CHICAGO, January 15, 2010

RE:      CFTC Seeks Public Comment on Proposed Regulations Regarding Retail FOREX Transactions

PFGBEST supports the CFTC's proposed rules regarding Retail Forex Transactions but hopes that leverage will remain the same to avoid unintended negative consequences of job losses to foreign competitors.

PFGBEST is pleased to offer strong support of the CFTC as it has provided clear guidance and a comprehensive scheme of regulatory requirements to govern retail foreign exchange trading in the United States.

Once again the CFTC has provided clear regulatory guidance that in the past has made it the premier regulator of the derivatives industry. 

In particular, the CFTC has fixed the regulatory capital requirement to $20 million plus 5% of liabilities that exceed $10 million, reinforcing its serious intent to protect customer interests.

PFGBEST will provide comments to the proposed rules to assist in making forex regulations similar to other derivative rules that have provided market integrity and customer protection in the futures industry.

One key component of the proposed rules that PFGBEST will comment about concerns a likely unintended negative consequence.  A leverage structure change in retail forex margining from 100 to 1 to 10 to 1 will force a great majority of forex business to be done offshore and thousands of U.S. jobs would be lost in the derivatives industry to European and other foreign competitors.  Worse, U.S. forex customers would not be protected by the CFTC.  PFGBEST feels that U.S. forex customers deserve the best protection available. It was clearly not the intent of the Congress to destroy the U.S. retail forex industry when the CFTC was given the authority to create rules for retail foreign exchange.  Congress made it clear that the industry was to be policed, not abolished.  The 100 to 1 leverage structure was changed from 400 to 1 earlier this year when the NFA submitted rules which the CFTC approved.  This governance created clear guidance and market protection while keeping the United States competitive with the offshore competitors even though it was a higher requirement.

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the publication in the Federal Register of proposed regulations concerning off-exchange retail foreign currency transactions. The proposed rules follow the passage of the Food, Conservation, and Energy Act of 2008, Pub. L. No. 110-246, 122 Stat. 1651, 2189-2204 (2008), also known as the “Farm Bill,” which amended the Commodity Exchange Act in several significant ways. In particular, the Farm Bill:

• clarified the scope of the CFTC’s anti-fraud authority with respect to retail off-exchange foreign currency transactions;

• provided the CFTC with the authority to register entities wishing to serve as counterparties to retail forex transactions as well as those who solicit orders, exercise discretionary trading authority and operate pools with respect to retail off-exchange foreign currency transactions; and

• mandated minimum capital requirements for entities serving as counterparties to such transactions.

“These proposed rules for retail foreign exchange trading are important steps in implementing the additional consumer protections authorized in the 2008 Farm Bill,” CFTC Chairman Gary Gensler said. “The Commission looks forward to receiving and considering the public’s comments on this important issue.”

Pursuant to this authority, the Commission is proposing a comprehensive scheme that would put in place requirements for, among other things, registration, disclosure, recordkeeping, financial reporting, minimum capital, and other operational standards. Specifically, the proposed regulations would require the registration of counterparties offering retail foreign currency contracts as either futures commission merchants (FCMs) or retail foreign exchange dealers (RFEDs), a new category of registrant created by the Farm Bill. Persons who solicit orders, exercise discretionary trading authority and operate pools with respect to retail forex would also be required to register, either as introducing brokers, commodity trading advisors, commodity pool operators, or as associated persons of such entities. As was the case prior to the passage of the Farm Bill, “otherwise regulated” entities such as financial institutions and SEC-registered brokers or dealers remain able to serve as counterparties in such transactions under the oversight of their primary regulators.

The proposed regulations also include financial requirements designed to ensure the financial integrity of firms engaging in retail forex transactions and robust customer protections. For example, FCMs and RFEDs would be required to maintain net capital of $20 million plus 5% of the amount, if any, by which liabilities to retail forex customers exceed $10 million. Leverage in retail forex customer accounts would be subject to a 10-to-1 limitation. All retail forex counterparties and intermediaries would be required to distribute forex-specific risk disclosure statements to customers, and comply with comprehensive recordkeeping and reporting requirements.

