copied from Global Gain’s website
resource link: http://globegain.com/brokers/forex-regulators
Like any financial market Forex currency trading requires proper regulation to avert and eliminate the abuse of investors’ rights. For this purpose each country has its own governmental and independent supervisory bodies which are altogether called ‘Forex regulators’. The most prominent of them are the NFA (the National Futures Associations), the CFTC (the Commodity Futures Trading Committee), the FSA (the Financial Services Authority).
The first and foremost objective of these regulatory bodies is to set and implement the policies for fair and ethical business behaviour of all forex-related institutions within their jurisdiction. In their turn all Forex brokers, IBs and signal sellers have to operate in strict compliance with the rules and standards laid down by the Forex regulators, otherwise their activity is regarded as unlawful. First of all, they must be registered and licensed in the country where their operations are based. This point is really indispensable as approval of the national regulatory institutions implies that the broker must stick to strict quality control standards and ensures that your business with the broker is safe and fair. In accord with this regulation licensed brokers are subject to recurrent audits, reviews and evaluations which force them to maintain the industry standards. Besides, Forex brokers must keep a sufficient amount of funds to be able to execute and complete Forex contracts concluded by their clients and also to return clients’ funds intact in case of bankruptcy.
Not all the brokers nowadays are regulated by appropriate financial regulators in their countries. So it’s of utmost importance to check the broker’s regulatory status before signing an agreement as it will determine the level of security and protection of your investments.
All the financial markets and firms in Australia as well as organizations and individual self-employed specialists consulting on and dealing with such issues as superannuation, insurance, investment, deposit withdrawals and credit-taking are regulated and controlled by ASIC.
On the one hand, being one of the market regulators, ASIC evaluate the efficiency of these structures performance and their discharge of obligations to act on financial markets properly, fairly, and transparently. Making recommendations to the Minister on the new markets authorization is also in power of ASIC. On 1 August 2010, the oversight of trade carried on domestic licensed equity, derivatives and futures markets was entrusted to ASIC too.
On the other hand, being the financial services regulator, ASIC grant licenses and supervise businesses rendering financial services connected with superannuation and insurance, managed funds and derivatives, shares and firm securities.
Being the Montreal Exchange’s subsidiary companу, CDCC fulfills the function of the principal clearing counterparty in the process of derivative output trading on the exchange. Apart from this function, CDCC performs as a counterparty in an increasing number of the off-exchange trade deals. To guarantee the steadiness and unity to the supported markets is the CDCC’s basic aim.
The exceptional position taken up by CDCC among all the financial markets of Canada is easily explained by the following reasons:
· There’s no other counterparty equal to this unique corporation in options, futures and options on futures clearing and settling in North America.
· 35 years’ experience and practice in exchange-trading.
· According to the average audience rating got from Standard & Poor’s CDCC proves to conduct both reasonable and standard risk assessment policies and a process sequence.
CDCC includes about 30 members, among which both main Canadian brokers and financial institutions are represented.
The BCSC is a state-run corporation able to control and govern a dynamic market due to its self-sufficiency and adjustability. Being one of the governmental agencies we report to the Legislature via the minister that bears responsibility for the Securities Act administration. BCSC’s self-financing signifies that not ratepayers but the participants of the market bear the securities regulation cost.
BCSC incurs a liability for the regulation of securities in British Columbia commerce via the Securities Act administration.
Public interest protection and promotion is BCSC main goal which can be achieved only by cultivating the following ideas:
·A fair and transparent securities market that guarantees public certainty and trust
·Creating securities industry characterized by competiveness and dynamics and thus providing vast opportunities for investors with their capitals.
All the capital markets of Ontario including equities, derivatives markets and fixed income are liable to the regulation by the OSC. Being a self-financed organization, the OSC is at the same time a state-run agency. It means that this commission is responsible vis-a-vis the Legislature of Ontario via the Minister of Finance.
Both the Commodity Futures Act and the Securities Act of the given province are administered and enforced by this regulatory body. The Business Corporations Act, and more exactly some of its provisions, is controlled and regulated by the OSC too.
According to the legislation the OSC’s duties are set out in the following areas: the development and enforcement of rules helping in investment safeguarding; the misconduct discouragement and prevention; the cultivation of fairness and integration at capital markets; the fosterage of public certainty and trust in the markets.
