Forex Capital Markets (FXCM) agreed to take on all of the open trading positions of CFG Trader, after CFG was forced to liquidate its positions by the US National Futures Association (NFA).
Richmond, Virginia-based CFG Trader failed to meet the NFA’s capital requirements and was forced to liquidate its open foreign exchange positions on March 21.
FXCM says it will contribute around $1 million dollars to make up the difference between the assets of CFG Trader and the funds owed to CFG clients due to under-capitalisation, should the Commodities Futures Trading Commission (CFTC) and NFA approve the transaction.
“Under the proposed agreement between CFG Trader and FXCM, no CFG client will lose money due to the under-capitalisation of CFG Trader. If the NFA and CFTC do not approve the agreement, there is no certainty that CFG clients will receive 100% of their funds,” says FXCM.
Drew Niv, CEO of FXCM, adds: “After the NFA decided to suspend CFG Trader operations, we received several requests to protect their clients against loss. Our strong balance sheet, which greatly exceeds NFA requirements, is enabling FXCM to put on the table an offer which may keep the 3,800 CFG traders from losing money. We hope the NFA and CFTC will enable us to protect these clients from substantial losses.”
Niv noted that the CFG incident highlights the fact that there are still some companies in the forex industry that are inadequately capitalised.