This is HUGE: FXCM fined $2 Million and refunds | Forex Factory

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This is HUGE: FXCM fined $2 Million and refunds

  • #1
  • First Post: Aug 12, 2011 5:29pm Aug 12, 2011 5:29pm
Word just came down today that FXCM is being fined $2 million by the NFA and they must also provide refunds for slippage orders going back to 2008. This is massive news. The refunds are going to hurt - that's a TON of orders to go back through.

Direct link to NFA case: http://www.nfa.futures.org/basicnet/...16&contrib=NFA
  • #2
  • Aug 12, 2011 9:28pm Aug 12, 2011 9:28pm
Wow. I used to trade with FXCM and switched simply because I didn't find their MT4 solution to be adequate for my needs. I was never effected by slippage in any major way but I have to say, this seriously erodes my faith that FXCM has been acting in good faith on behalf of its client base. While say may point to this as a positive development driven by regulators, I look at it as a rather negative development because it indicates to me that FXCM is not acting in good faith as a broker.

Curious to see what Jason has to say about this.
  • #3
  • Aug 12, 2011 9:36pm Aug 12, 2011 9:36pm
Quoting ITradeDaily
Word just came down today that FXCM is being fined $2 million by the NFA and they must also provide refunds for slippage orders going back to 2008. This is massive news. The refunds are going to hurt - that's a TON of orders to go back through.
Hi ITradeDaily,

Today'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.

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

Jason
FXCM
  • #4
  • Aug 12, 2011 10:27pm Aug 12, 2011 10:27pm
Quoting Jason Rogers
Hi ITradeDaily,

Today'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...
Not sure we had questions to begin with. Avoid FXCM and all is good.
  • #5
  • Aug 12, 2011 11:17pm Aug 12, 2011 11:17pm
I actually just received an email from FXCM regarding this and I've actually received money into my trading account due to this. I don't trade with them anymore but it is nice to see some extra money.
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  • #6
  • Aug 13, 2011 5:43am Aug 13, 2011 5:43am
Quoting ITradeDaily
Word just came down today that FXCM is being fined $2 million by the NFA and they must also provide refunds for slippage orders going back to 2008. This is massive news. The refunds are going to hurt - that's a TON of orders to go back through.

Direct link to NFA case: http://www.nfa.futures.org/basicnet/...16&contrib=NFA
That's nothing for fxcm , they have to pay the unpaid positive slippage after June 2008 , you will not get refunds for slippage , this is about unpaid positive slippage only .
  • #7
  • Aug 13, 2011 5:45am Aug 13, 2011 5:45am
Quoting IndyTrader
Not sure we had questions to begin with. Avoid FXCM and all is good.
Quoting Wacky Canuck
Curious to see what Jason has to say about this.
Indytrader = Mbtrading
  • #8
  • Edited 6:56am Aug 13, 2011 6:45am | Edited 6:56am
Ha HA HA, caught red-handed.

Fxcm Q2 2011 report = -1623 accounts
Q4 2011....-5000 accounts

will short selling 1000 more shares on NYSE this monday. Thx for the laugh.
  • #9
  • Aug 13, 2011 7:38am Aug 13, 2011 7:38am
this chop shop still around? makes one wonder.
  • #10
  • Aug 13, 2011 9:28am Aug 13, 2011 9:28am
Quoting tar
That's nothing for fxcm , they have to pay the unpaid positive slippage after June 2008 , you will not get refunds for slippage , this is about unpaid positive slippage only .
That's correct, this pertains to unpaid positively slippage in the second step of the offsetting process for NDD forex execution outlined in my first post above.

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.

http://img823.imageshack.us/img823/1...agehighlig.jpg




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

http://img232.imageshack.us/img232/2...ppagestats.jpg


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


-Jason
  • #11
  • Aug 13, 2011 10:13am Aug 13, 2011 10:13am
Quoting Wacky Canuck
I was never effected by slippage in any major way but I have to say, this seriously erodes my faith that FXCM has been acting in good faith on behalf of its client base.....Curious to see what Jason has to say about this.
Hi Wacky Canuck,

I can understand why you would feel this way.

