at the moment). The thing to remember with arbitration is many firms are confronted with unhappy clients. I guess the difference is many firms settle the case before it goes to arbitration. Not sure why these went all the way. I've worked for 3 of the largest investment banks in the U.S. and have seen and heard all sorts of complaints/arb situations. It unfortunately is just part of the business.
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Also some firms are ranked higher because they have less complaints, even though said firm has only existed for a very short time... There was a firm on that "Atlas" list that was ranked high that I would NEVER due business knowing what I know, it is exactly the kind of firm I could potentially see falsifying records.
So the report is really not that useful.
That said, no one is safe right now. Just the fact of the times, cost of doing business. You can go trade equities if you want protection, or wait and see if we get some form of insurance for futures.
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I agree that a forum post would be the wrong response. The company needs to make a statement to their customers and press release regarding what happened at MFG and PFG and how it will not occur at Velocity. Given that futures brokers are "self-regulated", the high number of CFTC/NFA disciplinary actions is what concerns me. One would need to look into these actions for more information regarding severity/recurrence, but the list from Atlas does give people a place to start.
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