Central Bank of Nigeria Lifts Forex Ban on Eight Banks After Negotiations

The Central Bank of Nigeria allowed eight of the suspended banks back into the inter-bank currency market today. The eight bank were suspended last week for failing to remit oil/gas dollar funds - approximately $2.3 billion - to the government's Treasury Single Account (TSA) in a timely manner.

Tokunbo Martins, director of the banking supervision department at the CBN, announced the news following a meeting between CEOs of the sanction banks and officials from both the CBN and the Chartered Institute of Bankers of Nigeria.

The agreement came after a repayment plan was presented by the affected bank to repay all outstanding dollar amounts back to the TSA.

Mrs. Martins explained in her statement:
“We have had engagements with the body of CEOs over a number of banks suspended from participation in foreign exchange market. I’m happy to say the ban has been lifted on the banks.”
Last week, many of the sanctioned banks protested the ban, claiming that dollar shortages in the country created significant obstacles in converting naira denominated revenue deposits.

The CBN sanctions did not go unnoticed in the Nigerian Forex markets. The sanctions caused the Nigerian naira to weaken against the dollar significantly due to decreased liquidity. On August 23 - the day of the ban - the USD/NGN exchange rate spiked to an all-time high of 350, while black market rates went as high as 414 naira per dollar in Lagos.

On Monday, the forex market in Nigeria recorded an all-time high of $327 million in turnover - a staggering figure compared to the average daily volume of $50 million. The naira closed today at 315.25, with many traders expecting the dollar shortage in the country to worsen.

New Zebpay Figures Indicate Awareness of Bitcoin is Growing in India

Is bitcoin usage growing in India? You bet! Zeb IT Services Pvt Ltd, a bitcoin app-based exchange headquartered in Ahmedabad, India, has announced that the company’s app, Zebpay, has been downloaded over 100,000 times from Android and iOS app stores.

The Zebpay app was launched in July of 2015 and the newly released figures are evidence of the swelling interest in digital currencies among Indians.

While most digital currency exchanges require users to be familiar with the mechanics of sending and receiving bitcoin payments - which can be a daunting task for newcomers and non-techies - Zebpay’s mobile wallet ties the user’s bitcoin to their email address, thus removing bitcoin’s very long alphanumeric addresses from the user experience.
“Zebpay removes all friction for a first time bitcoiner. You can buy and sell bitcoins from the app itself. Also, your bitcoins are linked with your mobile number so you don’t have to worry about bitcoin addresses and wallet backups.”

And this particular functionality has contributed a great deal to the success Zebpay is seeing in India. The press release states that 20,000 new users are signing up every month to use the Zebpay mobile bitcoin exchange. Mahin Gupta, co-founder and CTO of Zebpay, is expecting roughly 350,000 downloads by the end of the year, “We are on a mission to spread bitcoins in India. We believe it has a potential to bring technological disruption in financial infrastructure,” he adds.

The mobile app has also been received quite well on iTunes and Google Play, with ratings of 4+ and 4.3 respectively. Just one year after launching, Zebpay revenues for the month of June crossed 250,000,000 Indian rupees ($3,734,670).

Zebpay’s success comes at a time of rapid growth for the Indian telecom industry. Data released by the International Data Corporation revealed that the Indian smartphone market recorded a 17% growth in the second quarter of 2016. And according to the recent global Ericsson Mobility Report, there were 21 million new mobile subscriptions in India during the first quarter of 2016, compared to only 3 million in the United States.

Former HSBC Trader Denies Forex Rigging Charges in Brooklyn Court

Mark Johnson, former head of global of foreign exchange cash trading at HSBC, has entered a not guilty plea in Brooklyn federal court yesterday. Johnson was charged with wire fraud and conspiracy by the U.S. Justice Department for his alleged involvement in a $3.5 billion front-running Forex scheme.

Johnson’s prosecution is part of the ongoing Justice Department probe of foreign exchange rigging at various financial institutions across Europe and the United States.

Last year, six major banks (Citigroup, Barclays, JP Morgan, UBS, RBS, Bank of America) doled out $5.6 billion in Forex-related fines and admitted to criminal charges, with Citigroup paying the largest portion: a $925 million criminal fine and an additional Fed penalty of $342 million.

