I guess I will explain it again. I believe that it is unethical for a broker to have negative interest rates that are twice as high as the positive ones. That indicates that they are not really the interest rates that would be theoretically "passed through" from the interbank market if MBT/EFX is an ECN. The broker would have to be acting as a middle man and not a true ECN in order to have interest rates other than the true difference between those of the two currencies that are being held. And mathematically the negative side would have to be the same as the positive side. The fact that the negative side is twice as high as the positive side would seem to indicate that EFX/MBT is doing something other than acting as an ECN.
MountainTrader......... I think the divergence is in understanding that MBT is an FCM utilizing ECN technology. Let me help clarify. The actual ECN that MBT uses is called 3D Forex. Regards, Steve
Its not unethical, since everyone can look up their commissions and swap rates. I like their platform, i just don't see any point in trading there with the current commission-structure. Others do the same as them for less than half of what they charge.
Unfortunately I am not abe to recommend any particular broker because I have not found one that has all the features that I desire. Plus almost all training programs are tied with an introducing broker which is why there is a vested interest in the type of trading that is taught in the Forex industry. I am glad to not be a part of that because I believe that brokers drive the industry and consequently, the way people trade. And the methods being promoted in the industry may not be in the best interest of the trader because it all originates with bokers whether directly or indirectly through IB training companies. I do not wish to bash brokes in general because they are our business partners but as partners I would like to see my interests represented better.
My point entirely. They allow customers to have an exposure and then have swap lines with a bank(s) to ensure they do not have large credit or debit balances in their nostro accounts overnight. They then charge a large differential to their clients for this. And if they have this ability then they also have the ability to debit a customer in his dollar account and credit their sterling, hedging any exposure with the rest of their book. But instead they charge 5 cents for the transaction and say it isnt them but their bank..... Go figure.......
Just because a broker discloses that their interest rates are a rip off does not make it any more ethical.
Interest rates are not fees. They are (theoretically) the difference between the interest rates of the two currencies in the pair. Therefore it is unethical for them to be anything other than that.
What would you like clarifying? Are you saying a 5 cent spread is reasonable? Are you saying you have no mismatch on your book at the end of every day? Are you saying you have no tom/next, spot/next and forwrd lines with banks and thus could easily debit an account in dollars and credit it in sterling? Are you saying you are a true ECN and so match all sells and purchases. If this is the case how do you deal with the situation when client A is short of dollars at the end of the day and it was covered with bank x and client B is long of dollars but it was covered with Bank z? You therefore have no internal exposure between clients but have one with both bank x and bank z?
Lon.......... I can see that you have a different interpretation of what an ECN means. Please look at it just like the way ARCA is an ECN. An Electronic Communication Network which allows for banks, institutions, and retail customers to all trade together within one network. It clearly does not mean just retail customer to retail customer. In ARCA's case for example you could have scenarios where retail, institutions, and exchanges all trade with one another. The same applies for when I am describing how MBT uses ECN technology for spot forex trading. With regards again to the conversion of currency I think the confusion rests within not drawing the distinction between trading the spot market (ecn routing) and a banking functionality (converting currencies). Again, MBT is not a bank so the conversion was done at the bank which I understand you did not agree with the conversion rate. This is why I suggested that you can always take the currency in US dollars and convert within your bank. Regards, Steve