Forex Trading Platform Review

Posted on June 30, 2009, 11:08 am, by admin, under Forex Resources.

www.forexlawblog.com

Occasionally at the Forex Law Blog and at the Hedge Fund Law Blog we will allow guest posts from authors who are authorities on various subjects.  Today we have a guest post on a forex trading platform - eToro.  We hope you enjoy this article and please feel free to let us know if you would also like to guest post of the Forex Law Blog.

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Review of eToro

eToro is an exciting new firm with an altogether new and innovative approach to on-line forex trading. The many unique aspects of this firm would deserve a whole book to be fully analyzed and studied, but, for your convenience, we have summarized the most important and striking aspects of this firm in this article.

eToro’s revolutionary approach to trading aims to add the fun factor into the calculations of traders. We’re all used to trading being a stressful, difficult, and sometimes boring experience. It is hard to remain calm in the face of market turmoil, as the pain of losing money in trading leads us to emotional choices and compulsive trading with disastrous results. eToro believes that the deleterious consequences of panic and despair in trading can be remedied by making trading a more enjoyable practice.  To that purpose, the firm has created a visual interface that displays the abstract movements of currency quotes in an intuitive, easy-to-understand and entertaining manner. This is a unique approach deeply appreciated by the majority of beginning traders.

On the game-like interface you will see your favorite currency running marathons against the one that you sold, pull ropes, and wrestle. Each currency is represented by its national symbol. The U.S., for instance, is represented by Uncle Sam, while Japan is personified by a sumo wrestler. Needless to say, seeing these national icons fight against each other as your trade fluctuates is quite a fun and relaxing experience.

eToro specifically targets the retail segment of the forex market, and as such, it offers a great diversity of options for individual traders of all experience levels, and backgrounds. To allow clients maximum flexibility, eToro requires a minimum deposit of just $50, and offers a a great spectrum of leverage options from as low as 10:1 rising up to 400:1.

In the US eToro USA trading platform is operated by Tradonomi LLC which is regulated by the CFTC and a member of the NFA with ID 0382918. The firm is an innovative and powerful new entrant to the field, and if you want to partner with a broker that emphasizes the psychological aspect of trading over everything else, eToro is your choice. The trading platform of eToro doesn’t bother you with the intricacies of every indicator discovered since the late 19th century, and you have little need for that either as beginner. Instead, every aspect of this great platform is directed to allowing you a better, no-panic, no-fear experience of trading.

If you have any trading experience at all, you already know how great this aspect of eToro is for your future as a trader. If you are a complete beginner, you can take our word. The difference between  profit and loss is the difference between emotional control and panic.  To perform good forex analysis, you must be able to keep your sanity in the sometimes insane atmosphere of trading. eToro is your best friend and adviser and in the quest to achieve the proper mental attitude to trading.

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www.forexregistration.com

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CFTC Seeks Public Comment on Possible Changes to Regulations for Investment of Funds Deposited with Clearing Organizations and Futures Commission Merchants

Posted on May 28, 2009, 5:19 pm, by vbala, under Forex Press Release, Laws and Regulations.

The Commodity Futures Trading Commission (CFTC) has approved for publication in the Federal Register an advance notice of proposed rulemaking seeking public comment on possible changes to its regulations regarding the investment of customer funds segregated pursuant to Section 4d of the Commodity Exchange Act and funds held in an account subject to Regulation 30.7.

Regulation 1.25 provides that a derivatives clearing organization or a futures commission merchant holding customer segregated funds may invest those funds in certain permitted investments subject to specified requirements that are designed to minimize exposure to credit, liquidity, and market risks. The CFTC is considering proposing amendments that would revise the scope and character of these permitted investments.

Additionally, in conjunction with its consideration of possible amendments to Regulation 1.25, the CFTC is considering applying the investment requirements of Regulation 1.25, including any prospective amendments, to investments of funds held in accounts subject to Regulation 30.7 (accounts for foreign futures and options).

