FXDD fined by the CFTC for the second time in two weeks – the real story
FXDD fined by the CFTC for the second time explained by professional Forex trading experts the “FXDD fined by the CFTC for the second time” FX trading team.
FXDD fined by the CFTC for the second time
Before we begin, an FXDD spokesperson had the following to say:
With regard to the recent CFTC settlement on the issue of undercapitalization, FXDD continuously maintained sufficient capital on a combined basis with its subsidiary, however, for accounting reasons, the two net capital computations needed to be separated in order to meet adjusted net capital rules. As the CFTC notice states: “The Order notes that in settling this matter, the CFTC took into account FXDD’s cooperation and the corrective action it undertook after its deficiencies were discovered.”
So what really happened?
First, the small fine.
Yesterday, the CFTC imposed a not-so-large $275,000 penalty relating to FXDD being (supposedly) undercapitalized at least 18 separate months between November 2010 and December 2012. However, checking the CFTC’s own records for that time period FXDD appears (and likely was) properly capitalized, well above the $20 million minimum capital line.
With one exception, November 2012.
For those who follow LeapRate, you’ll recall that we blew the lid off that one, revealing that the CFTC and the NFA had decided to change the rules as to how subsidiary capital could be counted towards ‘real’ regulatory capital literally overnight — and on the last day of the month (and a Friday) no less. This forced FXDD to be unable to rectify the situation in time before month-end and move money from one subsidiary to another, which is all that was needed to rectify the situation. FXDD did so as soon as they could first thing on Monday morning, but by then it was already December, and they were technically offside for November’s CFTC report.
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