Easy Forex, a fairly large Middle Eastern broker and a NFA FDM, will probably withdraw its NFA clearing FDM status in the coming months.
Easy Forex today announced to all its US clients that “After a recent strategic business review at the parent company level of Easy Forex, a decision has been made no longer to accept and/or service retail customers from the United States at this time. In line with the foregoing, the last day on which you will be able to open new positions through your Easy Forex account will be: July 25, 2010; thereafter, you will have until 12:00 Greenwich Mean Time (GMT) or 08:00AM East Coast Time (ECT) on August 24, 2010, to close any open positions in your Easy Forex account(s). If you have not already closed or transferred your account before 12:00 Greenwich Mean Time (GMT) or 08:00AM East Coast Time on August 24, 2010, any remaining open positions in your account will be automatically closed at that day’s closing price and any funds remaining in your account will be refunded to you.“
Basically, Easy Forex will stop working with US clients which necessarily means that it will withdraw from the NFA completely, or at least will stop being an FDM. This also means that Easy will be able to withdraw its $20 million which were deposited as NFA’s minimal capital requirement. The funds will surely be either returned to the lender or disbursed between shareholders or more probably be used to expand existing operation in Cyprus and other countries and will also be used for marketing purposes.
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As I speculated more than a year ago and then after each new NFA it-doesn’t-make-any-sense requirement we will see a few more brokers withdraw from the NFA. Ever since, most American brokers established branches overseas, mainly in the UK and Australia, and time after time solicited their clients to move account there.
From what I’m hearing Easy Forex tried to switched its client accounts to its overseas subsidiaries as well however this time the NFA blocked the move leaving Easy with no choice but announce the clients that their account will be liquidated at the announced schedule. Clients will surely start looking for a completely new home and remaining US brokers will start actively soliciting them as we’ve already seen happening.
These clients however are probably not going to be very happy with this move and if you ask me they should be pissed mostly at the NFA firstly because of the crazy regulations which push brokers out of the country, thus reducing fair competition, and secondly because the NFA, if what I’m hearing is correct, allowed the big brokers to freely solicit clients to shift their accounts to overseas subsidiaries but blocked same attempt from a smaller broker.