The metaphorical tumbleweed that has drifted across the offices of the National Futures Association (NFA)’s FX membership applications department was briefly disturbed last week by Mirus Futures application for membership.
In the post Dodd-Frank Act absence of interest by retail FX companies to establish operations in North America and the associated exodus of some of the largest FX companies from the United States in their droves, the NFA has been less than overwhelmed with the task of processing applications for new members.
Indeed, with an ever decreasing number of FX companies currently supervised by the NFA, last week’s intriguing move to apply for membership by Mirus Futures following its acquisition by Ninja Trader was received, processed and approved by the NFA within a matter of just five days.
Ninja Trader’s acquisition of Mirus Futures has enabled the firm to offer full brokerage facilities, with Non-executive directors Raymond Deux, Dierk Detlef Droth and John Michael Gromala, Martin G. Franchi in the capacity of Chief Financial Officer, Patrick Jon Shaughnessy who holds the position of Chief Operating Officer and Eliot James Wickersheimer, the company’s Chief Compliance Officer making up the team of key personnel who will be responsible for upholding the conduct of the company in accordance with NFA rules.
One such factor is that the company will be required to lodge $45,000 with the NFA as part of the rulings on capital adequacy requirement for introducing brokers. This capital cannot be used as operating funds, instead being retained by the regulatory authority in order to remunerate clients in case of commercial failure. This, when considering the potential revenues that could be gained by attracting a US client base, was one of the main factors which made the jurisdiction unattractive to so many retail FX businesses.
Mirus Futures confirmed to LeapRate today that it has added FX as an introducing broker (IB) not as an FDM. There is indeed a very large difference in capitalization requirement between the two. Mirus is not a Forex Dealer Member (FDM) which would require $20m but rather a Forex IB that requires only $45,000.
As many other companies turn their back on the United States due to its stringent customer protection rules and high cost of satisfying regulatory criteria, Australian financial markets regulator ASIC has been inundated with applications to register as a regulated FX firm.
Indeed, Australia offers close proximity to the Asia Pacific region and its rich pickings, as well as a high quality business environment but with a fraction of the cost of operating in North America, and an exponential potential gain due to the client demographic. For this reason, ASIC has become very wary of accepting applications and is beginning to take a very long time over scrutinizing applications for AFS licenses, as well as post public warnings regarding retail FX firms.
It is certainly clear whilst the American institutional FX sector flourishes, there is still signs of life on the retail side.