In light of the recent news regarding the regulatory actions and bankruptcy filing by our FCM Member firm Peregrine Financial Group, Inc. (“PFG”), we felt it was appropriate to provide our Members with a statement regarding the situation.
By Paolo Palazzi-Xirinachs
Thursday, July 12, 2012
All PFG customer funds on deposit with Nadex are held by Nadex in fully segregated accounts at Nadex’s bank. Those funds, which represent a very small portion of PFGBest’s total customer segregated funds, will be held by Nadex until disbursement is directed by the regulators and the bankruptcy court. All PFGBest customer positions at Nadex expired on Monday July 9 and PFG has no remaining open positions at Nadex. Nadex incurred no loss as a result of its relationship with PFGBest.
Nadex is a fully regulated exchange and clearinghouse. We do not trade, either on Nadex or elsewhere. Nor do we leverage customer deposits through exotic investments; instead, we currently hold all customer deposits as cash in properly segregated bank accounts. Moreover, all products traded on Nadex are fully collateralized, which means that the funds used to establish positions on Nadex must actually be on deposit with Nadex in its segregated bank account prior to an order being accepted by the exchange. This process of checking each order against the funds available to support that order, referred to as “Cap Checking”, ensures that funds sufficient to cover the maximum possible loss on any trade (and conversely, to pay out the maximum possible profit on any trade) is collected in advance of the trade and held at the Nadex clearinghouse.
At Nadex, we take the integrity of the exchange and the safety of customer funds very seriously. Beyond adhering to the regulatory requirements for segregating customer funds, we feel that our fully collateralized products and the Cap Checks required by the Nadex Rules add additional levels of security that are not available on any other US exchange.
Chief Executive Officer
This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.