Is it possible to implement a RELIABLE accounting of the aggregate position structure in MT5? - page 13

 

Написано - 13.04.2007 : 12:32:43


An open foreign exchange position is a mismatch between claims (assets) and liabilities (liabilities).

The position can be either long or short position.

A long position is defined as an excess of foreign currency claims over liabilities, represented by plus sign " + ".

A short position is defined as an excess of foreign exchange commitments over claims, denoted by minus sign "-".

A foreign exchange position is formed by a set of transactions to buy or sell the base currency for the counter currency.

The set of transactions to buy the base currency against the counter currency forms a long position in the base currency in the amount equal to the sum of all transactions to buy the base currency against the counter currency.

The set of transactions to sell the base currency against the counter currency forms a short position on the base currency in the amount equal to the sum of all transactions to sell the base currency against the counter currency.

The set of transactions to buy and sell the base currency against the counter currency forms a position in the volume equal to the balance of transactions to buy the base currency against the counter currency and to sell the base currency against the counter currency. And if, as a result of balancing, claims exceed liabilities, the position is Long, if liabilities exceed claims - Short. If, as a result of balancing, the balance is zero - there is no position.

DIs may use any software, because they do not need to adjust it for the market laws (accounting), due to the fact that they (DIs) are not and may not be participants of the FOREX market.
And considering that the vast majority of brokerage companies are offshore and the rest are bookmakers, they have no problems with accounting.

With regard to the licensing of brokerage companies
In itself the servicing of customers in the FOREX market is not regulated or licensed.
However, only banks with a currency license (issued by the Central Bank of Russia) have the right to carry out foreign exchange transactions with individuals and legal entities.
Therefore formally only banks with such license can provide such service to clients. Accordingly, banks are subject to all regulations of the Central Bank of Russia, and the relationship between the bank and the client is subject to all norms of civil law.
For this reason, dealing centres either use an offshore scheme (the client enters into an agreement not with a Russian company, but with a non-resident company), or a betting scheme (when the dealing centre operates on the basis of a betting licence and clients do not perform foreign exchange transactions, but betting transactions (betting as in a casino or at a racetrack).

The only "place" where VC clients can go to complain about the VC is to the CRUUFOR (no point in going to Court).
As for the KROUFOR, one cannot take this organisation seriously as a self-regulating organisation (SRO) of professional participants of the foreign exchange market.
None of the banks, i.e. the only participants of the currency market, having the right to conduct currency transactions with clients are in this organization.
Unlike NAUFOR that has working contacts with the market regulator (the Federal Financial Markets Service) and is involved in developing and improving the regulatory framework for the stock market, the SROUFM can hardly have any effect on the legal regulation of currency transactions (this requires close working contacts with the Central Bank of Russia and the Ministry of Finance).
The only plus of this organization is the possibility for defrauded clients to file complaints against its members to the arbitration commission in case of disputes.
But even here all is not as good as it could be because if the dealing centre actions (even if obviously unfair) are not contrary to its contract with the client (and in this contract there may be any, including the most enslaving conditions), then the client's claims may be recognized as unfounded.

At this point I propose to finish talking about the reasons for not using MT in our bank.

Respectfully,
Vasily Proshin
tel.(495) 771-7833
fax(495) 771-7862
Proshin.vv@vtb24.ru


 
getch >> :

The legal-accounting report has nothing to do with storing the database of virtual positions on your computer or on the broker's trading server.

What is a "virtual position"? Where do you put it? Where is it defined - what is it?

In MT4, it is the balance of the client account UNDER THE CONDITION OF IMMEDIATE Execution of the second leg of a SWAP OPERATION (or "perpetual option exercise" or some other perverse term). Neither in law nor in accounting, there is NO such operation in normal circumstances. I repeat - in banks, it is remotely an accounting balance for the currency (on the date of purchase) + (floating) exchange rate difference. These are generally accepted accounting rules - for taxation and provisioning purposes.

 
I have a harsh suspicion that MetaQuotes decided to create a clone of Dukas and therefore co-oriented MT5 to bank dealers as well. Then everything is clear with the aggregate position, as the banks sometimes count it differently, in their own back office. Well then there would be a very advanced API to MT5 - to write the back office.
 
AlexEro >> :
I have a harsh suspicion that MetaQuotes decided to create a clone of Dukas and therefore co-oriented MT5 to bank dealers as well. Then everything is clear with the aggregate position, as the banks sometimes count it differently in their own back office. Well then there would be a very extended API to MT5 - to write the back office.

Dukas has implemented virtual positions.

 
I just don't understand why MetaQuotes can't explain it to us in general terms normally? Okay, I'm a banker and I have figured it out, but why torture the rest of us? We are doing MetaQuotes a favour - we are testing the MT5 beta, are we not entitled to some explanations here?
 
getch >> :

Dukas has implemented virtual positions.

Well, good for them. What's the big deal - they make balance monitoring easier for users. But I can write dozens of situations where the bank's balance is absolutely useless for a currency dealer to make a decision. Any user of this forum knows that checking the balance is the LAST step before opening a position, and has very little to do with risk management or money management. (go mix mortar and cement, there are more important things to do than your MT5).

 
AlexEro >> :

What is a "virtual position"? Where does it go? Where is it defined - what is it?

You have bought and recorded on paper that you have bought volume N. - is your first virtual position.

You buy again and put on paper that you have bought volume M - this is your second virtual position.

Your total position equals Buy (M + N).

Now do we understand why virtual positions have nothing to do with legal and accounting issues?

It just so happens that the automatic remote accounting of the aggregate position structure, as a set of virtual positions, is an extremely convenient tool for writing automatic strategies. And also essential, for trading multiple (not necessarily automatic) strategies at once.

 

The discussion again comes down to clarification and debate as to whether or not an accounting of the aggregate position structure is necessary? And should it be reliable?

For programmers (including developers) the answer is obvious. There is no solution to the problem (see thread title) yet.

 
getch >> :

The discussion again comes down to clarification and debate as to whether or not an accounting of the aggregate position structure is necessary? And should it be reliable?

For programmers (including developers) the answer is obvious. There is no solution to the problem (see thread title) yet.

Accounting and reliability are important for automation, not for manual trading.

It's kind of obvious. What's the argument about?

 
goldtrader >> :

It's kind of obvious. What's the argument about?

For programmers, the answer is obvious. However, not for all forum members, which is why the thread has grown so big.