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FXCM fined $2 million by NFA

  1. "August 12, Chicago - National Futures Association (NFA) has issued a Decision
    imposing a $2,000,000 monetary sanction against Forex Capital Markets LLC
    (FXCM) in settlement of a Complaint issued by NFA's Business Conduct
    Committee on August 12, 2011. The Complaint cited FXCM for retaining gains
    derived from asymmetrical positive price slippage; failing to adopt or carry out
    adequate procedures to ensure the efficient execution of all customer orders;
    failing to treat all customers equally when giving price adjustments; failing to
    adequately investigate suspicious activity in several customers' accounts; and -
    together with its principal Dror Niv - failing to supervise. FXCM is a Futures
    Commission Merchant, Retail Foreign Exchange Dealer, and Forex Dealer
    Member located in New York, New York.
    In addition to the $2,000,000 monetary sanction, FXCM must credit the accounts
    of its customers the amount of asymmetrical positive slippage which its
    customers experienced on their trades from and after June 18, 2008 and provide
    verification to NFA of these credits. In the future, FXCM is prohibited from
    engaging in price slippage or margin liquidation practices, as described in the
    Complaint. FXCM must also enhance existing procedures to ensure efficient
    execution of customer orders and compliance with NFA's anti-money laundering
    requirements."
    http://www.nfa.futures.org/news/newsRel.asp?ArticleID=3851
     


  2. Wow! Here come the class action lawsuits.
     
  3. Yes, marks the end of this sleazebag outfit.
     
  4. They were notorious for stop runs and spiking prices to create margin liquidations.
     
  5. Do they still do this?
     



  6. Hi Wallace,

    Friday's action from the NFA primarily concerns positive slippage, and I would like to shed more light on how positive slippage with FXCM's NDD forex execution system used to work prior to August 2010 and how it has worked since then.

    FXCM’s platforms display the best bid/ask spread streamed from the firm’s liquidity providers plus FXCM’s mark-up. Every FXCM NDD forex trade is automatically offset in a two-step process, designed to ensure that FXCM does not profit from a trader’s losses. In the first step of the execution process, a trader clicks on the price and the order is sent to FXCM. In the second step, FXCM automatically sends the client’s order to one of its liquidity providers to offset the trade.

    FXCM’s execution system prior to August 2010 only offered price improvements to clients in the first step of the process. If a better price became available on FXCM’s platform in the fraction of a second after the client submitted the order but before the order was received by FXCM, the client would benefit from the price improvement. However, FXCM’s previous execution system did not provide clients with price improvements in the second step of the execution process, even if FXCM was able to offset the order at a better price, excluding FXCM’s markup. FXCM enhanced the execution system in 2010 so that clients now benefit from price improvements in both steps of a transaction for all order types.

    It is important to note: By the end of 2010 FXCM enhanced its execution system to offer price improvements on all trades. You may remember from my forum posts last August that I announced positive slippage for limit and limit entry orders on this thread. All orders now eligible to receive positive slippage, and all price improvements are subject to available liquidity.

    The settlement amount and the client price improvement credit will have no negative impact on FXCM's financial balance sheet because several founding partners of FXCM have reimbursed the company for the credit and the fines. As of June 30, 2011, FXCM Inc. had over $200 million in cash and no debt.

    FXCM's goal is to have a fair and transparent system, and we are proud to offer an execution system that passes on any price improvements. FXCM has compiled statistics from July 1, 2010 until now to display the percentage of orders positive slipped and negatively slipped, and which orders most frequently experience each. The percentage of orders between positive and negative slippage has been roughly equal.

    [​IMG]



    And we have broken this down even further to display the number of orders on a monthly basis positively and negatively slipped:

    [​IMG]

    Limit and limit entry orders are the most likely to experience positive slippage which is why we highlight using limit and limit entry orders in the execution center on our website. You can find even more data on slippage broken down per order type in the complete report here: Slippage Statistics

    Please let me know if you have any additional questions. I will do my best to answer them as thoroughly as possible.

    Jason
    FXCM
     
  7. Jason,

    Thank you for the reply. For the record I am a very happy FXCM customer who has had a great experience with fills and customer service.
     
  8. I am going to end to love fest, and remind people that FXCM is being fined by the NFA!
     
  9. FXCM has only been ordered to reimburse US based customers, are we expected to believe that they only did this to US accounts? Somehow I doubt it, there may well be more fines to come as other regulators start looking into these corrupt practices.

    Jason will completely ignore this point of course.
     
  10. It took a lot of effort on my part to be removed from their mailing list.
     
  11. Highly improbably that other jurisdictions will be able to enforce anything. only places which have a chance is probably UK which might be able to enforce something against fxcm.

    Happy customer etc. is fine - but the bottomline is these guys just got fined 2 million dollars :))))) They are a shill, a bucketshop, who trade against the clients, and don't execute their trades at fair prices.