Widely known as CySEC, The Cyprus Securities and Exchange Commission corresponds to a regulatory body in the sphere of financial relations in the Republic of Cyprus.
When in 2004 the Republic of Cyprus was included into the number of European Union members, the CySEC became a part of European regulatory system MiFID. Since that time all the companies that have been registered in this Republic have been given access to the markets of Europe.
The CySEC watches that the Cyprian investment firms strictly followed financial instructions according to the legislation and the normative base of Cyprus and European Union. CySEC is a public body which supervises actions and the operations performed at stock exchange.
The incomplete list of obligations CySEC:
– Supervises activity of the licensed investment companies
– Observes activity of brokers and the broker companies
– Gives out current licenses to investment companies
The Danish FSA’s main mission is to carry out the supervision of various financial ventures such as banks, superannuation funds, mortgage-credit institutions and insurance companies. Solvency supervision is one the basic priorities of this regulatory body. This supervisory activity means that all the financial ventures have to possess their own adequate funds in order to cover all their risks.
So all the Danish securities markets are controlled by this organization. It supervises as well if the given undertakings fulfill their duties and obligations concerning all the relevant information publication (prospectuses, internal knowledge etc.). At last, all the cases of market abuse are also prosecuted by the Danish FSA. Apart from a supervisory activity itself, this regulator performs as a collector of key statistics and as an assistant in financial legislation drawing up.
Since 1 January 2011 ESMA has been functioning instead of former CESR (the Committee of European Securities Regulators). The latter one, being an independent organization set by European Commission, gave birth to ESMA. Since then ESMA has made its contribution to the protection and support of the EU financial system stability.
Close cooperation with EBA, EIOPA and other organizations connected with the supervision in banking, insurance and pensions assures ESMA to foster harmonization both across financial segments and among securities regulatory bodies. But the main aim of ESMA remains unchangeable – to create and support proper functioning of securities markets. It signifies to provide markets with the unity, transparency, efficiency and fairness. Improvement and reinforcement of the investment sector is another ESMA priority.
Since its establishment in May 2002, BaFin has been carrying out the supervision of most financial undertakings in the country such as banks, insurance ventures and providers of all kinds of financial services functioning under the same roof. The Federal Ministry of Finance exercises control over BaFin. Being an independent public-law regulatory body, this organization is financed by dues and payments contributed by the supervised institutions and ventures. So thanks to this fee system, BaFin doesn’t depend on the Federal Budget.
As for BaFin’s main goal it’s, first of all, to operate in the public interest assuring due functioning, unity and stability of the financial system in Germany. BaFin’s solvency supervision consists in controlling financial institutions ability to meet their engagements concerning all kinds of payments. Preventing illegal business and enforcing professional behavior standards are other objectives of BaFin.
The FSA is a Japanese regulatory body, undertaking to assure the financial system stability, to protect depositors, holders of insurance policies and investors of the securities market. Characterized by strict supervision, the FSA doesn’t only inspect private financial companies, but also carries out securities transactions monitoring. Taking by the FSA such measures as planning and policymaking provides financial system in Japan with transparent administration. Discipline and self-responsibility are the main principles of the existing national economy, and the FSA Japan supervises at all levels if these principles are followed by the participants of the market.
Financial systems qualitative repletion is another desired goal for the FSA. It can be achieved only by adapting financial regulations to such financial environmental changes as innovations and globalization.
The Central Bank of Ireland is the financial services regulator of Ireland and historically the central bank. In compliance with Central Bank Reform Act 2010 the Financial Services Authority of Ireland (commonly known as the Central Bank) and the Irish Financial Services Regulatory Authority (financial regulator) were replaced by a new single body – the Central Bank of Ireland – which now fulfills both central banking and regulatory functions. The Central Bank controls the activities of all financial institutions in Ireland with the purpose to enforce and maintain fair and safe financial environment for consumers. It implements and monitors the consumer protection, the compliance of financial bodies with the established business and prudential requirements. It also fixes min competency requirements for companies. The Central Bank has created several statutory codes of conduct which force financial bodies within its jurisdiction to carry out operations fairly, transparently and solely in the interests of their clients. These protection codes are enforced by means of on-site inspections and backed up by enforcement powers.
