FXCM - No Dealing Desk Email

I know there has been much debate on ET about the NDD platform at FXCM to weather its a true independent platform. I got the below email today.

Basically its says that they ARE the counterparty to your trades BUT immediately off set your trade AND do not make money if you lose.

Is this to good to be true? And no need to state the usually on a forex thread - i.e. they are all bucket shops, just trade futures, etc...



Dear Client:

At FXCM we believe that our No Dealing Desk model provides
you with the fairest, fastest, and most transparent execution:

()No restrictions. An ordinary dealing-desk broker,
acting as a market maker, may trade against a client. With No
Dealing Desk, we do not take a market position—eliminating any
conflict of interest or price manipulation. We fill your orders
from the best prices available to us from nine of the world’s
largest banks and most aggressive price providers.

()Our sheer trading volume, which exceeds $350 billion monthly,
ensures our close relationships with these global banks. With so
many price providers competing for our trading volume, spreads
are tight—even during market- moving news. Furthermore, these
price providers never see your stops, limits, or entry orders.

()Since the EUR/USD is nearing $1.60, now may be a good time to
take advantage of the tight spread on the pair. Do you need some
trading ideas?
That’s where DailyFX Plus can help: https://plus.dailyfx.com/tnews/loginForm.jsp

If your account needs replenishing, visit http://www.fxcm.com/depositing-funds.jsp

Note: since your account is set up with No Dealing Desk execution,
the National Futures Association (NFA) requires FXCM to provide
you with the following disclosure:

THE FOREIGN CURRENCY TRADING YOU ARE ENTERING INTO IS NOT CONDUCTED
ON AN EXCHANGE. FXCM IS ACTING AS A COUNTERPARTY IN THESE TRANSACTIONS
AND, THEREFORE, ACTS AS THE BUYER WHEN YOU SELL AND THE SELLER WHEN
YOU BUY. THE PRICES FXCM OFFERS MIGHT NOT BE THE BEST PRICES AVAILABLE
AND FXCM MAY OFFER DIFFERENT PRICES TO DIFFERENT CLIENTS.

ALTHOUGH FXCM IS THE COUNTERPARTY TO EACH OF YOUR TRADES, IF YOUR
ACCOUNT(S) IS TO BE TRADED UNDER A “NO DEALING DESK” MODEL, FXCM LIMITS
RISK TO ITSELF BY IMMEDIATELY HEDGING (OFFSETTING) THE TRADES AND
POSITIONS IT ENTERS INTO WITH YOU ONE FOR ONE WITH ONE OF SEVERAL
BANK MARKET MAKERS. AS A RESULT, FXCM DOES NOT PROFIT WHEN YOU LOSE
MONEY ON A TRADE. RATHER, FXCM IS COMPENSATED BY MARKING UP THE PRICE
IT RECEIVES FROM THE BANK MARKET MAKER.

IN SOME CIRCUMSTANCES FXCM MAY ELECT TO REMOVE YOU FROM THE
“NO DEALING DESK” MODEL. FXCM WILL NOTIFY YOU AT THE TIME THAT IT DOES SO.
IN SUCH A SITUATION, YOU SHOULD BE AWARE THAT FXCM MAY MAKE MORE MONEY IF
THE MARKET MOVES AGAINST YOU. ADDITIONALLY, SINCE FXCM ACTS AS THE BUYER OR
SELLER IN THE TRANSACTION, YOU SHOULD CAREFULLY EVALUATE ANY TRADING
RECOMMENDATIONS YOU RECEIVE FROM ANY OF FXCM’S REFERRING BROKERS.
FXCM ITSELF DOES NOT PROVIDE INDIVIDUALIZED-CLIENT TRADING RECOMMENDATIONS.

For more information on No Dealing Desk, please visit our page at
http://www.fxcm.com/execution-advantage.jsp.

FXCM is committed to offering you excellent execution, easy accessibility,
and exceptional client service—with live support 24 hours a day, 7 days a
week. If you have any questions, please call one of our
currency specialists, who are available 24 hours a day, at 888-503-6739,
or e-mail us at info@fxcm.com.

We look forward to serving you.

Best regards,

FXCM
Financial Square
32 Old Slip, 10th Floor
New York, NY 10005
1-888-50-FOREX (36739)
info@fxcm.com
www.fxcm.com

 

Thanks for posting this.

I have been looking for a clean broker for a while now. They all seem pretty sleazy. Just came across the FXCM site. They seem to be making too much noise about being a clean firm for it not to be true.

www.fxcm.com

If anyone has tried them, please share your experience.

Thanks.
sophie

 

I have had an account with them for 2 years. No problems

 

it is still not good enough in transparency:
THE FOREIGN CURRENCY TRADING YOU ARE ENTERING INTO IS NOT CONDUCTED ON AN EXCHANGE. [MEMBER] IS ACTING AS A COUNTERPARTY IN THESE TRANSACTIONS AND, THEREFORE, ACTS AS THE BUYER WHEN YOU SELL AND THE SELLER WHEN YOU BUY. THE PRICES [MEMBER] OFFERS MIGHT NOT BE THE BEST PRICES AVAILABLE.
ALTHOUGH [MEMBER] IS THE COUNTERPARTY TO EACH OF YOUR TRADES, [MEMBER] LIMITS RISK TO ITSELF BY INSTANTANEOUSLY OFFSETTING THE TRADES AND POSITIONS IT ENTERS INTO WITH YOU WITH A BANK OR INSTITUTIONAL MARKET MAKER. AS A RESULT, [MEMBER] DOES NOT PROFIT WHEN YOU LOSE MONEY ON A TRADE.
""""RATHER, [MEMBER] EARNS COMMISSIONS ON EACH TRADE IT ENTERS INTO WITH YOU. THE AMOUNT OF COMMISSIONS CHARGED IS DISCLOSED ON PAGE [x] OF THE CUSTOMER AGREEMENT.""""
http://www.nfa.futures.org/news/newsNotice.asp?ArticleID=2104

 

My favorite place to trade the majors is through CME on Globex. I use spot market to trade crosses.

 

yeah, that was my point in posting it. i figured they didn't have to send out that email.

i think with the new farm bill that passed a few months ago should help clean up some of these shops.

i have a account with them and no issues so far. well 1 issue there was a crossed/frozen market at like 9pm est on sunday and i tried to arb it. i knew better but i had to try. only loss like 6pips.

typical spreads on the EUR, JPY, and GBP is around 2 - 2.5. not the best, but you have to look at the complete package when you make a decision.

 

I find that alot of people in the forex market don't have alot of knowledge of the financial markets operation in general, and thats fine, as long as people realize the risks of a forex broker going out of business and the non segregation of funds compared to a futurs firm. Fxcm does around $380 billion per month in notional volume. Definately one of the biggest retail forex brokers besides Oanda, and they have a fairly sizable institutional client base. That may seem like alot, but the FX on CME does around $100 billion per day.

 

FXCM does have segregated accounts via FXCM - UK.


"Accounts with Forex Capital Markets, LTD (FXCM UK) are fully segregated in accordance with UK financial regulations. The Financial Services Authority (FSA), one of the world's most respected financial regulatory bodies, administers these regulations. In the unlikely event of FXCM UK's bankruptcy, clients of FXCM UK would be considered secured creditors and receive priority in bankruptcy proceedings."

http://www.fxcm.co.uk/open-an-account.jsp