FXCM order placement change to "enhanced execution"

Dear all,

I have received an e-mail from my broker fxcm stating that all my orders will be placed via "enhanced execution" soon. Currently I am paying a low spread + commission. Meaning for me it is no-dealing-desk (NDD) set-up.
According to the e-mail "enhanced execution" allows fxcm to match orders with external markets, other customers or even themselves to be the oppositve party. Furthermore I would not pay any commission anylonger and a (higher) spread instead. For my understanding FXCM is trying to force me to a dealing desk/ECN account type, right? Are the any benefits for me to do so? I only see higher cost (trough higher spreads vs. low spreads + commission) and less market proximity/transparency.

Have a nice day,
Hamburger

Hi hamburger,

As the email mentioned, execution continues to be a top priority for FXCM and we are committed to providing you with high speed quality execution as well as transparent and competitive pricing. That’s why we now offer enhanced execution which is a hybrid of No Dealing Desk and Dealing Desk execution.

I see from conversations on the forum that there can be the thinking that you need to be ideologically pure and only trade NDD/STP, but what ultimately matters to traders is the quality of execution they receive on their order. There may be instances when an order executed via NDD may provide the best available execution experience, and there may be instances when an order executed via DD may provide the best available execution experience. Our enhanced execution model now offsets client trades via whichever method that provides the best execution experience. In effect, getting you the best of both worlds.

If you look at the progression of execution models since the early days of the forex industry, most brokers, including FXCM, started as a dealing desk only broker with the broker choosing to hold the other side of the trade or offset net positioning. But the model had drawbacks, particularly for traders wanting to scalp which led to re-quotes and order restrictions. FXCM pioneered the NDD model in the late 2000’s as an alternative which hedged orders one for one with liquidity providers. This allowed traders to use any strategy, including scalping strategies, without the fear of broker re-quotes or order restrictions. However, the model is dependent on liquidity providers being there to provide quality liquidity even during illiquid periods such as news events. It’s not perfect either. Fast forward to the present, and we now believe the next step to improve our traders execution is for a hybrid of the two. The best of both worlds.

You’re probably thinking this all sounds great in theory, but how can I trust I’m getting the best execution possible. The only way we will be able to demonstrate this to you is through transparency which is why we started releasing execution stats on execution speed, slippage, and spreads.

Execution Speed

The average execution speed as of our latest data release for July 2018 was 30 milliseconds. This defines the amount of time from receipt of client order instructions at our server until execution. This excludes internet latency and post trade booking.




Slippage

As of July 2018, over 89% had zero or positive slippage. 10.24% of all orders had negative slippage. We break this data down by month on the website so you can get an idea of consistency of execution:



By order type…



By order size…



And more on the website. This gives you an idea of how your order type and size may impact execution. Keep in mind, past performance is not indicative of future results. **


Spreads

FXCM accounts with enhanced execution have spread based pricing with no commissions. Trading costs are all inclusive within the spread, typically 1.3 on EUR/USD, 1.3 on USD/JPY, and 1.5 on GBP/USD.*

How can you be sure you are getting the best pricing available and prices are not being manipulated by FXCM, i.e. stop hunting? The pricing and spreads on enhanced execution are set via price competition from the liquidity providers. Each liquidity provider streams through a direct feed of executable buy and sell prices to FXCM. FXCM’s price engine selects the best buy price and sell price, which result in the best available spread.

Monthly execution data for August 2018 should be released in the next day or two.

Jason


* Average Spreads: Time-weighted average spreads are derived from tradable prices at FXCM from 1 April 2018 to 30 June 2018. Spreads are variable and are subject to delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays or for actions relying on this information.
** Certain non-direct clients are excluded from the data. Limit and limit entry orders would only execute at the requested price or better and cannot receive negative slippage. Price improvements are subject to available liquidity. does not in any way attempt to represent that FXCM maintains a particular capacity or performance level. The figures 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.

79.79% of retail investor accounts lose money when trading with FXCM LTD. You should consider whether you understand how Forex/CFDs work and whether you can afford to take the high risk of losing your money.

Dear Jason,

Thank you for your feedback. One more question from my side linked to costs. For my understading the costs are the following:

AS-IS for EURUSD (in euros per Lot): spread 0.1 pip + commision = 0.86€ + 6€ = 6.86€

TO-BE for EURUSD (in euros per Lot): spread 1.3 = 9.92€

Is my calculation wrong or this a price increase of roughly 45%?

Best regards,
Julian

Knowing FXCM's history, I would not trust any "features" they launch. Wouldn't be surprised if they fill a market order against an internal limit order in the name of execution and then pocketing the price difference. Incoming CFTC fine in a few months/years.

Hi Julian,

Quoted spread cost may be higher, but we will work continuously with our liquidity providers to lower the spreads even further. Keep in mind that the improvements in execution I cited are for enhanced execution, and the benefits of enhanced execution where we have seen orders execute at the requested price or better 89% of the time is not something that should be overlooked. When trading solely on NDD, execution and factors such as slippage is dependent solely on external liquidity providers.

Jason

CONFLICT OF INTEREST
From FXCM's own presentation:


... Humbug!
Go to your marketing department and have this video deleted!

OR he can try himself at some Speaking Contest.

FXCM = SCAM