The Swedish FSA is a governmental agency. We strive for promotion of financial stability and assurance of consumer rights. Every company engaged in Swedish financial markets is liable to our supervision and authorization. Analysis of market patterns, evaluation of business soundness of firms, industries and market in general are within our cognizance. Paying due attention to risks and control measures, we ascertain conformity to the relevant normative acts.
We license every activity associated with financial services. Our legislative competence involves issuance of standards and amendment of current unqualified normative acts. Should incompliance or market rate manipulations become apparent, on-the-spot investigations will involve resident and non-resident Swedish companies.
We see to elaboration of accounting and reporting rules, guaranteeing that the public is kept posted on the activities pursued by the companies.
FINMA protects the investing public, system and its reputation, and advances financial market soundness, thus, strengthening the competitive capacity of the financial sector.
FINMA regulates the activity of other financial organizations, ensures protection against money laundering, and sometimes it acts as the liquidator. FINMA authorizes operation of companies and ensures their compliance with normative acts and laws along with fulfillment of the licensing requirements. It provides lawful administrative aid and imposes penalties, if necessary. Moreover, FINMA exercises regulatory and legislative activity, issues acts and guidelines, providing for acknowledgement of the standards of self-governance. FINMA monitors the matters related to takeover proposals, disclosure, and appeals against decisions taken in this field.
Economic activity of a free target-oriented zone in Dubai is regulated by the DFSA.
Management of resources and securities, execution of banking and trust services, Islamic finance, exchange of international equities and derivatives, as well as insurance matters fall within the competence of the DFSA.
Activity of DFSA is based on a principle of risk-related regulation and avoidance of unnecessary regulatory implications. Besides, the agency made it clear that the obligations liable to fulfillment should comply with optimization of risks in order for such obligations to be successfully met.
Under the circumstances, the priorities include generation of a cycle of risk optimization that aims at identification, evaluation and assessment of risks in order to enhance local and international markets and their patterns.
According to DFSA, the reality of efficient risk-based regulation is more important than the way of its achievement.
Fulfillment of federal tasks has always been the goal of Securities and Commodities Authority. Its normative acts establish and enhance the legal environment of the companies engaged in the securities business, thus, strengthening the Authority’s credibility.
The Authority continuously strives to enhance administration of the subordinate companies, alerting them to the general requirements set by the relevant federal laws and any other supportive normative acts.
The SCA shall license all securities markets in the UAE established in the form of electronically interconnected local public bodies.
Market management shall be ensured by the locally established Board comprising only those members that participate neither in any public joint-stock company nor in any brokerage activity.
The primary task of this agency lies in protection of the investing public, adequate enactment that promotes fair business and advances market efficiency, and adoption of the relevant control measures.
SEC in the U.S. ensures protection of investors, maintenance of fair markets, and capital formation advancement. The main participants dealing with securities are controlled by the agency. The first concern of the SEC here lies in promotion of crucial information disclosure, protection against fraud and fair business relations.
Rational and well-educated investors are an important mechanism of efficient market functioning, since they serve as the major information source. A variety of information aligned with investor awareness is posted by the SEC on this website, including the database of documents liable to disclosure and submission.
The SEC regulates and controls the American securities markets in cooperation with many other agencies, including Congress, various private companies and other organizations. Notably, the Chairman of the agency and certain public officials participate in a working group on financial markets.
NFA is a self-governed sectoral organization representing American futures industry. Day after day NFA strain to elaborate regulations, programs and services meant to protect market integrity and investors, ensuring legal qualification of it Members.
Being an autonomous regulatory agency, NFA is unbound to any certain marketplace. It activity has no financial implications for the taxpayer and it is funded solely by users of the futures markets in the form of affiliation and assessment fees.
With rapid development of financial markets, NFA has become the leader in self-regulation field. Since the need for efficient regulation today is as substantial as ever, NFA’s reputation is rather beneficial for the market agents willing to share their experience, while NFA serves as a model of self-regulatory organization.
FINRA is the largest independent agency regulating securities-related sphere of activity of various organizations in the U.S. FINRA’s objective lies in protection of American investors through assurance of fair and honest operation of the securities industry.
Every feature of the securities business, including registration and instruction of industry agents, elaboration and enforcement of rules and federal laws, evaluation of companies engaged in the field, training and instruction of investors, submission of trade reports, as well as administration of forum for dispute settlement, is covered by FINRA. Contractual market regulation for the key U.S. stock markets falls within our competence as well.