The CFTC seeks public comment on this action before issuing any proposed rule amendments. The comment file will remain open for 60 days following publication in the Federal Register. Copies of comments may be obtained by contacting the CFTC’s Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581, 202-418-5100 or by accessing the CFTC’s website, www.cftc.gov. Interested parties may submit their comments electronically at secretary@cftc.gov. All comments received will be promptly posted on the CFTC’s website.

To view the full related press release, please visit:

http://cftc.gov/newsroom/generalpressreleases/2009/pr5660-09.html

Please contact us if you have any questions or would like to start a forex hedge fund.

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CFTC Charges Florida Resident Michael J. Riolo and His Two Companies with Fraud in Alleged Multi-Million Dollar Foreign Currency Scam

Posted on May 28, 2009, 5:16 pm, by vbala, under Forex Fraud, Forex Press Release.

The U.S. Commodity Futures Trading Commission (CFTC) today charged Michael J. Riolo of Boca Raton, Florida, and two companies he controls and owns, LaSalle International Clearing Corporation and Sterling Wentworth Currency Group, Inc., with fraudulently soliciting and receiving funds from members of the general public in an off-exchange foreign currency (forex) scam and providing their customers with false account statements.

The CFTC complaint filed May 21, 2009, in the U.S. District Court for the Southern District of Florida, Fort Lauderdale Division, alleges that the defendants, from at least June 18, 2008, to the present, failed to disclose to customers that they were the counterparties in each forex transaction entered on behalf of their customers, that they owed millions of dollars to customers, and that they lacked the funds to make these payments as well as any payments for prospective profits.

The complaint also alleges that the defendants sent monthly statements to customers depicting the month-end value for each customer’s account, without disclosing to customers that defendants lacked sufficient cash to pay to customers the purported value of their accounts. The complaint further alleges that these account statements were false since the defendants expressly overstated the total cash available, in some instances by as much as $24.5 million.

According to Stephen J. Obie, CFTC Acting Director of Enforcement, “The CFTC continues to devote substantial enforcement resources to bring to justice Ponzi schemesters who mercilessly steal from those who oftentimes cannot afford to lose their investment. The CFTC is committed to using every means to end the Ponzi-liferation of schemes that have been detected and exposed thus far so that wrongdoers are severely punished and others are deterred from pursuing a life of criminality. We have seen an avalanche of Ponzi cases and have thus far in 2009 filed 23 such cases, and I expect more to be forthcoming.”

In the complaint, the CFTC seeks a preliminary injunction freezing defendants’ assets, restitution, disgorgement of ill-gotten gains, civil monetary penalties, the appointment of a temporary receiver, and a permanent injunction, as well as other relief.

The CFTC wishes to thank the Federal Bureau of Investigation, the United States Attorney’s Office for the Southern District of Florida, and the State of Florida Office of Financial Regulation for their assistance in this matter.

The following CFTC staff members are responsible for this case: Joseph Rosenberg, Steven Ringer, Philip Rix, Lenel Hickson and Vincent McGonagle, from the Division of Enforcement, and William Tylinski, from the Division of Clearing and Intermediary Oversight. In addition, Yeongil Park, a visiting Investigator from the Korean Financial Supervisory Service, assisted in this matter.

To view the full related press release, please visit:

http://cftc.gov/newsroom/enforcementpressreleases/2009/pr5659-09.html

Please contact us if you have any questions or would like to start a forex hedge fund.

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Delaware Resident Kenneth Branch and his company, Cocoon Trade, Inc., Ordered to Pay More than $1.5 Million in Restitution and Penalties in CFTC Commodity Pool Fraud Action

Posted on May 28, 2009, 5:14 pm, by vbala, under Forex Fraud, Forex Press Release.

The U.S. Commodity Futures Trading Commission (CFTC) announced today the entry of a Consent Order of Permanent Injunction against Kenneth L. Branch (Branch) of New Castle, Delaware and a Default Judgment Order (Default Order) against Cocoon Trade, Inc (Cocoon). The Orders require Branch and Cocoon collectively to pay $632,787 in restitution to defrauded customers and $910,000 in civil penalties. The Orders also permanently prohibit them from engaging in any commodity-related activity, including registering with the CFTC in any capacity.

