FX Spot Equivalent Futures contracts (SEFs)

Traders prefer using OTC Spot FX to exploit movement in the currency market. Although generally is not regulated in some extent, OTC spot FX provides a much more flexible trading condition compared to exchange traded currency futures (CME). This includes the minimum initial capital required to open an account, and the availability of a very flexible position sizing (you can trade 1 unit at oanda or micro lots at several FX brokers), and also the automatic rollover practice (i was told that exchange traded currency futures contracts need to be closed and automatically re-opened at the end of every trading day, resulting difficulties to track P/L of a certain mid-term positions).

But as we can see, the global currency market is still in its very early development stage. Regulation and market structure are still looking for its best form. One recent development is the introduction of the FX Spot Equivalent Futures contracts (SEFs), introduced by the U.S. Futures Exchange (www.usfe.com) in Chicago.

SEFs replicate spot foreign exchange markets in a U.S. regulated exchange environment. Trading is the same as on over-the-counter platforms, but with the customer protections and transparency of a regulated and cleared U.S. futures exchange.

Brokers available for trading this SEFs are: Lind-Waldock, MF Global Futures (Chicago), Daniels Trading, Infinity Futures, and MF Global Direct (UK).

More pointers:

• Immediately access continuous markets with competitive bid/ask spreads provided by USFE’s dedicated market makers
• Enjoy the opportunity to place orders and get filled inside the quoted market
• Have your positions automatically rolled forward at the end of each day at no cost
• Receive or pay a fair positive or negative end-of-day carry, with no bid/ask spread applied
• Trade with all the safety, security, and protections that a fully U.S. regulated and cleared futures exchange provides

More info:
U.S. Futures Exchange
141 W. Jackson Blvd., Suite 1460
Chicago, IL 60604
T +1 312-356-3900
F +1 312-356-3901

FXLQ Update: Retail Clients Have Priority

A buddy in the Forexfactory Forum posted today an update in a thread regarding the FXLQ crisis.

I spoke to a lady at the receiver law firm. They are awaiting FXLQ and other associated parties for responses, by February 15th.

Then, they will await until March 31st until they make any formal recommendations to the judge… as FXLQ may file for appeal or settle something with CFTC by then. FXLQ has $26million in cash, and $30million in liability. They need to get $6 million to be back in business… a seemingly trivial sum of cash in this business and to meet excess fund requirements.

If in fact there is dissolution, they will recommend that retail clients have priority.

Funds will be returned within two months of March 31st….

This has been a nice indication that trading with a regulated broker, even if it’s an OTC kind of market, still is a wise choice. In an event like this, clients have a proper protection. But we’ll need to wait for another 3 months to get this premise be proven completely.

(*)