I’ve received a number of emails from traders wanting to know where they can go to take advantage of a non-dealing desk and realized that I have been remiss in mentioning that I have yet to confirm that any broker is offering mini traders access to the market through a non-dealing desk at least at this time. To trade through a non-dealing desk one has to trade standard lots and that currently can’t be done with a deposit of less than $2,000. Broker Won't Confirm
I had an extended conversation a couple of weeks ago with Charles Ricci, a representative of the Commodity Futures Trading Commission, about a particular Forex brokerage firm who is advertising the fact that it’s offering mini traders (not super mini traders) access to the Forex through a non-dealing desk. Seeing this as an encouraging development, I called the firm to find out who they were clearing the mini’s through. When the broker refused to provide that information, I decided to bring my concern about the legitimacy of the offer to Ricci’s attention.
Before I go any further, it’s important to understand that no bank to my knowledge, has done more than express an interest in processing mini’s and for good reason - mini’s don’t generate a enough profit to justify the administrative expense. Knowing this, I asked Ricci if it would be possible to have someone from the Commission call the broker to confirm the existence of the firm’s clearing bank so the capability could be confirmed. I didn’t need to know who the bank was, but felt (like so many naive idealists) that it would be reasonable to expect that the company (if legit) wouldn't have any problem revealing that information to the CFTC.
Ricci informed me that my concern would be forwarded to the Enforcement Division, but an answer would not be forthcoming, at least on a personal basis. In closing he encouraged me to formalize the concern using CFTC’s online complaint form.
Trying to come up with a legitimate reason the firm didn’t want to reveal its clearing house, it occurred to me that a new game may be afoot. We may be seeing a whole new generation of flim-flam - brokers who attract traders with the promise of non-dealing desk trading only to forward those trades through a third party (their bank’s) dealing desk which, of course, would render the non-dealing desk offering meaningless. If they’re ever called on the carpet they can always declare quite honestly that their clients' trades not being processing through their dealing desk, knowing full well that the trades end up on one.
Make no mistake, non-dealing desk brokerage does exist but you can’t take advantage of it unless you’re trading in standard lots. If you are a mini trader (super mini trader) and find a broker offering access to the market through a non-dealing (non-trading) desk, ask who their trades are being cleared through. If he refuses to answer the question, raise the red flag and register your concerns with the CFTC. Legitimate or illegitimate, the firm will not be in a position to deny the CFTC access to that information.
As to providing the names of non-dealing desk brokers, I won’t be giving any. If I did, I could be justly accused of showing favoritism, worse yet, of having a hidden agenda. I don’t, so I won’t.
Short of Funds?
So what are you to do if you want to trade but don't have enough money to open an account to trade standard lots through a non-dealing desk? First, I'd recommend you consider waiting until you do have enough money to trade standard lots without putting everything you have into one or two trades. That being said, if you can't control yourself, make sure you're getting an education and not being indoctrinated. If you fail to do either of these things, you're better off not trading because you're going to make rookie mistakes and your trades are likely to be taken out.
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