In this sophisticated global economic situation FINRA acts as a reliable representative of investors’ interests; its activity is devoted to assurance of market soundness and aimed at regulation of financial matters to protect the market and the investors themselves.
Economic benefit of the markets dealing with futures is assured by the CFTC through promotion of their competitive capacity and efficiency. It strives for protection of market agents against fraud in order to exclude manipulation and unfair commercial practice, paying due attention to the clearing process soundness. Effective supervision of the CFTC makes it possible for the futures markets to fulfill their key function and provide for price regulation and market risk optimization.
CFTC’s activity is aimed at protection of market agents and individuals from fraud, manipulative action, abuse and constant derivative-related risk in conformity with relevant acts. Besides, its operation advances overt, viable and efficient markets.
The FSA is the independent body that regulates the financial services industry in the UK. Limited by guarantee, FSA is sponsored by the financial services industry. Although general policy establishment is reserved to the Board, daily decision making and staff management matters fall within the competence of the Executive Committee.
The FSA has a wide range of rule-making, investigatory and enforcement powers which enables them to meet four statutory objectives. The four statutory objectives are:
1. Market confidence – maintaining confidence in the UK financial system;
2. Financial stability – contributing to the protection and enhancement of stability of the UK financial system
3. Consumer protection – securing the appropriate degree of protection for consumers; and
4. The reduction of financial crime – reducing the extent to which it is possible for a regulated business to be used for a purpose connected with financial crime.
Copied off the official NFA web site.
This is such a joke! The king pins of the biggest fraud scam in the world are co-sponsoring avoiding fraud talks! Talk about trying to throw people off!
For anyone who saw the series BREAKING BAD about meth manufacturing etc – you can compare the NFA to the owner of the chicken franchise- always supporting anti drug projects!
People- you have to complain- it takes more than just me fighting to make something happen. YOUR BEING SCREWED OUT OF YOUR MONEY- GET MAD! TAKE ACTION! They collect millions in sanctions- and give none of it to the victims! Fight for your share of the sanction money!!!
For Immediate Release
April 19, 2013
National Futures Association, CFTC, AARP and Chicago Department of Family & Support Services co-sponsor “Avoiding Fraud is Your Best Money Strategy” during Money Smart Week
April 19, 2013, Chicago – National Futures Association (NFA), the Commodity Futures Trading Commission (CFTC), AARP Illinois and the Chicago Department of Family & Support Services (DFSS) will cosponsor a series of seminars that aim to provide individuals and community leaders with the tools they need to help protect themselves and others from investment fraud.
The seminar, “Avoiding Fraud is Your Best Money Strategy,” will be held on Thursday, April 25 from 11:30 a.m. to 1:00 p.m. at the Renaissance Court in the Chicago Cultural Center, which is located at 78 E. Washington St., in Chicago, Ill. The sponsors also will present a reprise of the seminar on Friday, April 26 from 10:00 a.m. to 11:00 a.m. at the Southeast (Atlas) Senior Center, located at 1767 E. 79th St., also in Chicago, Ill.
“Given today’s economy, it’s more critical than ever for consumers to be careful with their money and ensure they’re making smart investments,” said NFA Senior Vice President Karen Wuertz. “We want to ensure that everyone has access to as much information as possible and help them to make the best possible decision when it comes to trusting others with their money.”
These seminars are just part of a series of free classes and activities promoting financial education that will take place during Money Smart Week Chicago, a nationwide public awareness campaign designed to help consumers better manage their personal finances. Coordinated by the Federal Reserve Bank of Chicago, Money Smart Week runs from April 20 to 27.
“The consequences for fraud victims can be pretty horrific�people losing money for their kids’ college funds, for needed health care expenses, or for their own retirement,” said CFTC Commissioner Bart Chilton. “In many instances it is preventable with a little education and some due diligence fact checking.”
During the seminars, representatives from AARP, the CFTC and NFA will provide attendees with advice on how to identify the warning signs and avoid investment fraud.
“AARP research shows that consumer fraud, identity theft and protection from unfair and deceptive financial practices is a concern for more than 70 percent of AARP members in Illinois,” said Ryan Gruenenfelder, Associate State Director for AARP Illinois. “We’re pleased to join with our partners to provide consumers with the information they need to protect their assets and have greater financial security peace of mind.”