Comments regarding the proposed regulations may be submitted by any of the means listed in the Federal Register release and should be received by the Commission within 60 days of the date of publication.

Thank you to all who participated in the End of the Year Trading Contest. Participants guessed the close of December 31, 2009 for the following futures contracts  March 2010 E-mini S&P 500, March 2010 30yr Bond and the March 2010 Dollar Index. Participants who sent in their guesstimates no later than Friday December 18, 2009 were eligible to win a 1 troy ounce Silver Coin from futures and forex broker Peter Slaga of PFGBEST in Camarillo, CA.

Anyone interested in receiving a 2010 commodity guide and trading calendar can contact Peter Slaga at 800-656-0443 or email him at pslaga@pfgbestdirect.net

Without further ado here are the winners in each category.

E-mini S&P 500 Futures ContractWinner is  Victor A. with a guesstimate of 1110.35 and the close of 1110.75

30yr Bond Futures ContractWinner is Jim P. with a guesstimate of 115’12 and the close of 116’10

Dollar Index Futures ContractWinner is Lorne T. with a guesstimate of 78.25 and the close of 78.22 

AboutPFGBEST is a U.S based FCM that offers Futures, Forex and Precious Metals services to clients worldwide. Futures Traders can utilize a variety of futures trading platforms from BestDirect, NinjaTrader, BestDirectNavigator and TradeStation to execute trades. Forex Traders prefer our own proprietary MT4 ECN that gives forex traders anonymity for the banks providing liquidity. PFGBEST also offer physical metals services from traditional bullion sales to the new GSAP program which allows for partial size ownership and allows for small monthly investments.  Please contact Peter Slaga if you have questions.

Hamzei Analytics, LLC is in its twelfth year of serving institutional traders, fund managers, and professional traders.   Since February 2001, our data has been available to individual traders and investors, providing everyone real-time access to these powerful trading tools.

PFGBEST® Customer Notice

New Year's Day Trading Schedule
* All times listed in Central Time

Thursday, December 31

CME Group (Floor)
12:00 pm Close: Foreign Exchange and Interest Rate products
* All other products regular close

NYMEX (Floor)
Regular Close

GLOBEX
Closed: KOSPI 200 Futures
12:00 pm Close: NYMEX Brent TAS
* All other products regular close

ICE
12:00 pm Close: Open Outcry Financial products
3:15 pm Close: Index products
4:00 pm Close: Financial products
Regular Close: Soft and open outcry Index products

EUREX
Closed

OneChicago
Regular Close

NYSE
Regular Close

Forex
4:00 pm Regular Close

Friday, January 1, 2010

CME Group (Floor)
Closed

NYMEX (Floor)
Closed

GLOBEX
Closed

ICE
Closed

EUREX
Closed

OneChicago
Closed

NYSE
Closed

Forex
Closed

*All times listed in Central Time

The above calendar is compiled from sources believed to be reliable. PFGBEST assumes no responsibility for any errors or omissions. It is meant as an alert to events that may affect trading strategies and is not necessarily complete. The closing times for certain contracts may have been rescheduled.

NFA bars James C. Morton, former principal of GlobeFX Club Inc., from acting as principal for a period of five years

November 25, Chicago - National Futures Association (NFA) has barred James C. Morton from acting as a principal of an NFA Member for a period of five years and also ordered him to pay a fine of $10,000 in the event that he reapplies for NFA membership or associate membership. Morton was a principal of GlobeFX Club Inc. (GlobeFX), a former Commodity Pool Operator located in Homestead, Florida, which NFA permanently barred from NFA membership in September 2009 for providing false and misleading information to NFA and failing to cooperate in NFA's investigation of the firm's operations. See previous press release.
The Decision as to Morton, which was issued by an NFA Hearing Panel, accepted a settlement offer submitted by Morton and was based on an NFA Complaint filed in June 2009, which charged Morton with failure to supervise GlobeFX's business operations and forex activities. The complete text of the Complaint and Decision can be found on NFA's website.
NFA is the premier independent provider of innovative and efficient regulatory programs that safeguard the integrity of the futures markets.