    Moreover, Jason has only responded for traders who are on no dealing desk basis. For all those naive traders who just begin and get influenced by sleek marketing of fxcm, they just end up becoming sitting ducks for fxcm dealing desk.

    Really, if Jesus Christ exists, he should send such people to super-hell for 1000 years!

    Has IB for example been fined ever by NFA/CFTC/SEC ?
     
  12. Always happy to help best I can.

    The change to our execution process made last year adds positive slippage on all orders to all clients regardless of their jurisdiction. However, the settlement only impacted FXCM US accounts. No other accounts are eligible for a credit.

    I don't have additional information on this matter, but you can reference the FAQ found through the press release http://ir.fxcm.com/phoenix.zhtml?c=238885&p=irol-newsArticle&ID=1596037&highlight= or contact compliance@fxcm.com if you have additional questions.

    -Jason
     
  13. Good to hear.
     
  14. Hi gmst,

    That's not correct. Every order with FXCM's NDD forex execution is offset one for one with the liquidity providers. This is outlined in the FXCM US trading agreement as required by regulations and on our website. All orders are filled at the best price available dependent on liquidity and both positive and negative slippage can occur, again dependent on available liquidity.

    -Jason
     
  15. they rake that shit in half a day
     


  16. I assume that prior to that date FXCM kept the positive slippage regardless of jurisdiction. Thats what I had assumed.
     
  17. I am having issues with FXCM for well over a month now. An erroneous margin call was triggered (wiped out my entire account, with almost 200k) because of their spread widen 30 pips for no reason and I have put in numerous complains about this, with little to no help at all from their staff... some of the emails were actually rude emails that they send me. Anyway, a month later (Nov 2), I get an email from their compliance department with a release agreement form telling me to sign it so they can refund me the full amount that my account incurred. I signed and returned the form, I wait 2 business days for them to process before following up. I go to chat, followed up, send a few emails and wait patiently again. On Nov 7, they send me a letter stating that my account has been terminated BEFORE processing the refund that I was promised. I have sent them numerous emails (about 6-8), with no respond whatsoever. This is what the email says:

    Dear Jasper Que,

    This letter is to inform you that as of November 7, 2012 Forex Capital Markets (“FXCM”), will be terminating the Client Trading Agreement signed between FXCM and Jasper Que as well as any other agreement and any other title signed between said parties (collectively, the “Agreement”).

    Pursuant to the Agreement, this termination shall be effective immediately.

    If you have any queries or comments, please feel free to contact me.

    Sincerely,

    Senior Compliance Associate
    FXCM Compliance Department

    Tel (212) 897-7660
    Fax (212) 897-7669
    Website: http://www.fxcm.com/


    I have tried to contact several of their departments, tried to reach
    out to various key people, and still nothing. They continuously keep
    ignoring my emails. Is this what you can expect from "the biggest fx
    broker in the world" to just dodge and ignore emails when it is
    convenient for them? And not keep their word when they already send you in writing that they will refund your account 194k, make you sign a form then just forget about you?
     
  18. How exactly is it possibe that you wipe your account out due to a 30 pip spread? Can you give more details than that? Its hard to comment without knowing exactly what happend. Clients losing money the legt way, isnt really unheard of either..
     

  19. Well, I would not be surprised that this happened with a crooked broker like FXCM..:cool:
     
  20. Erroneous margin call. That was the first thing I mentioned. FXCM refuses to take responsibility for this error and made me wait a whole month, before their compliance sent me a release agreement form to sign so I can get reimbursed. I signed and sent it back, but before they even process it, they just closed my account and now not really responding to any of my inquiries and refused to send me back the money that they had already promised to reimbursed back 2 weeks ago. How messed up is that?
     
  21. Back in the day my son opened an account with FXCM when he was 18. He did not fund it, but they contacted him almost daily for the entire year. Obviously, they saw his age and knew he would probably blow up.

    Maybe they changed their policy since then, but I noticed on their website that they debit an account for negative interest, but do not credit it for positive interest.

    I do not know why any retail trader still participates with non-ECN brokers- makes no sense!
     
  22. Alert to new traders- "Non dealing desk" is not what you want. Dealing desk, aka ECN brokers, are what you should look for- just because Rogers says the word "non" and implies that this means they are not scamming you by mischievously "dealing" does not mean it is best for you.

    With an ECN, the broker is motivated to provide the lowest spread to you. On pairs like EUR-USD, it is usually under 1 pip. You pay a commission that is small for this (a few dollars per lot). I think new traders should expect to save over 2 times with an ECN. That's my 2 cents. :cool:

    mike
     
  23. Not exactly sure how they can inform a client that they will reimburse for a mistake on their end and then just ignore the client after they make them sign the release form.