Anyone wishing to attend the program should pre-register by calling (312) 781-1454.
For more information on Money Smart Week events visit www.moneysmartweek.org.
copied from the NFA website
resource link: http://www.nfa.futures.org/news/newsRel.asp?ArticleID=4208
March 28, 2013
NFA takes emergency enforcement action against North Carolina firm James A. Shepherd Inc. and its principal, James A. Shepherd
March 28, Chicago – National Futures Association (NFA) announced today that it has taken an emergency enforcement action against James A. Shepherd Inc. (Shepherd Inc.), an NFA Member commodity pool operator (CPO) and commodity trading advisor (CTA) located in Southern Pines, N.C., and James A. Shepherd, the sole principal and associated person (AP) of Shepherd Inc.
NFA has taken the Member Responsibility Action (MRA) and Associate Responsibility Action (ARA) to protect participants in the Shepherd Fund and investors in other investment vehicles controlled by Shepherd Inc. and James Shepherd, because of their failure to cooperate with NFA in its examination of Shepherd Inc. and the Shepherd Major Play Option Fund L.P. (Shepherd Fund). In particular, Shepherd has failed to make himself available for questioning by NFA examiners, and has failed to provide support for certain assets reported in the Shepherd Fund’s Dec. 31, 2012 audited financial statement that was filed with NFA.
Specifically, Shepherd Inc. and James Shepherd have failed to provide support for–or confirm–the approximately $6 million in cash that was reported in the Shepherd Fund’s Dec. 31, 2012 audited financial statement as being on deposit at BB&T bank in the name of the Shepherd Fund. Consequently, NFA has been unable to determine whether Shepherd Inc. and James Shepherd have acted properly in their dealings with participants of the Shepherd Fund or whether they have misappropriated participants’ funds and provided false information to NFA and participants concerning the assets of the Shepherd Fund.
Shepherd Inc., James Shepherd and any person acting on their behalf are prohibited from soliciting or accepting any funds from customers or investors, soliciting investments for any managed accounts, commodity pools or other investment vehicles, or placing any trades on behalf of customers, commodity pools or investors except liquidation or risk-reducing trades. Additionally, they are prohibited from disbursing or transferring any funds over which they exercise control without prior approval from NFA.
The MRA/ARA will remain in effect until such time as Shepherd Inc. and James Shepherd have demonstrated to the satisfaction of NFA that they are in complete compliance with all NFA Requirements.
Shepherd Inc. and James Shepherd may request a hearing before NFA’s Hearing Committee.
It’s been a couple weeks since I filed complaints with every branch of the trade industry and consumer protection agencies (6 total) and there has been no results. I have to consider that the level of corruption goes up higher than I thought- involving not just the NSA but also the CFTC.
Not even the American Gaming Association has reacted to the fact that forex trading platforms- upon becoming self contained systems- became legally a “Gambling Machine” or a tool for “Online Gaming” – both of which fall under their jurisdiction.
CNN replied with a “thanks for your story” but no action has followed. The Attorney General said the CFTC has to address it before they can. I thought there was nothing more I could do- then ***ping! Duh! This is a federal crime happening on a national level- federal crime = FBI
I think it’s pretty pathetic for just 1 person …. me…. to be fighting so hard to stop something that doesn’t even affect me. I’m doing this to try stop you- the person reading this that does trade “forex” from being ripped off.
People- it’s time for YOU to do your part- COMPLAIN TO THE FBI ask your broker questions- demand to know if your trading against a computer program. Ask them if your orders are called out- pooled and submitted to anywhere at all- or is it like that blogger says- all my orders are processed right on the platform. Ask them how many platforms are supervised per employee. And are they allowed to alter or adjust the contract price after the transaction has been completed? FIGHT BACK!!
Most importantly- ask to see the companies financial report- the page that shows how much was paid out to customers in 2012. I noticed a few days ago that on all these financial reports- there’s no line that shows how much was withdrawn by customers that was in excess of what the put into the account. WHERE DOES IT SHOW PROFITS PAID OUT
Why is that…… oh… I know……………………………………. there aren’t any.
White-collar crime is financially-motivated nonviolent crime committed for illegal monetary gain.