PFGBEST introduces 5th decimal pricing over its BESTDirect MT4 ECN Forex Platform

As part of our continuing commitment to providing client driven solutions we are introducing 5th decimal pricing on all of our currency pairs. The 5th decimal prices will be available in our demo environment on Sunday afternoon at 6pm EST on October 4, 2009 and will be available in the live environment on Sunday afternoon at 6pm EST on October 11, 2009.Expert Advisors users on our BESTDirect MetaTrader4 ECN must consider the impact this change will have on their trading strategy.  Clients of PFGBEST will have the opportunity to test their strategies in the new environment beginning this Sunday.

Why use 5th decimal pricing?
Adding the 5th decimal point can reduce the spread for clients executing on our BESTDirect MT4 ECN.  The upgrade will continue to allow PFGBEST and its client’s goals to remain in line by passing through the best bid and the best offer from our 9+ liquidity providers.

How will this affect Expert Advisors (EAs)?
Most EAs will be affected by the introduction of the 5th decimal. Please make sure that you have adjusted all pip value related parameters, such as take profits or stop losses, to allow for the additional decimal point. For instance, if you are currently using a stop loss level of 10 on a four decimal pair, you would have to change the value to 100 on a pair with a 5th decimal. Please be aware that some EAs will need fundamental changes to the code to ensure that they will work as you expect. We would suggest testing your EA’s on our demo accounts before using them on your live account to ensure they are working properly. If you need help coding please contact Ricardo Menjivar at rmenjivar@pfgbestdirect.net to be put in contact with on of our programmers familiar with our MT4 ECN Platform.

How does this affect your trading?
All take profit, stop loss values that are expressed in points should be multiplied by 10. For example, if you would like to enter a Stop Loss of 10 pips, you would enter the value 100 into the Stop Loss field.

How does this affect the profit / loss values in the Terminal?
All profit & loss values already incorporate the 5th decimal adjustment.  No changes will be seen in this area.

Does this effect Trailing Stops?
Yes. When you are setting a trailing stop value you will need to multiply it by 10 as you do for a normal S/L and T/P mentioned above.   For example a trailing stop of 10 pips would be set as 100 on your Terminal window.

Feel free to find more information at www.pfgbestdirect.net  or contact us at 1.800-656-0443

About our BestDirect MT4 ECN Platform

The technologies of the BESTDirect MetaTrader4 (MT4) trading platform aggregate prices from a number of liquidity providers and stream this to PFGBEST.com clients. MT4 is highly configurable to work for a whole host of FX trading models. Deep liquidity and real-time pricing are key to the hundreds of brokers that leverage BESTDirect MT4 trading systems. The single point of access to the multi-source liquidity, along with the aggregated pricing configurations, offer what MT4 creators call ‘the purest form of forex trading.’ MT4 gives you the flexibility to configure your own trading system with your preferred execution model and risk management tools along with a customized desktop for the most efficient and comprehensive user experience.

Don’t miss out on these features that make BESTDirect MT4 ECN Platform one of the most in-demand trading platforms on the market today!

• Anonymous order execution
• Highly competitive dealing spreads
• Straight Through Processing environment
• Mini lots available on 28 currency pairs
• Manage long and short positions individually throughout the day
• Trailing stops
• Overlay pre-defined technical indicators…..or customize your own studies
• Open, monitor and update an unlimited number of charts
• Customizable trading layouts
• Set audible rate and indicator alerts
• Multi-lingual trading interface – 17 languages available
• Unlimited advanced technical analysis
• Automated strategy trading
• Real-time streaming quotes
• Risk management tools
• PFGBEST® Forex Division 24-hour execution desk

NFA announces effective date for adoption of an alternative net capital requirement for Forex Dealer Members

As of November 30, 2009, NFA will eliminate the existing exemption from the security deposit requirements for Forex Dealer Members (FDMs) and institute a new alternative net capital requirement.

