FXCM gets another CFTC fine, while Drew Niv leaves FXCM UK board
LeapRate Exclusive... The drama of the past week at FXCM continues... While it has not been announced yet by either the company or the US regulator, LeapRate has learned from court documents that FXCM has agreed to pay a $650,000 fine in settlement of charges that it was undercapitalized, and slow to report its capital position, in the wake of the January 15, 2015 spike in the value of the Swiss Franc.
And, FXCM CEO Drew Niv and FXCM PRO head Brandon Mulvihill have withdrawn from the board of the company's FCA regulated UK subsidiary.
Is something more going on here behind the scenes?
Get all the details, exclusively now at LeapRate.
you know FXCM is fucked, when Forexfactory doesn't give a shit about renaming all these FXCM threads like they did back in the day when someobdy complains about them..lol
something is definitely cooking alright. i have this gut feeling that US clients will not be bought over by gain cap. instead leucadia, FXCM's major creditor will spin off its own retail broker, given that it also owns jefferies which is a regulated lp.
why did leucadia jump to fxcm's aid immediately following the snb peg? simply because it had interest.
perhaps it already knew of fxcm's investor fraud beforehand and was the one that alerted the authorities.
given that cftc documents cited the fraud happened between 2009 - 2014 and the 2015 swiss franc bailout was a golden opportunity for leucadia, which in fact is a holding company, and these are the type of strongarming a holding company does to get the best deal. and it is also alot easier to buy and grow a company than build one from ground up.
with fxcm gone, US clients will only be left with gain cap and oanda. that is a huge pie that leucadia would definately not want to miss out on.
will I get banned by posting this link ? http://www.forexfactory.com/showthread.php?p=7853352
whatever it is, that is a huge pie that leucadia will want to take control of.
back when i was still with citibank, FXCM liquidity managers would often ask for larger liquidity on top of their book, and we would then be forced to quote 100m @ 0.3/ fill at 99%
simply put, the sheer volume that FXCM executed on a daily basis was enormous and the sheer number of tickets was ridiculous. it came to the point where we requested they net off trades before backoffice could fill orders without blowing up our own treasury system.
What did Drew Niv DO to CFTC?? I think he didn't pay enough protection racket to the CFTC/NFA like Gain. Gain paid the most so he got to gobble up all of FXCM's business. Oanda didn't pay as much as Gain so they got left out but they still paid enough so CFTC/NFA is leaving them alone, for now.
I took seriously their action after the EURCHF floor crash; they charged their clients for Negative balance, where trader was unable to close due to their damn servers.
I moved my cFD account to German based Hanseatic Broker and Forex account to FxPro.
I donít have the luxury to be a victim as traders did with IronFx fate.
What happened on January 15, 2015?
The majority of retail forex traders were long EUR/CHF when the Swiss National Bank made their surprise announcement to abandon the 1.2000 exchange rate floor they had established for the pair. Had FXCM been on the other side of client trades, we would have made money when EUR/CHF dropped and retail traders took massive losses on their long positions.
The moved wiped out those clients' account equity as well as generated negative equity balances owed to FXCM of over $225 million. The caveat of our NDD model is that traders are offset one for one with a liquidity provider. When a client entered a EUR/CHF trade with FXCM, FXCM Inc. had an identical trade with our liquidity providers. During the historic move, liquidity became extremely scarce and shallow, which affected execution prices. This liquidity issue resulted in some clients having a negative balance.
While clients using NDD forex execution did not cover their margin call with us we still had to cover the same margin call with our liquidity providers. As a result, FXCM ended with a regulatory capital shortfall. Accordingly, FXCM needed to get a loan to cover this balance, which we did. For anyone that still thinks FXCM is running an FX dealing desk on our NDD model, the SNB event demonstrated that is not the case.
How does our NDD model work?