Within criminology, it was first defined by sociologist Edwin Sutherland in 1939 as “a crime committed by a person of respectability and high social status in the course of his occupation“.
The FBI has adopted the narrow approach, defining white-collar crime as “those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence” ____________________________________________________________
- Attempt and conspirac
- Material involving sexual exploitation of minors
- Mail fraud – frauds and swindles
- Bank fraud
- Prohibition of illegal gambling businesses
Some forms of corruption—-now called “institutional corruption”—-are distinguished from bribery and other kinds of obvious personal gain. Campaign contributions are the prime example. Even when they are legal, and do not constitute a quid pro quo, they have a tendency to bias the process in favor of special interests, and undermine public confidence in the political institution. They corrupt the institution without individual members being corrupt themselves. A similar problem of corruption arises in any institution that depends on financial support from people who have interests that may conflict with the primary purpose of the institution.
The UNITED STATES FOREX TRADE INDUSTRY has become corrupt.
NFA rules about platforms
FDMs must adopt and enforce written procedures reasonably designed to ensure the integrity of trades placed on their trading platforms.
. Trading platforms must be designed to provide bids and offers that are reasonably related to current market prices and conditions. For example, bids and offers should increase as prices increase, and spreads should remain relatively constant unless the market is volatile.
Furthermore, if an FDM advertises a particular spread (e.g., 1 pip) for certain currency pairs or provides for a particular spread in its customer agreement, the system should be designed to provide that spread.
The report should exclude transactions by contract eligible participants **as that term is defined in Section 1a(12) of the CEA.
(** contract eligible participant=those with accounts with over 10 million)
Management should approve each fill outsi de the price range displayed by the system when a market order was placed and should document the reason for the fill price.
If the FDM’s customer agreement provides for exceptions in volatile or illiquid markets and those exceptions are prominently disclosed, the system may be programmed to be consistent with the agreement’s terms.
The number one issue traders face right now is misinformation. Those running the retail forex industry know that traders are unaware that the whole trade environment switched from real to 100% simulated in the US and parts of the UK. Any trader who searches for information on Google or Bing will come up with the answers I posted below. They explain forex the way we think it is now. But its actually only the way things used to be. This old information is keeping thousands of traders from seeing the truth.
The truth is only found on the NFA website and only if you dig deep. Here is the link to read it in detail for yourself-http://www.nfa.futures.org/nfamanual/NFAManual.aspx
It clearly states that
- All traders and businesses with less than 10,000 million in assets is labeled a “Customer.”
- “Customers” trade the “Retail Market” “OTC”
- The “Retail Market” is only traded Off-Exchange
- On all Off-Exchange transactions, the broker acts as the only counter party.
- That they can only claim “no slippage” if they dont have access rights to adjust the price orders were closed at- after the ordered was executed.
The blue italicized writing is comments by me. Red is critical info. as is bold Lettering.
Tell every trader the truth. Demand simulated trading be recategorized as online gambling, The difference between the old platforms and the current ones is what the program is being used for. The real platforms are nothing but data pushers. A way to pass numbers back and forth with accuracy- and with a record of the transaction. Like paying for something with your pay pal account. It processes the numbers and transfers the money for you.
The new platforms are no longer a tool that a broker uses to transfer orders back and forth between people. The new platforms are running self contained simulated trading games that trade against you right there on the platform. Your orders are not sent to any bank or other traders. It’s just like playing on line slots. You put real money in an account and virtually pull the lever and see if you win. You know its rigged to make you loose. So are the trading platforms. (You didn’t loose your touch in the last 5 years- they just started cheating).
The following definitions came from wipikidia and Investopedia. The 3rd definition is thru the UK. You can tell they basically copied what the the other page said.
What they describe is what most traders think they are doing- You think your using a trading platform to trade on the Interbank trade network. Your trading all by your self against a computer game programmed to make you loose.
Definition of ‘Interbank Market’
The financial system and trading of currencies among banks and financial institutions, excluding retail investors and smaller trading parties. While some interbank trading is performed by banks on behalf of large customers**(accounts over 10 million only), most interbank trading takes place from the banks’ own accounts.