Currently, FDMs that maintain 150% of their required net capital requirement are exempt from collecting a security deposit from their customers. However, beginning November 30, that exemption will no longer exist, and all FDMs will be required to collect a customer security deposit of at least 1% for the major currencies (British pound, Swiss franc, Canadian dollar, Japanese yen, Euro, Australian dollar, New Zealand dollar, Swedish krona, Norwegian krone and Danish krone) and at least 4% for all other currencies.

The new alternative net capital requirement will be $20 million plus 5% of the amount of customer liabilities over $10 million. FDMs that exclusively use straight-through-processing for their customer transactions will be exempt from this alternative requirement and need only maintain the $20 million minimum (unless the firm is subject to a higher requirement under NFA Financial Requirements Section 1).

Questions concerning the new requirements should be directed to Valerie Kretschmer (vkretschmer@nfa.futures.org or 312-781-1290) or to Sharon Pendleton (spendleton@nfa.futures.org or 312-781-1401).

CME Group's E-micro Forex products allow individual traders to dip their feet into the $3.2 trillion in daily turnover foreign exchange market.

Sometimes it is a good thing to take a step down. CME Group hit it big in 1997 with its E-mini S&P 500 futures, opening the door to active individual traders around the globe and ushering in a host of new successful E-mini contracts at the exchange. In March 2009, CME Group again tapped into this market with the launch of E-micro Forex contracts, smaller-size foreign exchange (FX) futures that are drawing solid interest from individual traders.

"The FX market in general is gaining in popularity because customers are looking for alternatives to traditional stock trading," says Rick Leesley, vice president of the private client division for MF Global. "They tell us the currency markets are easy to understand and easy to trade."

E-micro Forex contracts have the potential to be a huge success, Leesley says, because they are quoted in the same terms as cash FX, which makes them simple for individual investors to comprehend. And trades are executed on the industry-leading CME Globex electronic trading platform. In the first six months since the launch of E-micro Forex, average daily volume has ranged between 6,000 to 10,000 contracts and open interest has been strong (See chart, right). Leesley says the biggest reason many MF Global customers switch from the cash market to exchange-traded is the security provided by the regulatory environment.

"The customer's funds are segregated from the brokerage firm's and they feel comfortable knowing the execution is done on a FIFO (first in, first out) basis, in a competitive market at the exchange," Leesley says. "Once they try the FX futures market, we find the customers quickly understand the benefits of exchange trading over the cash-trade FX market."

CME Group came up with the idea for E-micros after attending numerous trade shows and talking to active individual traders who liked FX futures, but found CME Group's standard-sized contracts too large for them. The result was that the exchange developed this suite of smaller contracts, which are roughly one-tenth the size of CME Group's standard contract.

E-micro Forex contracts cover the most actively traded currencies and include:

• E-micro AUD/USD
• E-micro EUR/USD
• E-micro GBP/USD
• E-micro USD/CAD
• E-micro USD/CHF
• E-micro USD/JPY

The new contracts complement CME Group's slate of 49 futures and 32 options contracts based on 20 currencies, says David Schulz, director of FX products, CME Group. E-micros' smaller size allows for better managed and affordable access to the market. The products also can be used to hedge a position in the over-the-counter market or may be combined with full-size products to make for a more specific-size position.

"Active individual traders can buy or sell an E-micro Forex contract and hold a position similar to a stock in their portfolio if they are taking a longer view on a particular currency, with one-tenth the exposure of CME Group's larger standard FX contracts," Schulz says.

Also worth noting is whether you are a "one-contract" trader or a large institutional trader, you "have equal access to trade on the same prices, as trade is done on a FIFO (first in, first out) basis," Schulz says. Market participants also can improve the bid or offer on CME Globex, whereas some platforms offer only a bid or offer, which forces traders to trade only on the price they display, he says.