The Orders settle a CFTC enforcement action filed in the U.S. District Court for Maryland on March 28, 2008 (see CFTC Press Release 5479-08, April 7, 2008).

The Default Order finds that Cocoon, through the acts of Branch, fraudulently solicited at least $1.4 million from at least 46 individuals to invest in commodity futures, either through a commodity pool or individual trading accounts that Branch would manage on their behalf. According to the Default Order, Cocoon, through the acts of Branch, misappropriated at least $941,897 of customer funds to pay purported profits to pool participants and to pay for personal expenses. The Order also finds Cocoon committed registration and regulatory violations in connection with the operation of the commodity futures pool and individual managed trading accounts.

The following CFTC Division of Enforcement staff members are responsible for this case: Kevin S. Webb, Katherine S. Driscoll, Kara Mucha, Michelle Bougas, James H. Holl III, Gretchen L. Lowe and Vincent McGonagle.

The Commission appreciates the cooperation of the Securities Division of the Maryland Attorney General’s Office in investigating this matter.

To view the full related press release, please visit:

http://cftc.gov/newsroom/enforcementpressreleases/2009/pr5658-09.html

Please contact us if you have any questions or would like to start a forex hedge fund.

 

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CFTC Extends Public Comment Period on Concept Release Regarding Review of Exemptions for Swap Dealers

Posted on May 28, 2009, 5:07 pm, by vbala, under Forex Press Release.

The Commodity Futures Trading Commission (CFTC) is extending the public comment period on the concept release regarding review of exemptions for swap dealers.

The comment period for this request is set to expire on May 26, 2009, but based on several public requests for an extension, the Commission is extending the comment period for an additional 21 days. As a result, comments on this concept release must now be received on or before June 16, 2009.

Specifically, the concept release arose from Recommendation Five of the September 2008 “Staff Report on Commodity Swap Dealers and Index Traders with Commission Recommendations.” The concept release reviews the underlying statutory and regulatory background, as well as the regulatory history and relevant marketplace developments which led to Recommendation Five. It then poses a number of questions designed to help inform the Commission’s decision as to: (1) whether to proceed with the recommendation to eliminate the bona fide hedge exemption for swap dealers and replace it with a conditional limited risk management exemption; and (2) if so, what form the new limited risk management exemptive rules should take and how they might be implemented most effectively.

The extension notice will be published shortly in the Federal Register. Comments may be submitted electronically to secretary@cftc.gov. All comments received will be posted on the Commission’s website.

To view the full press release, please visit:

http://cftc.gov/newsroom/generalpressreleases/2009/pr5657-09.html

Please contact us if you have any questions or would like to start a forex hedge fund.

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CFTC Charges Texas A&M Finance Professor Robert Watson, and Texas Attorney Daniel Petroski and their Companies with Fraud in Multi-Million Dollar Forex Scheme

Posted on May 28, 2009, 4:52 pm, by vbala, under Forex Fraud.

The U.S. Commodity Futures Trading Commission (CFTC) today charged Robert D. Watson (Wastson), an executive professor in the Department of Finance at Texas A&M University’s Mays Business School, Daniel J. Petroski (Petroski), a Texas lawyer and certified public accountant, with orchestrating a multi-million dollar fraudulent off-exchange foreign currency (forex) scheme. Watson and Petroski managed two companies, PrivateFX Global One Ltd., SA (Global One) and 36 Holdings Ltd. They are charged with defrauding U.S. investors by using forged bank records to make it appear they were earning spectacular returns in foreign exchange trading. The Securities and Exchange Commission simultaneously filed a related emergency action against the Defendants.


In the two related actions brought actions the Defendants, the CFTC and SEC allege that the Defendants:

§  violated the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.