Investopedia explains ‘Interbank Market’
The interbank market for forex serves commercial turnover of currency investments as well as a large amount of speculative, short-term currency trading. According to data compiled in 2004 by the Bank for International Settlements, approximately 50% of all forex transactions are strictly interbank trades. (not any more)
Interbank foreign exchange marketFrom Wikipedia, the free encyclopedia
The interbank market is the top-level foreign exchange market where banks exchange different currencies. The banks can either deal with one another directly, or through electronic brokering platforms. The Electronic Broking Services (EBS) and Thomson Reuters Dealing 3000 Xtra are the two competitors in the electronic brokering platform business** and together connect over 1000 banks. The currencies of most developed countries have floating exchange rates. These currencies do not have fixed values but, rather, values that fluctuate relative to other currencies.
** The only real platforms
The interbank market is an important segment of the foreign exchange market. It is a wholesale market through which most currency transactions are channeled. It is mainly used for trading among bankers. The three main constituents of the interbank market are
the spot market
the forward market
SWIFT (Society for World-Wide Interbank Financial Telecommunications)
The interbank market is unregulated and decentralized. There is no specific location or exchange where these currency transactions take place. However, foreign currency options are regulated in the United States and trade on the Philadelphia Stock Exchange. Further, in the U.S., the Federal Reserve Bank publishes closing spot prices on a daily basis.
Unlike the Stock Market, the Foreign Currency Exchange Market (Forex) does not have a physical central exchange like the NYSE does at 11 Wall Street. Without a central exchange, currency exchange rates are made, or set, by market makers. Banks constantly quote a bid and ask price based on anticipated currency movements taking place and thereby make the market. Major Banks like UBS, Barclays Capital, Deutsche Bank and Citigroup handle very large currency trading (forex) transactions often in billions of dollars. These transactions cause the primary movement of currency prices in the short term.
Other factors contribute to currency exchange rates and these include forex transactions made by smaller banks, hedge funds, companies, forex brokers and traders. Companies are involved in forex transaction due to their need to pay for products and services supplied from other countries which use a different currency. Forex traders on the other hand use forex transaction, of a much smaller volume with comparison to banks, to benefit from anticipated currency movements by buying cheap and selling at a higher price or vice versa. This is done through forex brokers who act as a mediator between a pool of traders and also between themselves and banks.
Central banks also play a role in setting currency exchange rates by altering interest rates. By increasing interest rates they stimulate traders to buy their currency as it provides a high return on investment and this drives the value of the corresponding central bank’s currency higher with comparison to other currencies.
Interbank Forex Markets Explained
The Interbank forex markets, as obvious from the term, is the highest level in the foreign exchange markets where banks exchange currencies directly with one another. The Interbank forex markets can also be referred to as the forex wholesale market where most of the currency transactions are performed and is mostly used for trading within the banking community. The interbank forex markets is unregulated and decentralized, thus there is no central location or an exchange where these transactions take place, unlike the stock markets where transactions are carried out at the stock exchange.
What comprises the Interbank Forex Markets
The Interbank makers is made up of three components.
Spot markets: Also known as the organized or OTC (over the counter) market. This is made up of cash market is known as the publish financial markets where financial tradable instruments and/or commodities are traded for immediate delivery. The spot market prices are individually agreed between the parties and therefore the prices are usually not published. The spot markets entails a two day delivery period in order to move cash from one bank to the other. The online forex trading markets is usually comprised of the spot markets as trading is purely speculative driven and transactions are done on the spot.
Forward markets: The forward markets is over the counter financial markets that dealins in the CFD’s or contracts for differences for future delivery. Forward markets are also known as forward contracts and are personalized between the buyer and seller which includes the delivery time and amount which is usually determined at the time of the transaction.
SWIFT: Most of us who have ever made an international bank WIRE would have heard about this or BIC (Bank Identified Codes). SWIFT is an acronymn for Society for Worldwide Interbank FInancial Telecommunications. SWIFT is used to send payment orders that are usually settled via the correspondent accounts which the banks have with each other.
What moves the Interbank Exchange Rates
Due to the fact that the forex market is decentralized, banks set their own bid and ask prices taking into account any anticipated currency fluctuations that might take place. It is safe to say that the forex market is actually made up of market makers due to the fact that banks have their own price quotes. Large scale banks such as UBS, Deutsche Bank, HSBC, Citigroup handle large volumes of currency transactions and it is due to the movement of this volume which is the primary driver of the currency prices, especially in a short term perspective. Of course, there are other factors that influence the Interbank exchange rates such as hedge funds, smaller banks and online forex brokers and traders.