However, Mark Johnson and Stuart Scott - former head of cash trading at HSBC, who was also charged along with Johnson in the scheme - are the first individuals to face criminal prosecution for currency exchange rate rigging.

According to prosecutors, Johnson and Scott used insider information to profit illegally from a large Forex transaction by a client of HSBC, who was looking to exchange $3.5 billion British pounds.

Having foreknowledge of the large order, the defendants executed their own trades first, which affected the currency market and thus resulted in a worse currency exchange rate for the HSBC client.

While the affected party has not been named in court documents, a confidential source told Reuters that Cairn Energy, one of Europe's leading independent oil and gas firms, was the defrauded HSBC client.

Prosecutors revealed the illegal Forex transaction netted HSBC about $3 million in front running profits, and $5 million from executing the trade at the manipulated price.

Johnson has been free on $1 million bail, while Stuart Scott remains in the UK and has denied the allegations.

Japan’s Chief Cabinet Secretary Yoshihide Suga Hints at FX Intervention

Image credit: wezijn.com

Yoshihide Suga, Japan’s chief cabinet secretary, said today that another FX market intervention may be on the way. The Japanese yen has appreciated significantly against the dollar this year, impacting exporters.

"Through the meetings, the government will closely watch market moves and respond appropriately," said Suga.

In an interview with Reuters, Suga explained that Bank of Japan’s negative interest rates policy, which was adopted in January, is agreeable with the Shinzo Abe administration and that the government will not interfere with monetary policy decisions taken by the Bank of Japan.

Suga laid emphasis on the need to keep political meddling away from the BOJ, saying that the government will not object if the bank decided to cut interest rates further into negative territory, “In any case, it's important not to impair fiscal policy and the BOJ's independence," adds Suga.

The Bank of Japan has abstained from currency interventions to appease U.S. Treasury officials, who have previously said that such interventions result in an “unfair advantage that is very disruptive to the global economic system.”

The secretary’s comments today run directly against the wishes of Washington!

When Suga was questioned about the possibility of directly distributing money to households to stimulate the economy (helicopter money), the secretary responded by questioning the definition of the concept and reiterated the need for Japanese monetary authorities to defeat deflation.

Despite multiple currency interventions and monetary easing programs, including the most recent 2.7 trillion yen ETF purchases expansion, the BOJ has failed to meet its 2 percent inflation target.

Interest in Bitcoin Continues to Rise Across the World, Especially in Venezuela and Russia

It doesn’t look like peer-to-peer bitcoin trading on LocalBitcoins will be slowing down anytime soon. New volume records were posted for last week in countries like Colombia, New Zealand, Russia, Sweden, Ukraine and Venezuela. New records are now a weekly occurrence in Russia and Venezuela.


Colombia’s only bitcoin exchange, Colbitex, was forced to close its doors at the beginning of August due to pressure from Colombian financial regulators. Prior to the Colbitex closure, Superintendencia Financiera de Colombia (SFC), which oversees financial markets in the country, issued a warning on bitcoin, stating that the digital currency is not legal tender and that digital currency businesses are not regulated.

Colbitex was the only startup in the country attempting to build a proper trading venue for the virtual currency, but that effort was stifled and virtual currency enthusiast in Colombia only have LocalBitcoins as an alternative. The Colbitex closure may partially explain the pop in volume on LocalBitcoins for the week ending 2016-08-27, which came in at 209,783,856 Colombian Pesos ($71,704):

New Zealand:

On the 11th of August, 2016, the Reserve Bank of New Zealand cut interest rates by 25 basis points to 2 per cent, citing “political risks” and an uncertain prospects for global growth. RBNZ Governor Graeme Wheeler said that further monetary easing will be necessary and that “A decline in the exchange rate is needed.”

Wheeler’s dovish statements may have played a role in the massive spike in bitcoin trading that took place on LocalBitcoins last week, with turnover coming in at 199,402 NZD ($144,550.50):


There is no other weekly LocalBitcoins volume chart on Coin.dace that looks anything like the Russian weekly chart, which shows an 8th consecutive record of 223,521,442 Russian Roubles worth of bitcoin trades for last week:

Even die-hard skeptics in Russia may take a good, hard look at the digital currencies, following the recent comments made by Alexei Moiseyev - Russia’s deputy minister of finance - on virtual currency regulations to Russian news agency TASS, on Friday:
“The law is most definitely ready, but we won’t be hasting it, and it will most likely change as the discussion goes on. Now I’m going to have a series of meetings with experts and think twice about what to do. I’d say that considering the development of technology, a direct ban won’t be a really right move.”


