Taiwan Firm Cancels NFA Application for FX Dealer Member Status

Nanshan Jinchuang Co originally applied for the status in May of this year.

Nanshan Jinchuang Co has withdrawn its application with the National Futures Association (NFA) to receive the status of a Foreign Exchange (forex) Dealer Member and Forex Firm, Finance Magnates has learned.

According to the regulator for the United States derivatives industry, as of June 16 this year, the company has withdrawn its application for the two status.

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The firm originally applied for the status on May 20, 2019. At present, it still has two more status pending – Commodity Pool Operator and Retail Foreign Exchange Dealer (RFED).

As Finance Magnates previously reported, the details surrounding Nanshan Jinchuang Co are unclear. The company is based in Taiwan and first applied with the NFA to become a registered Commodity Pool Operator and Commodity Trading Advisor in February of this year.

In May, the firm appears to have withdrawn its application for Trading Advisor Status. But less than a week after it did that, the firm applied to become a Forex Firm, Forex Dealer and RFED.

Now, the company has withdrawn all applications besides the RFED and Commodity Pool Operator. It remains unclear as to who operates Nanshan or what it’s primary focus is. 

The company has an address listed on the NFA database, but it does not appear to match with a real-life one.

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As Finance Magnates previously found, a government database of all registered companies in Taiwan also only lists one firm with Nanshan in its name – Nanshan Group. Aside from its name being different to the NFA firm, it is also located in a separate city to the company listed on the US regulator’s database.

Brokers are returning to America

Regardless of the legitimacy questions surrounding Nanshan Jinchuang Co, the application of the firm is part of a larger trend – America is starting to look more attractive to retail brokers.

More than a decade ago, the US forex market was saturated with 40 different retail brokers. Now, that number is down to five – IG US, Ameritrade, GAIN Capital, Oanda, and Interactive Brokers.

Brokers originally fled the country following the implementation of the Dodd-Frank Act in 2010, along with a host of other regulations.

The main difficulty the Act brought was a significant increase in the capital required for brokers. Any retail forex broker operating in the US must have a minimum of $20 million on its balance sheet at any given time. On top of that, firms must maintain five percent of customer liabilities that exceed $10 million.

Over the past decade, the US has seemed like an unattractive destination because of this. However, with the European Securities and Markets Authority (ESMA) implementing its product intervention measures which banned binary options and limited leverage for retail clients, America is no longer looking like such a hostile industry.

Since ESMA’s rules were implemented, IG Group launched its new US subsidiary IG US at the beginning of this year. The London-headquartered broker was the first new entrant into the market since 2009. In fact, the Dodd-Frank Act gradually forced IG itself and many other firms out of the market.

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