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NFA Vs. FXDD, GFT And "Negative Excess Capital" – The Real Story

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A no-warnings, overnight interpretation decision by the NFA led to some scrambling by otherwise well-capitalized FX brokers.

FXDD logoAs several other blogs noted over the past two days, the CFTC's monthly data for November on the capitalization of regulated U.S. retail FX dealers showed negative "Excess Net Capital" for two FX brokers, FXDD (minus $3.7 million) and GFT (minus $15.5 million). It was erroneously noted in those blogs that the deficit at FXDD was due either to $3.3 million which FXDD had to deposit in escrow as it fights certain NFA claims (it wasn't connected, that event didn't occur until the first week of December), or a rule interpretation change governing pooling of funds from foreign subsidiaries (again, off the mark).

So what really happened? For more details see LeapRate's Forex Industry News at leaprate.com.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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