Managed Forex / Aaron Brett

[Alpine Dragon]

Probably a long shot...

I am in the final stages of wrapping up my feasibility investigation / Due diligence into Forex as a possible vehicle to form part of my overall investment portfolio. However there are a few gaps, particulary in the area of Managed Forex.

Has anyone had any Actually dealings whatsoever with managed Forex Accounts? If so can you please provide a summary of your experiences (good or bad)

Furthermore, Has anyone had any ACTUAL dealings with Aaron Brett or organisations in any way? e.g Inform Forex and FxPro? I've searched around on multiple search engines, but haven't been able to find a lot about him or his organisations. I've dug up one thread regarding InformForex seminars on sharetrader and a few a861.com (e gold site) but that's about it.

I've sent him an Email asking a few questions pertaining to his dealings with Managed Forex but as of yet, still haven't received a reply. An ominious sign prehaps?

Thanks.

[Xerof]

The only Company I am aware of that offers a managed FX product that is based here in New Zealand is NZ Currency Concepts http://www.nzcurrencyconcepts.co.nz/

Of course there are any number of sites that allow you to 'do it yourself' but it seems that is not what you are looking for.

I haven't heard of Aaron Brett, or the Companies you mentioned, so can't assist any further. Sounds like they may have "gone to ground" or been closed down (by the Securities Commission?). I have noticed the flurry of advertisements that used to be on talkback radio stations on FX trading have disappeared.

Please be aware that before investing in any 'managed FX fund', you should ask for a prospectus and investment statement, or ask to see evidence that they are an 'authorised futures dealer' gazetted by the Securities Commission (Authorised dealers are not required to issue prospectus/investment statements)

The regulations surrounding margin trading in FX contracts on behalf of clients is currently under review by the Securities Commission, as its a relatively new product and the current legislation is somewhat unclear and inappropriate in respect of FX margin trading. I do know, (from asking) that they currently consider FX margin trades to be 'futures contracts' (basically because there is no other category to put them under), and that the Securities Markets Act 1988, the Securities Act (Authorised Future Contract) Exemption Notice 2002, and the Futures Industry (Client Funds) Regulation 1990 are relevant and must be adhered to by authorised dealers.

'Unauthorised' dealers would be required to issue prospectus' and investment statements I would imagine, but I am not aware of any out there in the market at this stage. It would be extremely difficult to get a prospectus approved IMO, as this area of the investment market is extremely high risk/high return with excellent potential to be a complete disaster if not handled properly.

There are two recent additions to the list of 'authorised futures dealers' - KVB Kunlun NZ Ltd, and Intercontinental Financial Services Corp Ltd, but I don't know what products they are offering and would imagine its probably not FX

I am currently applying for authorised futures dealer status, but, at least for the immediate future, will be operating a 'closed fund' for a small group of habitual investors personally known to me.

Anyway, hope this assists you Alpine


Xerof

[Alpine Dragon]

Thanks for your reply. I especially appreciate the effort that you have gone to in explaining and clearing up the situation for me with respect to the local market.

I did during the start contemplate "doing it myself" and it was investigated as part of the Overall feasibility Investigation into Forex, but after many months (a few years actually) spent gathering information, investigating and endless manual and live back testing, Didn't think it was worth the effort nor risk at all in any aspect. The average returns I determined to myself that I could expect was only in the region of 8-20% P.A. after the tax department takes a bite, fees and other costs, The end result was little better than a long term "buy and hold" growth stock investment strategy.

I first heard of Aaron Brett and his InformForex / Fxpro organisation through the property & investment expo that was held in Auckland a few months ago.

It looks like I could be striking off using Aaron Brett's services as it seems to be difficult to get any sort of reply from him and no where does it say on his websites that he is an "authorised futures dealer" or of a similar resemblance though it does included this at the bottom of http://www.fxpro.com/FXP/managed_accounts.aspx ...

"The Securities Act (1978)(NZ) does not apply to this investment as your funds are not pooled with other client funds and your account is opened by yourself and is operated individually. The Account holder should consult its own legal and accounting advisors over this investment and their tax effect."

For the time being, I'm continuing to conduct in depth due diligence on this subject including the companies that you have mentioned.

Thanks again.

[Xerof]

Alpine, had a cursory look at the web site you refer to. I would say Fxpro, if that is Aaron Bretts outfit, is purely an introducing broker.

The dealers trading on your behalf are US based, and have a license to trade, so it appears to be all above board.

This arrangement is very common, and if you were to join up via the Fxpro website, they would receive a fee from the trading platform. You would not pay this, it is paid by the trading platform to Fxpro.

I can't comment on the performance of the platform, and of course it is all hindsight anyway, as they won't guarantee anything going forward.

Hope this helps

Xerof

[Alpine Dragon]

Ah! Okay, Thanks for the clarification.

If this is the case, which it could very well be. I'm guessing that there would probably be no way of actually determining who would be trading my account until I signed up with them through FXpro?

