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Futures Broker Due Diligence Notes post PFG
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Futures Broker Due Diligence Notes post PFG

  #71 (permalink)
 Vendor: www.fxcm.com 
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PFG Trustee Moves on to Retail Forex

The Wall Street Journal is reporting that PFG's trustee is now going to address the status of PFG's retail forex customers:

http://online.wsj.com/article/SB1000...googlenews_wsj


Quoting 
Ira Bodenstein, the trustee liquidating Peregrine, in a notice Wednesday told holders of currency and precious metals accounts with the firm that addressing their claims was his "next agenda item," though no decisions have been made on how these will be handled or how much money these customers may get back.

"If the Bankruptcy Court concludes that payment in full to forex and metals customers is appropriate, there are sufficient funds to accomplish that outcome," Mr. Bodenstein wrote. "If the Bankruptcy Court reaches a different conclusion, there are sufficient funds to address whatever treatment of these claims that the Bankruptcy Court orders."

Of further interest to traders in the article is the NFA's support for additional legal protections, although nothing was specified.

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  #72 (permalink)
Elite Member
Houston,Tx
 
Futures Experience: Advanced
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FCMReform View Post
the PFG bankruptcy should give retail forex traders pause in regards to opening a retail forex account with a Futures Commission Merchant instead of a Retail Forex Exchange Dealer due to the disparity in treatment the two class of customers are getting in this bankruptcy.

@FCMReform

If you have an account with a Retail Forex Exchange Dealer ... and that dealer did what PFG did.... what protections would you have?


FCMReform View Post
The Wall Street Journal is reporting that PFG's trustee is now going to address the status of PFG's retail forex customers:

http://online.wsj.com/article/SB1000...googlenews_wsj



Of further interest to traders in the article is the NFA's support for additional legal protections, although nothing was specified.


@FCMReform

The link didn't work for me.

What can he do for the forex accounts? My understanding is the law doesn't provide for coverage of Forex accounts ... no?

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #73 (permalink)
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ThatManFromTexas View Post
@FCMReform

If you have an account with a Retail Forex Exchange Dealer ... and that dealer did what PFG did.... what protections would you have?




@FCMReform

The link didn't work for me.

What can he do for the forex accounts? My understanding is the law doesn't provide for coverage of Forex accounts ... no?

RFED's do not have seg funds protection either. The issue here is that there is a potential in the PFG Bankruptcy for the bankruptcy judge to parcel out retail forex funds to other creditors (including futures customers) since retail forex customer funds do not have seg funds protection and futures customers do. It's a question of what place in line are retail forex customers in as the bankruptcy proceedings move forward? We are about to find out.

Try this link for the WSJ article:
Peregrine Financial Trustee Turns to Currency Accounts - WSJ.com

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  #74 (permalink)
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FCMReform View Post
RFED's do not have seg funds protection either. The issue here is that there is a potential in the PFG Bankruptcy for the bankruptcy judge to parcel out retail forex funds to other creditors (including futures customers) since retail forex customer funds do not have seg funds protection and futures customers do. It's a question of what place in line are retail forex customers in as the bankruptcy proceedings move forward? We are about to find out.

Try this link for the WSJ article:
Peregrine Financial Trustee Turns to Currency Accounts - WSJ.com

@FCMReform

Based on the above... why should anyone trade EUR/USD in a forex account instead of trading the 6E in the futures market?

As bad as PFG turned out to be for traders at least with the futures account you have some protection.

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #75 (permalink)
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ThatManFromTexas View Post
@FCMReform

Based on the above... why should anyone trade EUR/USD in a forex account instead of trading the 6E in the futures market?

As bad as PFG turned out to be for traders at least with the futures account you have some protection.

It remains to be seen how much money futures traders will be getting back either. But trading currency futures and currency spot forex are different products.

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  #76 (permalink)
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FCMReform View Post
It remains to be seen how much money futures traders will be getting back either. But trading currency futures and currency spot forex are different products.

@FCMReform

I appreciate your input to the forum .... and I am not trying to give you a hard time ... and I like your website... but help me understand....

1. Whatever amount the futures traders get back... they will still be ahead of the forex traders right?

2. How are trading currency futures and currency spot forex different products?

I've tried a demo account at your site and compared it side by side to the futures chart and they were almost identical. The only difference I could see was that spot forex margins are 5 to 6 times higher than futures margins .

Thanks again for your input to the forum

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #77 (permalink)
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ThatManFromTexas View Post
@FCMReform

I appreciate your input to the forum .... and I am not trying to give you a hard time ... and I like your website... but help me understand....