FXCM uses 16 liquidity providers to create a best bid best offer price stream for clients. LPs selected to price retail clients are forced to adhere to an extremely high standard of execution beyond just price including consistently low rejection rates, low latency, minimum quote sizes and high fill ratios even during market events.
We discuss in our UK execution study the criteria we use to rank our liquidity providers which you can see listed in question 13 of the FAQ. FXCM's liquidity providers are ranked based on compliance to these standards which we identify as providing the best customer experience possible. Being a top ranked liquidity provider is important. Liquidity providers with the best pricing according to these rules may gain an advantage over other liquidity providers which could result in a large increase in orders captured. Poorly performing liquidity providers are ranked lower for order flow and ultimately could be removed from our platform until they return to compliance.
Also, the results of this study show FXCM UK retail client order prices to be better for FX than futures prices (74.97% of the time) and interbank prices(91.56% of the time).*
* The study does not in away way attempt to represent that FXCM maintains a particular capacity or performance level. The figures in this study are provided for information purposes only, and are not intended for trading purposes or advice. FXCM is not liable for any information errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Past results are not indicative of future performance.
FXCM's Retail Clients are defined as individual, joint, and corporate accounts trading on our retail price stream.
The comparison to each of the Futures and Interbank data is made at the time that the FXCM client order is executed. Normal market slippage and slippage due to rejections by liquidity providers are already included by the time the FXCM client order is executed. However, there is an assumption that there is no slippage on the Futures or Interbank market data.
In order to maintain consistency, Futures Market data and Interbank data used the same acceptable ranges in market trades. The summary of findings is based on the assumption that the maximum acceptable difference between the FXCM price and the Interbank/Futures market price is 5 pips in either direction.
Fees that a participant would pay on the Futures or Interbank market, such as CME Exchange Fees, NFA Fees, FCM Fees, Clearing Fees, and other commissions, were excluded from the study. Similarly, FXCM Commissions are excluded from the study.
Why did FXCM choose Gain? I'm one of the unfortunate and have to make some decisions fast. I love Marketscope and hate the new learning curve I'm forced to endure. Does anyone have any suggestions on where to go or what those of us in this situation are to do?
I don't know whether to scream and throw a fit about this, embrace a new opportunity or just sulk.
Suggestions are appreciated, I've only got a few days/hours to make decisions.
Thank you, I pulled up a demo in Oanda last night. Can you give me your reasons or some comparison? Is it their charts, people? News articles?
In terms of platforms, they started offering MT4 about 7 years ago if I am not mistaken but their inhouse platform, if they still use it is also very good, very user-friendly and pleasant to look at.
There is an Oanda Discussion thread here in the "Broker Discussion" section. You can check it out to get a feel of this broker.
Next month I will complete 10 years as a trader.
Two and a half years ago I stopped trading forex.
Because of the volatility collapse. I can't make money with the EUR/USD moving 50 pips per day.
Now I see that those problems which pushed me out of forex were a blessing in disguise.
There are so many things to trade out there ( options, stocks, futures, etc) which gives you decent volatility, so you don't have to put so much capital upfront.
I'm so happy I moved to equities !!!!!!!!
Now I can sleep regular hours ( NY timezone), I don't need to worry about stupid brokers freezing my platform ( like Oanda) and slippage , spreads etc are a thing from the past.
You have to trade where the volatility is.
Forex may become tradable in the future but right now it is just an illusion.
Once in a while I still peek here on FF and when I see news about brokers getting busted and lack of choices or the danger of trading offshore ........I laugh !!!!
If tomorrow cash FX is traded on a central exchange with all the big players as the clearing firms like in futures or specialists like in stock exchanges, then cash FX would be EXACTLY the same as stocks, options, futures except with LOT bigger volume and LOT larger market movement because you are trading money itself! But nobody wants to make this effort to make it happen. A central exchange DID exist at one point https://en.wikipedia.org/wiki/Matchbook_FX but it closed down when the financial crisis hit in 2008 when all the big players pulled out.
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