 You can practice trading these contracts by signing up for a live futures demo account at http://pfgbestdirect.net/futures-trading.html

Effective Date of Amendments to NFA Financial Requirements Sections 11 and 12 and the Interpretive Notice Regarding Forex Transactions

NFA has received notice that the Commodity Futures Trading Commission has approved changes to NFA Financial Requirements Sections 11 and 12 and related changes to the Interpretive Notice titled "Forex Transactions." The amendments adopt an alternative net capital requirement for Forex Dealer Members (FDMs) and eliminate the existing exemption from the security deposit requirement. These changes will become effective on November 30, 2009.

The amendments to Section 11 revise the existing alternative net capital requirement that is based on an FDM's liabilities to customers.¹ As of November 30, 2009, the alternative requirement is $20 million plus 5% of the amount of customer liabilities over $10 million. FDMs that exclusively use straight-through-processing for their customer transactions are exempt from this alternative requirement and need only maintain the $20 million minimum (unless the firm is subject to a higher requirement under FR Section 1).

The amendments to Section 12 eliminate the existing security deposit exemption for FDMs that maintain 150% of their required net capital. This means that, beginning on November 30, 2009, all FDMs must collect a customer security deposit of at least 1% for the currencies listed in Section 12 and at least 4% for all other currencies.²

NFA's submission letters to the Commodity Futures Trading Commission include of the revised language and more detailed descriptions of the changes. You can access electronic copies of the February 23, 2009 submission letters at http://www.nfa.futures.org/news/PDF/CFTC/FRSec11_IntNotc021909.pdf (for the changes to Section 11) and http://www.nfa.futures.org/news/PDF/CFTC/FRSec12_IntNotc021909.pdf (for the changes to Section 12).

Questions concerning these requirements should be directed to Valerie Kretschmer, Manager, Compliance (vkretschmer@nfa.futures.org or 312-781-1290) or to Sharon Pendleton, Director, Compliance, (spendleton@nfa.futures.org or 312-781-1401).

Federal Court Freezes the Assets of Florida Resident Beau Diamond and Diamond Ventures LLC, Charged by the CFTC with Operating a $37 Million Dollar Forex Fraud

Defendants charged with defrauding at least 200 investors in Ponzi scheme

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained an emergency federal court order freezing the assets of defendants Beau Diamond and his company, Diamond Ventures LLC, both of Sarasota, Fla. The court’s order also prohibits the destruction of documents and grants the CFTC immediate access to defendants’ documents.

The order, entered on September 3, 2009, in the U.S. District Court for the Middle District of Florida, arises from a CFTC enforcement action filed that day charging Diamond and Diamond Ventures with operating a $37 million foreign currency (forex) Ponzi scheme that defrauded at least 200 investors.

Specifically, the complaint alleges that, from at least April, 2006, to the present, the defendants falsely guaranteed investors the return of their principal plus monthly returns ranging from 2.75 percent to 5 percent purportedly paid from defendants’ successful forex trading. In reality, the defendants lost $13.3 million trading investors’ funds, according to the CFTC. To conceal and perpetuate their alleged fraud, the defendants provided investors with false account statements showing that their accounts were increasing as promised although the accounts actually were losing money. The CFTC also alleges that the defendants misappropriated at least $850,000 of customer funds and used the money for luxury purchases and gambling.

In the continuing litigation, the CFTC is seeking repayment of investor losses, repayment of funds received by the defendants, civil monetary penalties and permanent injunctions prohibiting the defendants from violating federal commodity laws and from engaging in further trading.

The CFTC appreciates the assistance of the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Middle District of Florida, which filed a criminal complaint against Diamond.

The following CFTC Division of Enforcement staff members are responsible for this case: Diane M. Romaniuk, Ava M. Gould, Mary Elizabeth Spear, Scott R. Williamson, Rosemary Hollinger and Richard B. Wagner.