§  grossly exaggerated their extremely successful historical performance of forex trading in order to entice investors to purchase shares of Global One

§   made false representations to Global One investors regarding Global One’s extraordinary forex trading profits and the concomitant returns these investors supposedly enjoyed

§  provided governing agencies with falsified account statements showing supposed profitable forex trades at an international brokerage house in order to conceal their fraud

§  produced to governing agencies false Swiss bank statements for 36 Holdings Ltd. in an attempt to conceal Defendants’ fraud and discourage further investigation

At the request of the plaintiffs, on the same day the complaint was filed, U.S. District Court Judge Sim Lake froze Defendants’ assets and permitted the governing agencies to seize all relevant records in their possession. 

Court has set a Status Conference for May 29, 2009, although no date has been set for a preliminary injunction hearing.

To view related press release, please visit:

http://cftc.gov/newsroom/enforcementpressreleases/2009/pr5661-09.html

Please contact us if you have any questions or would like to start a forex hedge fund.

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NFA Release on Forex Account Statements

Posted on April 6, 2009, 2:14 pm, by admin, under Forex Resources, Laws and Regulations.

[http://www.forexlawblog.com]

New Rule Requires Better Reporting to Retail Forex Investors

Forex Dealer Members (FDMs) are subject to NFA oversight because they are required to be registered with the CFTC and also to be members of the NFA.  On June 1 of this year, FDMs will need to comply with heightened disclosure requirements to their retail forex investors.  These greater requirements are designed to promote greater transparency into the retail investors’ account activity and balances.  The new rule is Rule 2-44.  More information can be found in the NFA release below.  Please contact us if you have any questions.

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Forex Investor Alert

NATIONAL FUTURES ASSOCIATION
FOREX INVESTOR ALERT: FOREX CUSTOMER ACCOUNT STATEMENTS

In these challenging times, the need for investors to monitor and understand the activity occurring in their trading accounts has never been greater. National Futures Association (NFA) believes that customer account statements should contain clear, concise and complete information. The more difficult a customer account statement is to understand, the easier it is for a broker or account manager to mislead a customer about the value of a customer’s account and the success of the customer’s trades.

In an effort to provide retail forex customers with clearer, more uniform confirmations, daily statements and monthly statements, NFA has developed specific customer reporting requirements for its Forex Dealer Members (FDMs).

FDMs must currently provide written confirmations to customers within one business day after any activity in the customer’s account, including offsetting transactions, rollovers, and deliveries, and these confirmations must include details of the transaction and any related costs. Effective June 1, 2009, a new rule clarifies that activity requiring a confirmation includes option exercises, option expirations, trades that have been reversed or adjusted, and monetary adjustments. The new rule specifies that the confirmations must contain the following information regarding the transaction and the funds in the account:

  • Transaction date;
  • Transaction type (e.g., new position, offsetting position, rollover, adjustment);
  • Currency pair;
  • Buy or sell (if a new or offsetting position);
  • Size;
  • Price or premium (for new or offsetting positions or price adjustments);
  • Price or premium change (for price adjustments);
  • Monetary adjustments (debit or credit);
  • Net profit or loss for offsetting positions; and
  • Charges for each transaction (e.g., rollover interest and/or fees).

In addition, FDMs are currently required to send monthly statements to all customers who have accounts that have open positions at the end of the month or changes in the account balance or equity since the prior statement. Quarterly statements are required for all other open accounts. The new rule states that monthly or quarterly statements must contain the following information regarding the transactions during the reporting period and the funds in the account:

  • The account equity at the beginning of the reporting period;
  • All initiating or offsetting transactions, deliveries, option exercises, or option expirations that occurred during the reporting period, with the following information for each: date, currency pair, buy or sell, size, and price or premium (with any price or premium adjustment noted);
  • All open positions in the account, with the following information for each position: date initiated, currency pair, long or short, size, price or premium at which it was initiated (with any price or premium adjustment noted), and the unrealized profit or loss;
  • All deposits and withdrawals during the reporting period;
  • All other monetary adjustments (debits and credits) to the account;
  • The amount of cash in the account (excluding non-cash collateral and unrealized profits and losses);
  • A breakdown by type of all fees and charges during the period, including commissions and interest expense or rollover fees; and
  • The account equity at the end of the reporting period.

