Both ILQ and their unfortunate experimental client ATC Brokers, found that even small deviations can be very costly, especially in this post disaster environment.
Recognize that as a retail investo your alternative in trading is to go rogue, whereby if you should ever become successful, the likelihood of receiving your claimed proceeds is virtually nill.
Recognize that some firms are really endeavoring to develop solid businesses in accordance with the rules of law, while under the most stringent jurisdictions in the world.
Make sure you deal only with these firms, if you want any hope of ultimate success. Why else would they lay claim here, when it is so easy to commit fraud elsewhere??
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AI
Sorry, but all these details about the importance of the NFA regulation are completely irrelevant. Fact is that the biggest violations of investor rights and the biggest fraud cases in history have happened under the NFA, and under other large regulators. The regulator is a way to cover ass for large institutions. It was never meant to protect retail investors. By dealing with regulated companies large institutions can, when they lose money, claim that they did their due diligence and cannot be sued for negligence.
A 10K fine is nothing, when you have managed through an algorithmically manipulated feed to pick the pockets of thousands of clients, even if you got caught due to a complaint about $9. All the other guys simply didn’t know they should complain.
You want to know whether a broker is fair? - read the contract in detail. If the broker guarantees STP, it is still not enough because STP only means that the broker lets the trades straight though through without intervention. It doesn’t mean that the broker does not outsource its market making, Like FXCM does (that is why they started promising STP in recent years). The contract has to state that it is STP and that there is no party dealing / market making between the trader and all the multiple banks that are providing the broker liquidity (eventually someone has to market make, but it has to be multiple market makers completing for the feed through an aggregation system as this eliminates the ability of any market maker to benefit from skewing prices).
ECN btw, also does not guarantee you are safe. The contract has to be clear about not market making. The sales person can promise what he is told to promise (half the time they don’t even know what they are talking about and just repeating what they were educated to say). I have read many broker contracts and most of them squeeze in, in vague wording, that they maintain the right to deal against clients. All the big ones do.
Also, a broker that is truly STP and not dealing, but rather clearing against multiple banks and offering competitive prices to its clients cannot be profitable if it accepts small clients. A real STP broker will earn on about $3 per month for a 2K account, assuming decent retail volume of trades per 1K of deposits. How can one expect then to be offered institutional trading conditions if you open a small retail account? Don’t expect to really get STP for less than a 25K account as it is not worth an STP broker’s time to open such an account.
Hope this helps you all.