Edit: Just to add, Aaron Brett other site is www.informforex.com

[Xerof]

quote:you open your own individual trading account direct with IFX Commerce of Boston. They are a (NFA)National Futures Association Member and your account is held with the Commerce Bank of Boston and your deposits up to USD$100,000 are FDIC insured by the US government.

This is who you're signing up with, and by the way you could probably sign up directly with them, and cut out the middleman. The US govt guarantee relates only to a chapter 11 scenario - they do not guarantee your funds against losses on FX dealing!!

I don't know what the other guys who contribute to this thread would think, but personally I prefer to enter trades myself. If you have no experience, then don't do it until you've used a demo account for as long as it takes for you to feel confident, have a good risk management regime in place and are, on average, making money consistently. This game is very dangerous stuff and I personally, again, would not feel comfortable entrusting my money to someone I do not know, to trade on my behalf (with apparently no rules of engagement)

I know I have said I am planning to act on my clients behalf myself, but all my clients are personal friends/associates who have known me for many years. They know and trust me - I don't believe the circumstances are the same.

I would think about it very carefully before committing any money to such an arrangement. A standard disclaimer regarding trading FX is that you need to be aware that you could lose your entire pool of funds, and needs to be money you are prepared to lose. Giving it directly to someone you don't know much about is asking for it to happen IMO

Xerof

[Xerof]

Just seen your edit with the other website - he is definitely a promoter or introducing broker for IFX Commerce

[Alpine Dragon]

Many Thanks for your replies Xerof.

Apparently Aaron employs the use of Profressional traders that through Power of Attoney trade your IFX commerce account on your behalf. Currently there does not seem to be anyway to determine who these professional traders are or how they trade. However It was hinted during the expo that they employ a canadian to some of this trading but that is all I know and it appears that these traders are not employed by IFX commerce and are merely just acquantinces or contacts that Aaron managed to pick up.
The FXpro site does make reference to this 'Power of attorney' and that it can be revoked at any time. I'm not sure in general what happens in the real world, but if I did find the trader was acting badly (i.e putting too much of the account at risk to one trade) I could just simply revoke the Power of attoney and lock the trader(s) out of my account as the account is supposedly under my control?

I do see where you are coming from regarding prefering to put the trades on yourself. As part of the feasibility investigation, process, I was merely Looking at the possibility of using managed Forex (who hopefully had the tools and much greater expertise at hand) to put a tiny amound of "risk" capital primarily to just to deversify the porfolio a little, capital which if I did lose would be far from destroying me financially and would only comprise 5-10% of my overall investment portfolio

I have been playing around on a demo (fxgame.oanda.com) for quite some time (2 years to be exact) testing different strategies and methodologies, all using a rigid money management and risk management system in place and using no more than 1.5-2% allocated capital on any single trade. I am confident that I would be able to preserve capital so to speak if I ever did go live, but the main point of why I did embark on this excersize of investigation of Forex, was to look at the feasibility of including Forex as a small but more speculative part of my entire investment portfolio that would yield a higher rate of return on each dollar than the rest of the portfolio over the Long Run.

It's most likely that I may have been over optomistic about what could be achieved trading margined instruments such as forex as currently my testing to date reveals that over the long run (at least 10 years) I could only expect to get an average rate of return of around 8-20% P.A. which I believe is only a little better than buy and hold.

Prehaps Part of the reasons possibly include that as a small investor (and only willing to put up small amount of capital), that I do not have the extensive Expertise nor access to the tools that the professionals themselves have access to which cost in the region of thousands of dallars, such as trade station, wealth lab etc. Admittedly the most consistant system I was able to conceive was an insanely simple twin moving average system comprising of a longer term MA indicating the Overall trend and the shorter term MA whereby you take your trades from in the direction of the trend.

There is no doubt that as you suggest, trading margin instruments like this is a high risk game and as such, why I am conducting due diligence as deep as possible. It could be in the end, that I dump the idea of using Margin Forex as part of my Overall investment strategy and just simply walk away.

[Xerof]

If you have any doubts, no matter how small, and can't get logical answers to allay concerns, stay away from it.

I cannot post any recommendations based on my own experiences but I know the guy at NZ Currency Concepts personally and have researched their set-up extensively (because I'm looking to do the same thing) and would suggest that if you want to allocate some funds to a Managed Account, they would be OK. Only hearsay, but I believe they are returning around 9% to 11% per month (not annualised) and after fees are deducted, on a reasonably consistent basis. So thats doubling your dough annually for no input at all.

The other aspect is they have a physical presence in Auckland, i.e. you can go and talk to them if you're based there - going by your poster name maybe you live in Arthurs Pass or Murchison, but its a lot closer than Boston, mate

Xerof

[Alpine Dragon]

I live in Auckland Actually, Eastern suburbs.:D

But Anyway, Thanks for providing your thoughts here. I appreciate it.