Bitcoin is continuing to gain popularity in Sweden and even financial institution like SEB Group, which invested $4 million in digital currency payment processor Coinify at the beginning of this month, are getting into digital currencies.

Sweden has been in a negative interest rate regime since February of last year. There are now signs of deteriorating liquidity conditions in Sweden’s bond markets and investors may now be considering digital currencies as an alternative asset class.

LocalBitcoin’s volume in Sweden hit an all-time high last week of 2,846,155 Swedish Krona ($335,686):


The new LocalBitcoins all-time high in Ukraine was nothing like the spikes observed in New Zealand and Colombia, but this reading indicates that bitcoin is gaining ground in impoverished Eastern European countries as well.

For the week ending 2016-08-27, LocalBitcoins turnover in Ukraine came in at 764,973 Hryvnia ($29,951):


Against the backdrop of triple-digit inflation, food riots, 50 per cent minimum wage hikes and Venezuelans running across the Colombian border to buy basic necessities, LocaBitcoins volume in the country hit another all-time high last week of 163,732,154 Bolivars:

That is approximately $16,455,908, according to the official VEF/USD exchange rate of 0.1 - more than double the LocalBitcoins volume in the USA for the same week, which came in at $7,015,712!!

Post-Yellen Sunday Night Market Overview

Image credit: cornell.edu

Chairwoman of the Federal Reserve, Janet Yellen, hinted at the possibility of raising interest rates in her keynote speech at the Jackson Hole symposium last week. The unexpected news sent currencies, oil, gold and equities into a frenzy, with most markets closing in negative territory, except the CAD and JPY.

And it wasn’t just comments made by Chairwoman Yellen that pushed markets so violently. In a CNBC interview on Friday, Fed Vice Chairman Stanley Fischer said the FED should begin "a program of gradual rate increases.”

Fed governor Jerome Powell also echoed Fischer’s comments on Friday in an interview with Bloomberg, saying that serious discussion about raising rates needs to take place at the next meeting in September.

Atlanta Fed President Dennis Lockhart, St. Louis Fed President James Bullard, Dallas Fed President Robert Kaplan and Cleveland Fed President Loretta Mester made similar remarks over the weekend.

The daily charts for most major FX pairs like the EUR/USD closed off last week with massive bearish engulfing candles:

Stocks, crude oil and gold are also showing significant bearish engulfing candles on the daily charts:

This should be a very interesting week for global financial markets. Equities have been grinding away in directionless chop since the middle of July and last week's comments by Chairwoman Yellen may finally catalyze stocks out of their comma. If the massive bearish candles are to be believed: it may be a very painful week for equity markets.

China's Biggest Search Engine Stops All Digital Currency Ads

Image credit: Bloomberg News

China’s most popular search engine, Baidu, has pulled all digital currency advertisements from its service, according to statements from OKCoin and Huobi, the two largest bitcoin exchanges in China.

According to the South China Morning Post, the Baidu ban was confirmed by both exchanges, but Baidu so far has not released an official statement on the controversial decision.

Following the decision by the People’s Bank of China to ban financial institutions from handling bitcoin transactions in 2013, Baidu promptly stopped accepting the digital currency as payment, citing volatility risks to consumers.

However, the SE behemoth allowed advertisements of various alternative digital currencies and services, and the company still has a stake in the SuperCharger Accelerator, which backed Hong Kong-based digital currency exchange Gatecoin in January of this year.

Baidu’s drastic change of heart has left many in the bitcoin community quite stunned. But Baidu’s actions on digital currency ads may not be without merit.

The highly-publicized Bitfinex hack at the beginning of August - which ranks as the second biggest heist in the digital currency space, with close to $70 million in bitcoin evaporating from client accounts - has contributed to the perception of virtual currencies as being unsafe. A perception Baidu’s marketing and public relations departments may have deemed to be a material threat.