As of June 1, 2009, FDMs must also provide daily statements showing the account equity as of the end of the day. FDMs may provide the daily statements online or by other electronic means as long as they are readily accessible to customers. FDMs may provide confirmations and monthly/quarterly statements online or transmitted by other electronic means if the customer consents to the specific method used.

Conducting Due Diligence

NFA reminds all individuals who trade forex to conduct business with a regulated forex firm - i.e., a bank, an insurance company, a broker-dealer or a futures commission merchant. If the firm is a futures commission merchant, it is required to be registered with the Commodity Futures Trading Commission and to be a Forex Dealer Member of NFA. You can easily check an FDM’s registration status through NFA’s Background Affiliation Status Information Center (BASIC), available through NFA’s website (www.nfa.futures.org).

Anyone who has any questions or concerns regarding their forex dealer should contact NFA either through our website (www.nfa.futures.org) or by calling our Information Center toll-free at (800) 621-3570 during normal business hours.

NFA is a self-regulatory organization subject to oversight by the CFTC. NFA’s primary mission is to protect investors and maintain market integrity.

March 31, 2009

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New NFA Forex Rules Approved

Posted on February 26, 2009, 2:44 pm, by admin, under Uncategorized.

New Forex Rules Set to Become Effective Soon

(www.forexlawblog.com) The NFA issued a press release, reprinted below, stating that the CFTC has approved certain proposed rules by the NFA regarding off-exchange foreign currency trading (forex).  For NFA Member firms which trade in the forex markets, there are new compliance rules which they will need to adhere to (see NFA Forex Compliance Rules for a discussion of the compliance rules).  Additionally, Forex Dealer Members will need comply with new rules (see NFA FDM Rules).

Please contact us if you have any question on this or the new forex registration requirements.

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Notice I-09-07

February 26, 2009

Effective Date of NFA Forex Requirements

NFA has received notice that the Commodity Futures Trading Commission has approved amendments to existing NFA forex requirements as well as a new compliance rule regarding forex customer statements. The amendments and new rules will become effective as set forth below.

Hypothetical Performance, Weekly Reports, Rollover Charges, and Managing Customer Accounts: Effective April 1, 2009

Effective April 1, 2009, NFA Compliance Rule 2-36(i) will make clear that if a Member uses hypothetical results in forex promotional material it must comply with NFA Compliance Rule 2-29(c) and the related Interpretive Notice. Although the detailed requirements regarding hypothetical performance results do not become effective until April 1, Members are reminded that using hypothetical forex performance in a misleading manner has always violated NFA Compliance Rule 2-36.

As of April 1, the forex weekly reports must be submitted by a supervisory employee who is, or is under the ultimate supervision of, a listed principal who is also an NFA Associate. Section 13 already requires, and will continue to require, that the person filing the report have authority to bind the firm.

Also effective April 1, Forex Dealer Members (”FDMs”) and their Associates are expressly prohibited from exercising trading authority over customer accounts for which the FDM acts as counterparty. The Interpretive Notice does not prohibit FDMs and their Associates from exercising discretion over customer accounts if another FDM is the counterparty.

Finally, as of April 1, an FDM must have a written policy detailing the procedures used to calculate rollover charges and payments. The Interpretive Notice does not dictate the calculation the FDM must use, nor does it require the FDM to use the same calculation in all market conditions. The procedures must, however, set forth the factors that the FDM takes into consideration when calculating the rollover charge, as well as the sources for such factors. The FDM must maintain the documentation of the underlying factors it looked at in calculating the charge so NFA can replicate the calculation during an audit.

