A couple of months ago I posted a warning to traders to be wary of FCMs offering non-dealing desk brokerage services to mini and micro-mini account holders. It appears my suspicions have been further validated by an insider who talks about the inner workings of InterbankFx, a brokerage firm that claims to be running a non-dealing desk. If you are trading currencies - especially trading mini’s or micro-mini’s - you will be interested in the following excerpts taken from a post that appeared recently on a broker review site that was forwarded to me just yesterday. The identity of the site is withheld here only because it serves a singular commercial purpose. If you would like to read the specific citaton, drop me an email and I'll gladly provide it.
June 1, 2006
About a year ago I went to work for Interbankfx. I worked there for about four months and then went back to trading again. I got to see them from the inside.
Todd Crosland, Ken Trionfo and Mark Osterlo (spelling), have been holding the truth back about the Interbankfx direct pass-through dealing system [non-dealing desk] until recently. What really happens when we click on buy or sell, is that the trade is instantly routed to an outside dealing desk. (Forex Liquidity, NFA id 0362216, Robert Gray Pres.)
All of the customer service reps know about the dealing desk now, but aren't allowed to say anything.
Anyway, Interbankfx is an in-house market maker, the market is just in Southern California. I want to let traders know that it's not [a] pass-through [non-dealing desk] at all.
Anonymous
Now you might be thinking as I did when I first read the post that this is just some flame written by one of InterbankFx’s adversaries but the validity of the writer’s claims can be easily validated. Email InterbankFx at info@interbankfx.com. Forward a link to this posting or the original and ask them to comment.
The questions everyone should be asking are pretty obvious.
1. If InterbankFx isn’t running a dealing desk internally, but forwards all of its trades to the dealing desk of a single cooperating dealing desk broker, doesn’t this pretty much negate the value of anonymous, pass through trading?
2. If all mini and micro-mini accounts are being passed through to Forex Liquidity , how does this arrangement differ from having a direct relationship with Forex Liquidity or any dealing desk broker for that matter?
3. If InterbankFx’s offer of non-dealing desk brokerage is legitimate, why aren’t account reps allowed to talk about the fact that all trades are being processed through the company’s California connection?
4. If Interbankfx is running a non-dealing desk, why are mini and micro-mini account holders only looking at a single bid/ask price per currency pair?
5. Who’s in control of the rates being displayed? Interbankfx, Forex Liquidity, or some undisclosed third party?
If you are trading through Interbankfx and get an answer to one or more of the aforementioned questions, please let me know. If they clarify these issues, I’ll be more than happy to amend and/or modify this posting.
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