Additionally, Baidu’s corporate image took a hit in July, after an investigative report by Beijing News revealed how illegal gambling operators were posing as legitimate corporate agents on Baidu to bypass filters and advertise their sites to the general public.

The gambling scandal also pushed Beijing regulators to issue a list of suggestions to Baidu on filtering potentially problematic advertisers. Baidu's drastic actions on digital currency ads may be a direct response to pressures exerted by the Chinese government.

PayPal Now Competing with Bitcoin in Indian Freelance Industry

Image credit: coincheck.com

PayPal recently launched its new P2P payment service PayPal.Me in a bid to capture market share in the growing freelancer economy in India and across the developing economies.

The interesting bit here is that PayPal’s new payment service is very similar in its functioning to the way Bitcoin and blockchain-based digital currency payments work: a merchant simply gives a link/address to the customer and they send the funds, without revealing any sensitive financial information. However, in the case of digital currency payments, the fees are much less - not to mention the fact that charge-backs are impossible.

It’s not hard to fathom why PayPal is pushing to get into the Indian freelancing industry. Unlike the freelance industry in the United States - which totals about 53 million - the Indian freelance market is comprised of only about 15 million individuals, which represents close to 25% of the entire Indian workforce. But according to Payoneer, these 15 million Indian freelancers account for approximately 40% of the freelance work done in the entire world. In fact, more than 50% of US startups contract Indian freelancers to cut down on costs.

VP of Strategic Partnerships at Truelancer.com, Prakarsh, writes:
“With over 1.5M professionals graduating out of the schools every year; India is undoubtedly the largest producer of skilled professionals in the world and ready to fuel the burst in demand side of this exponentially increasing freelance industry.”
The PayPal.Me service is geared to towards freelancers, offering them an easy method of receiving & sending payment links over Skype chat sessions and email messages, but even this new service has an Achilles heel: currency exchange fees!

PayPal charges a hefty 2-4% premium on currency conversions, and even with the recent 1 percentage point cut, these Forex fees may still be a dealbreaker for many Indian freelancers.

If you want to find out what those PayPal foreign exchange fees can do to you, just ask Harsh Agrawal, an Indian user who lost about $130 over the course of a few days due to reversed PayPal transfers to his bank account.

This is where bitcoin really outshines PayPal. Not only is bitcoin just as easy to send as a PayPal.Me payment link, it’s also irreversible and doesn’t have those pesky foreign exchange fees.

And the digital currency is becoming more popular in India. Benson Samuel, CTO and Co-Founder of one of India’s largest Bitcoin exchanges, Coinsecure, told CNCB Moneycontrol that “there are about 50,000 users in the country, with about 30,000 actively using Bicoins for transactions.” While those figures pale in comparison to the amount of freelancers in India, bitcoin may gain even more traction as the Indian rupee has lost a considerable portion of purchasing power over the last few years:
Chart Source: XE.com

PayPal Cuts Forex Fees for Indian Merchants, Launches P2P Payment Service PayPal.Me

Image credit: Gizbot

PayPal is looking to make its payments services more appealing to Indian freelancers and small businesses by cutting its forex exchange fee by 1 percentage point. Anupam Pahuja, general manager at PayPal India, explained that the new fees will amount to 30-40 per cent savings for Indian merchants.

PayPal recently launched its own P2P payment service called PayPal.Me, which allows cross-border payments between parties without the need to disclose sensitive banking details, "Freelancers or Sellers no longer need to send a manual payment request or detailed bank account number, SWIFT code. They can simply send their PayPal.Me link while chatting with their client and get paid right away," explained Pahuja. The new service supports 26 currencies and works with major debit & credit cards.

PayPal is strategically positioning itself to take advantage of the rising tide of freelancers in India. According to data compiled by Truelancer, a whopping 25% of the entire Indian workforce is freelancing, with freelancers contributing $400 billion to India’s GDP:
Freelancers in India also charge only about $10/hour, as opposed to their US counterparts, which charge on average about $40/hour. The growth prospects for the freelancing industry in India are looking very promising, and PayPal is well aware of this fact.

