If NFA can't protect the US clients of PFGBest, neither if they can't return their money back, then what is this regulator doing? They have the security deposit of PFGBest, at lest they can refund some people.
Actually I have no trust on any US brokers. In fact US brokers are losing popularity around the world, even in US for which CFTC made strange rule that only US brokers are allowed to do business in USA.
Its not a big deal to understand why US based brokers are failing. Simple reason, they failed to bring anything innovative and due to their high operation cost they are forced to charge comparatively high commission/wide spread. For a same employee, an US based broker need to spend around 4-5K USD per month at least while other brokers can get an employee who can do the same job with much cheaper price. This is making a huge problem for US based brokers. If they need 100 employees, their monthly spending after employees will be at least 0.5 million dollar. Its really difficult to earn that much profit from client's commission.
So, they choose the easy way to gambling with clients trade and therefore you can see the final result.
NFA, which should work for traders and not for brokers is actually working for brokers interest. Otherwise, a broker has no reason to get bankrupted. If a broker is STP/ECN, its impossible that the broker can go bankrupted unless there is any kind of cheating.
Reputation still matters. I suggest to avoid US brokers, US regulation sucks.
also, nfa has some of the most ridiculous policies. all they really care about is protecting their own centralized exchanges. this is why many brokers had to reduce their metals leverage so their centralized exchanges (CME...ahem ahem and a few others) can compete. seriously, just because they found that they have a weakness, they don't seek to improve, but instead drag all the other brokers down to their level.
PFGBest is probably one of the most well known brokers for commodities before the twentieth century. however, due to poor accounting procedures and other activities, the company has to shut down. you can view more from reuters.
my question is that this incident just so happened with pfgbest, but can really happen to any broker. PFGBest was regulated by the NFA, but that didn't make it any safer to trade with. don't you suspect that other brokers could also be on the verge of bankruptcy?
no matter how large a broker is, they can still shut down. regulation isn't any much safer. one regulatory body can't do anything so we should rethink about choosing regulated brokers and broker size and reputation.
Managing a company is not easy and especially in the forex trading industry where big money can move very fast and change hands.
To properly run a good forex company you need to have a good risk management team and also good IT department.
Traders don't know the future that is why traders need market scenarios.
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