Forex Customer Statements - New NFA Compliance Rule 2-44: Effective June 1, 2009

New NFA Compliance Rule 2-44, which becomes effective on June 1, 2009, describes the information that must be included in FDM confirmations and monthly statements. In addition to initiating and liquidating transactions, Compliance Rule 2-44 requires confirmations for rollovers and any adjustments to an account, including those that debit or credit the account rather than changing the price. The rule also requires that the monthly statement show all transactions for both forex options and non-options contracts, even if the position is closed by the end of the month. Rollovers do not have to be included on the monthly statement.

Compliance Rule 2-44 also requires FDMs to provide readily accessible daily statements that include the account equity in a customer’s account. Compliance Rule 2-44 permits an FDM to meet its delivery requirements for confirmations and monthly statements by providing on-line access where the customer consents to that method.

The Supervision of the Use of Electronic Trading Systems: Effective June 1, 2009

The amendments to the Interpretive Notice to Compliance Rule 2-36(e) regarding Supervision of the Use of Electronic Trading Systems will also become effective on June 1, 2009. These amendments require each FDM to:

  • notify NFA of the trading platform(s) it uses and of the owner of each platform;
  • audit the trading system annually, with the initial and biannual audits conducted by an outside party;
  • notify NFA as soon as reasonable, but no more than twenty-four hours, after it experiences operational difficulties with its trading platform;
  • provide advance disclosure (when an account is opened and on the FDM’s web site) of the factors that might affect the system’s performance and an alternative means of contacting the FDM during system outages or slow-downs;
  • provide customers with relevant time and sales information (upon request);
  • provide customers with year-end reports showing realized profits and losses incurred during the year and unrealized profits and loses on open positions as of the end of the year;
  • produce to NFA, upon request, a sortable report showing monthly and yearly realized and unrealized losses by customer; and
  • maintain written procedures describing how settlement prices will be set using objective criteria.

Copies of the amendments and new Compliance Rule 2-44 can be viewed in NFA’s submission letters to the CFTC. The rule submission letters contain more detailed explanations of the changes, and you can access electronic copies of those letters at

http://www.nfa.futures.org/news/PDF/CFTC/CR2_36_2_39_FRSec13_InterpNotc112408.pdf,

http://www.nfa.futures.org/news/PDF/CFTC/CR2-44_Forex_Interp_Notc_112408.pdf,
and

http://www.nfa.futures.org/news/PDF/CFTC/IntNotc_CR2-36e_Elec_Trading_Systems_112408.pdf.

Questions concerning these changes should be directed to Sharon Pendleton, Director, Compliance (spendleton@nfa.futures.org or 312-781-1401) or Lauren Brinati, Senior Manager, Compliance (lbrinati@nfa.futures.org or 312-781-1215).

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Another Forex Fraud

Posted on January 27, 2009, 4:33 pm, by admin, under Forex Fraud.

CFTC Freezes Assets of Fraudulent Forex Traders

The CFTC announced another forex scam targeting retail forex investors.  Like many frauds which we have detailed over the last few months, this fraud would likely have been detected earlier if the investors had made some basic inquiries into the claims made by the fraudsters.  This action again shows that investors need to be cautious when investing with unknown managers.  Investors should also be vigilant about conducting due diligence on all investments.  Read the rest of this entry »

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FINRA Jumps on Forex Regulation Bandwagon

Posted on January 27, 2009, 12:53 pm, by admin, under Laws and Regulations.

Regulatory Agency Proposes Leverage Limit

FINRA Member firms which engage in off-exchange forex transactions with retail customers may face leverage limits if a new FINRA proposed rule is adopted.  The new rule would limit the leverage which a member firm could provide to a retail forex investor (i.e. an investor who is not an eligible contract participant) to 1.5 to 1.  Many forex dealers currently provide leverage of 100 to 1 or more.  FINRA cites the volatility of the forex markets and investor protection as reasons for the very low leverage limits.  FINRA will be accepting comments on this proposal until February 20, 2009.

For a reprint of the full release, please see FINRA Forex Proposal.

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