Anupam Pahuja tells The Times of India:
"India as an opportunity is not lost on PayPal. We are looking at the right way and right time to come to India. It is not a question whether we will come to India or not. It is a question of how, what and when."

JP Morgan Direct Beneficiary in Nigerian Central Bank Forex Debacle

Central Bank of Nigeria, Image credit: TheGuardian

Nine Nigerian financial institutions (United Bank of Africa, First Bank of Nigeria, Diamond Bank, Sterling Bank, Skye Bank, Fidelity Bank, Keystone Bank, First City Monument Bank, Heritage Bank) were suspended on Tuesday from the inter-bank Forex market by the Central Bank of Nigeria (CBN) for failing to remit $2.3 billion to the government’s Treasury Single Account (TSA). The TSA was established last year in a bid to combat corruption and to bring more transparency to government finances.

President Muhammadu Buhari’s administration imposed strict rules on how banks needed to remit funds, one of those rules stipulates that Nigerian banks must send government dues in US dollars.

This policy decision by Buhari’s administration may not seem very problematic at first glance, but the scarcity of dollars in the country has placed many banks in an untenable position.

In June, the CBN decided to allow the Nigerian naira to float on the open market. The move was aimed at stimulating foreign investment, but president Buhari’s continued opposition to the devaluation has scared off foreign investment. Political instability and uncertainty has created very difficult foreign exchange conditions for banks in Nigeria. The naira has taken a sharp nosedive the last few months and outside investment in the country has been minimal.

A representative from Diamond Bank, Mike Omeife, explained that many banks in Nigeria were looking to pay the CBN in naira, given the shortage of dollars in the country, “Because of the crash in the local currency, the banks expected the CBN would have allowed them to pay in naira instead of dollars,” said Omeife, in a phone interview with Bloomberg.

According to a report by This Day Live, Fidelity Bank representatives also confirmed Omeife’s sentiments regarding the inadequate dollar liquidity in the country:
“We got a repayment schedule which we have been meeting. Our original indebtedness was about $500 million and it was only in June we were unable to make a refund based on the schedule due to the dollar scarcity,”
United Bank of Africa managed to pay its $530 million dollar debt to the CBN yesterday and was allowed back into the inter-bank forex markets today. Diamond Bank, which owes about $287 million, is still in discussions with CBN, according to statements by Mike Omeife.

While some of the affected banks have been scrambling to appease the CBN with rapid repayments, some market analysts have begun to question why the CBN is taking such heavy-handed measures against Nigerian banks.

One analyst tells news outlet This Day Live:
“I do not understand the benefit of taking dollars from Nigerian banks and sending them abroad to the CBN’s account with JP Morgan.”
Not only does JP Morgan benefit directly from this whole debacle, the inter-bank FX penalties will deprive Nigerian banks of trading fee revenue, as well as loan origination fees as less capital is available for lending.
“So by asking the banks to refund the dollar deposits to the TSA, the government must understand that the CBN does not domicile dollars and will have to export it to JP Morgan abroad, effectively strengthening those banks and weakening Nigerian banks,” he adds.
The CBN was very quick to impose harsh penalties, yet the central bank completely ignored the present foreign exchange conditions in the country, which greatly contributed to this mess.

Image credit: TheGuardian

Important Price Levels on Major Forex Pairs for Aug 24/2016

EUR/USD: 1.13 and 1.1255

GBP/USD: 1.316 and 1.305

USD/CAD: 1.2858 and 1.281

USD/JPY: 100.92

EUR/JPY: 113.25

GBP/JPY: 132 and 130.40

XAU/USD: 1356 and 1333

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New All-Time Highs in LocalBitcoins Volumes in Russia and the United States

Russians have really started to warm up to Bitcoin this year. Charts from Coin.dance show a new all-time high volume on LocalBitcoins for the week ending 2016-08-20: 215,548,659 Roubles ($3,353,277 at the current USD/RUB exchange rate of 64.28) in digital currency trades.

The rising interest in the digital currency has even spurred some LocalBitcoins traders to open physical trading venues in Russia. For example, BTC24pro.com, an established seller on LocalBitcoins, has opened an office in Moscow that allows locals to convert their digital currency to Russian Roubles. According to a SiliconAngle report, BTC24pro charges a 4% premium during regular hours and a 10% premium during off-hours.