[Xerof]

Very handy then - ask for Scott at NZCC if you want to pursue it. Tell him the Havelock connection referred you;);)

And no problem - happy to assist


Xerof

[arco]

Xerof

I am aware of NZCC although have had no dealings with them.
It has always seemed strange to me that they do not put a
past monthly performance history on their site. After all
they have been in the game now since 2003, and records should
be available.

arco

[Xerof]

They will be informing clients of course, but posting performance may be seen as a form of advertising, and the laws are so bloody tight, that if its not audited, which it won't be every month, then they may be in danger of breaching clause 15(1)(vii)(e)subsection 367(a)(i)(z) of some obscure bloody law enacted in 1589

Get my drift?

which leads me to state that Xerof's fund of fund has hit some roadblocks this morning.......before its even started, but work in progress.....a 3 month set back by the looks

people are right when they say compliance costs are killing initiative...........

Xerof - aka angry of mayfair:(:(

[arco]

So does that mean my high flying
and extremely prestigious role as
CEO of the Xerof Fund of Funds is
on hold for another 3 months?
Bugger [V]

[Xerof]

frayed sew

can you survive till then?

[Xerof]

Steve, its become a bit of an exaggeration to say its a fund of funds, but I have been looking at starting a (very small) business based on margin trading FX contracts on behalf of a small group of clients. The more you look at the legislation, the more complex it becomes, and I now have a major process to go through before I can commence at all. So the business is in limbo for at least a couple of months.

If it gets off the ground it won't be open to the public, I'm not interested in starting all over again - it'll be a hobby for me with a bit of income, and hopefully some good returns for my loyal band of investors.

But right now its back at ground zero

regards

Xerof

ps. Arco's book might be a lot more interesting though[:p][:p][^][^]

[Xerof]

Steve,

Agency Agreement, Power of Attorney - fine, but as soon as you manage client funds, you become subject to Securities Act, unless you are an 'authorised futures dealer', in which case you are exempt from a lot of the conditions of the Securities Act, but then you are obliged to adhere to the Futures Industry (Client funds) Regulation 1990, which means you have to have a separate client bank account and countless other requirements (although in fairness the requirements are not too onerous)

To become an authorised futures dealer is the tricky part, and it is this which takes time, and has quite high compliance programmes and costs. 'Substance', expertise, quality of character and a 'compliance reporter model' are the main issues to be looked at apparently (and don't say 'well that rules Xerof out - poleeease')

The whole issue regarding margined FX trading legislation is currently in a state of flux, as it is not an 'exchange traded' product in the usual sense, therefore has no regulatory body, such as the old NZFOE and the SFE, to appoint and monitor dealers, no standard terms and no rules and regulations. It has therefore been subject to an interpretation by the SC, who have decided to regard it as a 'futures contract' to ensure there is at the very least some semblance of control over who can offer it to the public (including habituals, associates and family, for gods sake), its promotion and consumer protection.

Therefore, having closed any possible loopholes, they are required to authorise dealers on a case by case basis, and wannabe's should be sure they apply...300k fines, imprisonment for transgressors.

Ahem, I'll let you know[xx(][xx(]

Xerof

I could write a book about it, eh Arco:D:D

[lakedaemonian]

Xerof,

Is it possible to manage it, legally as well as logistically, via individual accounts for your clients(to simplify the tax side for them and you, although you would be limited in total accounts in terms of execution speed), whereby you charge $1 a year for trade signals + a percentage of profits which you are able to view via an additional user login?

Is it legal to have as part of the $1 nominal fee complimentary trade execution?

If it's a question of clients being required to approve individual trades to avoid messy managed funds issues is it possible to rig up an Instant Messaging solution with automated/semi-automated replies from your clients IM software?

EXAMPLE:

Xerof IM(to all): USD/EUD Short 1.2255 50k S/L 1.2278

CLIENT IM(all returning to Xerof): Execute

Automated "Out of Office" type of reply setup by client, responding just to you, without any duress or overt encouragement by you.

I would think a PoA and the IM logs MIGHT be sufficient to protect your clients, and just as importantly you and allow you to accomplish your goal.

Just an idea.

[Xerof]

Steve,

thanks for your offer of assistance mate, but I'm a good distance down the road to finalising this project now and don't wish to vary my structure, as it will see me through the impending changes to legislation (which are likely to tighten up on a lot of grey areas BTW....)

regards

Xerof

[eliteeservices]

hi,

my company eliteeservices offers forex managed accounts.

www.ees.net.nz

company was formed sept. 2002

what are you guys trying to accomplish?

instead of going through financial law, why not partner with company who has compliance department? they protect you and in return you give them business. i went through this and spent over a million USD setting up this company (including research and all expenses) and found the easiest way is to just parter with the big guys instead of doing yourself. you can see both setups on my website, the kiwi setup and the IB setup

www.ees.net.nz/clients.htm

joe