1. Whatever amount the futures traders get back... they will still be ahead of the forex traders right?

2. How are trading currency futures and currency spot forex different products?

I've tried a demo account at your site and compared it side by side to the futures chart and they were almost identical. The only difference I could see was that spot forex margins are 5 to 6 times higher than futures margins .

Thanks again for your input to the forum

Hi ThatManFromTexas,

I can help with these questions.


ThatManFromTexas View Post
1. Whatever amount the futures traders get back... they will still be ahead of the forex traders right?

Given the different status that futures and forex accounts are currently given under US law, this could be the case. Futures accounts have secured creditor status, while forex accounts are not. That means that in bankruptcy proceeding, futures account holders will get priority in regards to reimbursements.


ThatManFromTexas View Post
2. How are trading currency futures and currency spot forex different products?

Currency futures are traded on an exchange, while spot forex is trade over-the-counter. Since futures are traded on an exchange the contracts have to be standardized which means the minimum trade size is larger and there is less variety in the number of currencies you can trade. Since spot forex is traded over-the-counter, there is more flexibility in the trades sizes that are offered, and also greater variety in the number of currencies you can trade.

Also, you mentioned that you saw higher margins on spot forex. I'm not sure whether you are referring to the used margin you set aside as a deposit to open positions, or if you are referring to the transaction cost you pay to enter a trade (the spread). If you are referring to the spread, one thing to keep in mind is that we charge no commission on top of the spread. We also recently launched a new lower spread account option.

Jason

If you have questions about our services at FXCM please send me a Private Message.
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  #78 (permalink)
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Jason Rogers View Post

Also, you mentioned that you saw higher margins on spot forex. I'm not sure whether you are referring to the used margin you set aside as a deposit to open positions, or if you are referring to the transaction cost you pay to enter a trade (the spread). If you are referring to the spread, one thing to keep in mind is that we charge no commission on top of the spread. We also recently launched a new lower spread account option.

Jason

@Jason Rogers

What I was referring to was .... to trade a full lot of EUR/USA requires a deposit(margin) of $3000 and one pip =$12.50 ... to trade one contract of 6E where one tick = $12.50 requires a deposit of $500 margin

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #79 (permalink)
 Vendor: www.fxcm.com 
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Futures Experience: Intermediate
Platform: Strategy Trader
 
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Thanks: 122 given, 153 received


ThatManFromTexas View Post
@Jason Rogers

What I was referring to was .... to trade a full lot of EUR/USA requires a deposit(margin) of $3000 and one pip =$12.50 ... to trade one contract of 6E where one tick = $12.50 requires a deposit of $500 margin

Hi ThatManFromTexas,

Since you are a US resident, the margin requirements on your account must comply with CFTC and NFA regulations. You will find the same minimum margins for EUR/USD with any US regulated broker. Note that we have an FXCM UK entity that offers non-US residents the ability to trade one standard lot of EUR/USD with only $500 margin, but that is because UK regulations are different from in the US. In the past, US residents were able to open trading accounts with FXCM's UK entity in order to take advantage of lower margin requirements in the UK, but the regulations in the US changed over the past couple of years. Now only US regulated brokers can offer forex trading to US residents, and they all must comply with the higher 2% margin requirements as shown on this table.

Jason

If you have questions about our services at FXCM please send me a Private Message.
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  #80 (permalink)
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PFG Forex Traders Make their Case in Court


The lawyers for PFG's Forex/Metals customers have just filed a motion designed to prevent creditors from laying claim to the funds of forex traders. The hearing for this motion is set for Thursday morning.

Hearing for Motion scheduled for Thursday, October 11, 2012 at 10:00a.m. - PFG Forex Metals Legal Account


Quoting 
Given the current broad inclusion of retail forex within the scope of the CEA, CFTC Regulations and NFA Rules, as well as the CFTC‘s core mandate to protect the investing public, it defies logic to deny retail customers who trade such contracts the same statutory protections now afforded all other market participants, including institutional dealers in cleared currency swaps and options. It would be equally unjust and irrational, given the wide ranging regulatory controls to which retail forex is now subject, to attempt to exclude this most vulnerable class of customers from the single provision most directly protective of their economic interest.

It is a noble sentiment and one that FXCM wholeheartedly supports. We have been hammering away in Washington on this issue for seven years now. Here’s hoping the judge surprises on Thursday with a ruling supportive of retail forex traders everywhere. But clearly, the status quo cannot be tolerated. You can let the CFTC know by emailing secretary@cftc.gov and by contacting your local Congressional Representatives and passing along your concerns. In the meantime, we will continue to advocate for Segregation of Funds, Customer Insurance, and Public Disclosure of Financials for all FCM’s and RFED’s.

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