While the outfit is not currently registered with any monetary authorities within the Russian Federation, the owners have expressed their willingness to cooperate with regulators if the need arises.

Despite the rise of reputable & licensed digital currency trading platforms in the United States like Coinbase, Kraken and Gemini, LocalBitcoins trading volumes have continued to surge in America as well. Last week, LocalBitcoins turnover in the US came in at $8,099,706 - an new all-time high!

One might assume that the rise of regulated exchanges will render venues such as LocalBitcoins obsolete, but that doesn’t seem to be the case. Many of the established digital currency exchanges like Poloniex, Bitstamp, Gatecoin and ShapeShift have been hacked at least once already, and the addition of the recent Bitfinex hack to the growing roster of compromised exchanges will likely steer even more users to venues like LocalBitcoins and decentralized P2P platform, Bitsquare.

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The Impending Global Negative Interest Rate Regime Bodes Well for Bitcoin

Image credit: historyofbitcoin.org

The widely-publicized Bitfinex heist, which is the second biggest Bitcoin exchange hack after MtGox in 2013, may have a short term negative impact on the way general public perceives the novel technology. However, the Bitcoin blockchain - the backbone of the digital currency - was never compromised and the network continues to function without a hitch. The same could not be said for the world’s financial system!

Big brokerage houses like Interactive Brokers have already begun implementing negative interest rates on clients holding EUR, CHF and SEK balances. And negative interest rates have also begun to creep into corporate banking as well. Today, Royal Bank of Scotland announced that starting Monday, corporate clients such as fund managers and pension funds will be charged for holding cash in certain foreign currencies, including the euro. According to a Daily Mail report, RBS stated that negative interest rates may also be applied to small business; that is if the Bank of England decides to cut interest rates into negative territory to stimulate the sagging British economy.

Most of Europe and Japan are already in a negative interest rate regime, with the US and UK very likely to follow suit in the coming months. Consumers have so far been spared the direct sting of negative interest rate as banks have tried to absorb some of the cost by increasing fees on some services, but as the RBS has already demonstrated today, this will not be the case for much longer:
“Until now RBS has absorbed these costs and imposed a zero per cent minimum on deposit rates. But it said this was no longer sustainable.”
It is precisely at this point that digital assets and currencies like Bitcoin will begin to gain serious traction with small businesses and consumers. Bitcoin has a fixed supply and can’t be inflated away at the stroke of a pen. The coming global negative interest rate environment bodes very well for the future of Bitcoin and digital assets outside the legacy financial system.

Bitcoin Price Analysis:

Bitcoin took a big hit in the aftermath of the Bitfinex hack, where close to 1% of all Bitcoin in existence were stolen, but the digital currency has stabilized over the past two weeks. The Bitcoin exchange rate has been hovering around $580 for the past two weeks. In fact, the $580 level has been used as support about three times in August, and once as resistance on the 16th.

Bitcoin broke above $580 today and this pivot zone may start to now act as support and prop-up the market. It seems that another rally towards $600 may materialize over the next few days.

In case $580 doesn’t hold as support and price breaks south again, the $565 area may come into play as support due to its prior history.

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FXCM Fights Back Against CFTC Charges, Says Firm a 'victim of the SNB Event'

(Image Credit: Bowe King/The Mill Chicago)

The US Commodity Futures Trading Commission hit New York-based Forex broker Forex Capital Markets (FXCM) with a lawsuit yesterday, but FXCM issued a very strongly-worded statement today that disputes the allegations and rejects outright some of the claims the regulatory agency has made.

Jaclyn Sales, Corporate Communications and Investor Relations for FXCM, states that the CFTC is mistaken when it claimed that FXCM did not inform regulators of the capital shortfall in a timely manner.

According to FXCM, the CFTC and the NFA were immediately notified of the massive capital shortfall that resulted from the SNB decision on January 15, 2015:
“Equally unwarranted is the CFTC's claim that the Company did not timely notify the CFTC of its net capital shortfall. As noted above, the regulators were fully apprised of the capital shortfall and, within hours of the SNB Event, the CFTC and the NFA were on site at FXCM's offices.”
Yesterday, the CFTC also charged that FXCM misled clients by leading them to believe that they were protected from incurring negative balances, but FXCM says that is not the case and that the company went out of its way to make sure traders were fully informed of the risks:
“To the contrary, FXCM repeatedly represented to and warned its customers of the significant risks of trading FX and that such trading is appropriate only for individuals who can assume risk of loss in excess of their investment and margin deposit.”
FXCM went on to explain that all clients were required to sign waivers prior to engaging in any currency trades.