How do forex traders fit into the bigger game
Forex traders make money by purchasing one currency and selling another currency. The difference in the bid and ask price of these currencies is how profits are made. Therefore, forex traders are familiar with the term, buy low sell high. Forex traders make their profits by the fluctuations in the currency prices as cited above. ECN Forex brokers are the kind of brokers that connect forex traders straight to the tier 1 liquidity providers made up of banks and financial institutions. It is because of the interbank forex markets that ECN forex traders get to see pricing where in most cases the spreads are almost zero.
Read more http://www.ecnforex.co.uk/interbank-forex-markets-explained/
NFA supporting their lie:
SOME foreign currency contracts are traded off exchange? they make it sound like it happens occasionally instead of the 100% off exchange trading done for all retail customers. All with less than 10 million.
My complaint is against the NFA and or whichever agency authorized the change in definition of the word FOREX from it’s globally known meaning of: Transactions conducted ON the Foreign Exchange, to its new meaning, as written on the NFA website as OFF-exchange transactions. Further more, their rules indicate that it no longer includes on-exchange transactions.
The word FOREX is the short for Foreign Exchange. (FX as well)
All but one on line dictionary still defines FOREX to exclusively mean On-Exchange trading
Changing the meaning of such a global word to its opposite meaning is the root cause for the trade industry fraud problem. Customers believe they are trading on the real foreign exchange. According to the NFA rules- “person with less than 10 million in assets and most small businesses are referred to as “customers” and that they trade “OTC” on the “retail market”.
Retail market = simulated trading done on gaming platforms accessed thru the internet. They’re programs the brokerage creates.They’re separately accessed by each customer. They play against the program. The broker is legal counter party cuz they control the program (some firms partner with other firms to act as “an outside bank” to support claim to trade with “financial institutions”)
The programs combines the current stock market movement with algorithms to produce charts that appear to be following the real market, while simultaneously responding to the trading patterns of the customer- adjusting the market as needed to cause them to loose their money.
There have been hundreds of cases regarding accurate order execution, slippage, program freeze. All the complaints have the same core issue- The trading does not behave as expected. As it should. As it used to. And they are correct. Over the last few years- electronic trading was shifted from being real to being simulated.
The industry regulator, NFA, shifted the term FOREX along with it. allowing brokers to continue calling what they offered “Forex Trading”. It allowed the entire industry to delude customers into thinking they’re trading real accounts.
The NFA’s advertising rules don’t address the use of the word FOREX in any way .. They have abused their position of authority to the determent of the public., there is no defense to switching the definition of a word that could not be switched without deluding people! The only possible reason to switch it was to delude the public. It was done intentionally to defraud the public. By who’s authority can any country change the meaning of a globally established word? To allow it would cause obvious confusion in other countries.
The NFA says its a not-for-profit, yet benefits from a thriving market 3 fold. 1)They collect .002% of all off exchange transactions they monitor (and all transactions require monitoring) which I just read is 1 trillion a year. 2) annual membership dues that range from 125k to 1 million 3)sanction fines (non disbursed money) which average 30k- 125k
I strongly recommend auditing their financial records because their public financial record shows conflicting numbers- claiming to take in less than 200 million- and ending the year with the almost the same 7mil surplus they started the year with. .002% of 1 trillion plus the membership dues- not counting the sanction fees is already over 1 billion a year. This doesn’t include the .005% they get from institutional accounts.
All the data above was collected off their website and the other regulating authorities of the forex market. Laws and rules are from the Trade commission website. NFA financial records were obtained via google search.
Action taken so far: I filed complaints with the U.S. Commodity Futures Trading Commission , The office of consumer affairs, with the NFA (against their actions), The consumer protection agency and the US Attn General. I also started a White House Petition to have the definition restored. link to petition: http://wh.gov/VSjV The petition isn’t likely to get enough signatures unless someone does a story on it. I reported about it to both CNN and FOX11 in LA. No response from either. Did all this in the last few days- after discovering the altered definition on the NFA’s website. The CFTC responded saying they got my report and don’t usually update complainers unless, and when it goes to court. The US Attn General said to report it to you.______________