As far as FXCM is concerned, the brokerage was a "victim of the SNB Event" and the CFTC has no grounds to file an undercapitalization violation claim in such unprecedented circumstances.

CFTC Hits Biggest US Retail Forex Broker FXCM With Lawsuit

Forex Capital Markets LLC, the largest retail Forex brokers in the US, was hit with a civil lawsuit today by the CFTC.

The complaint filed by the CFTC alleges that "FXCM had an advertised policy of zeroing out negative customer balances, effectively guaranteeing customers against loss in contravention of CFTC regulations."

CFTC rules forbid Forex brokers to make such claims. FXCM clients took a $200-million hit when the Swiss National Bank decided to abandon its euro peg on January 15, 2015. The New York-based brokerage was forced to seek a rescue loan the following day, which came from Leucadia National Corp.

Forex brokers like Alpari UK were wiped out that day and clients managed to get back about 80% of their funds, with the rest going to legal and bankruptcy administrative fees.

The agency also took issue with the fact that FXCM did not report a critical capital shortfall in the aftermath of the SNB debacle and that regulators found out about the infraction after initiating a formal request:
"The Complaint also alleges that FXCM failed to immediately notify the CFTC when it knew or should have known that its adjusted net capital was less than that required under the applicable CFTC regulation and that it was, therefore, undercapitalized."
According to current regulations, FXCM is required to keep at least $25 million in operating capital, but the firm experienced a much larger shortfall. The regulatory agency is seeking a civil penalties and FXCM has not made any public statements regarding the lawsuit at this time.

Alpari UK clients to get 80 cents on the dollar after 19 months of bankruptcy proceedings

Following 19 months of creditor meetings, progress reports and client notices, clients of bankrupt Forex broker Alpari UK will be receiving between 78-80 cents on the dollar. Alpari UK went into receivership due to massive losses incurred when the Swiss Franc jumped 30% on the 15th of January, 2015, as a result of the Swiss National Bank announcing it was no longer going to support the euro peg.

Netherlands-based financial auditing firm KPMG was appointed to manage the bankruptcy process. While KPMG managed to recover most of the client deposits ($98.2 million) - even deposits in held in various online payment services - only about $77 million will come back to clients of Alpari.

According to the latest KPMG report, the auditing company will pocket close to £10.5 million in legal and administrative fees, down from the original £11.89 million estimate that was given prior to negotiations with the Creditors’ Committee:
“As a result of discussions with the Creditors’ Committee, there is a maximum cap on our fees of GBP 10.5 million directly relating to our work as joint special administrators. This figure does not include legal fees, disbursements or VAT.“
The Alpari UK bankruptcy process took close to 2 years and most clients will get about 80% of their assets, with preferential creditors already being paid in full.

Image credit: seputarforex.com

Important Price Levels on Major Forex Pairs for 09/08/2016


Market now trading between two major pivots: 1.11 & 1.105!


The range between 1.309-1.31 is a huge pivot area. This level is now acting as resistance.


Market now trading between 1.3185 on the top end, and 1.3135 on the lower end. Look for a break of either of these level for future direction.


Mark 101.58 and 102.70 on your charts; these area have been used as support/resistance multiple times.


The 30-minute chart shows that 0.7625 has been respected a number of times over the past four trading days.


The Eur/Jpy is also trading between two important pivot levels: 113 & 113.62!!


Last week, the market plunged under 134; this area is now acting as resistance. You might also wanna keep an eye on the 135.16 area in case 134 is broken this week.


The Nzd/Usd has been moving between major pivot zones since July. Mark 0.707, 0.7145 and 0.7225 on your charts, and look for interesting candle patterns around these pivot level - that's where the good trades happen!


The 1346 area was broken last week, so this pivot may now act as resistance. The 1331 area is now acting as support as well; just as it did at the end of July.

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