FXCM's goal is to have a fair and transparent system, and we believe that the benefits NDD forex execution providing positive slippage along with anonymity of execution, no dealer intervention, and removing the conflict of interest between trader and broker furthers this goal. FXCM took the step over a year ago to enhance our NDD forex execution system to pass on positive slippage in the second step of the offsetting process, and all orders with FXCM's NDD Forex execution are now filled at the best price available, which includes FXCM's mark-up. FXCM simply passes clients' orders to one of the ten+ liquidity providers which compete to provide pricing to FXCM. Additionally, FXCM US provides daily trade reports to the NFA which monitors and supervises FXCM US's activity.

We launched the forex execution center last year and plan to continuously update it with information to add additional transparency behind NDD forex execution as we did by providing slippage statistics. And FXCM as a publicly traded company now gives you additional information on our business practices and financial stability.

-Jason
  • #12
  • Aug 13, 2011 12:51pm Aug 13, 2011 12:51pm

monday, i too am going to short another 2000 shares on nyse monday.
  • #13
  • Aug 13, 2011 9:56pm Aug 13, 2011 9:56pm
Quoting ITradeDaily
Word just came down today that FXCM is being fined $2 million by the NFA and they must also provide refunds for slippage orders going back to 2008. This is massive news. The refunds are going to hurt - that's a TON of orders to go back through.

Direct link to NFA case: http://www.nfa.futures.org/basicnet/...16&contrib=NFA
dude, it obviously that they wont pay for the 2m fine nor the slippage refund. They are going to appeal and get away with it. The 2m fine is the PR move to reduce trader's dissatisfaction.

If you really believe this crap news, your probably a good sucker for them. they probably loves a good sucker customer like you
  • #14
  • Aug 14, 2011 1:57am Aug 14, 2011 1:57am
Quoting john123x
dude, it obviously that they wont pay for the 2m fine nor the slippage refund. They are going to appeal and get away with it. The 2m fine is the PR move to reduce trader's dissatisfaction.

If you really believe this crap news, your probably a good sucker for them. they probably loves a good sucker customer like you
You are correct in that FXCM will not pay for this. However it's not because they will be appealing or the like. Got email yesterday saying I'm being credited little over $800. In a link posted in the email and reposted here: http://www.fxcm.com/clients.jsp it explains the how's and why's of the settlement with NFA and includes the following:

How does this affect FXCM's balance sheet?

  1. 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.

  • #15
  • Aug 15, 2011 3:12am Aug 15, 2011 3:12am
after reading this thread I went over a few of my statements more closely and found 2 australian brokers where I have plenty of negative slippage but never positive slippage.... hmmmm
  • #16
  • Aug 15, 2011 4:28am Aug 15, 2011 4:28am
No FXCM any more. No matter this FXCM guy explains, as a spokesman, he can n0t change anything about FXCM, a long-term scam, benefits from unregulated FX markets.
  • #17
  • Aug 15, 2011 5:19am Aug 15, 2011 5:19am
Quoting OzGeorge
No FXCM any more. No matter this FXCM guy explains, as a spokesman, he can n0t change anything about FXCM, a long-term scam, benefits from unregulated FX markets.
Go to the CFTC website and you will see other cases against FXCM as well.
  • #18
  • Aug 15, 2011 7:55am Aug 15, 2011 7:55am
Quoting john123x
They are going to appeal and get away with it. The 2m fine is the PR move to reduce trader's dissatisfaction.
Hi John,

The case with the NFA has been settled and there is no appealing.

-Jason
  • #19
  • Aug 15, 2011 8:01am Aug 15, 2011 8:01am
Quoting praky
after reading this thread I went over a few of my statements more closely and found 2 australian brokers where I have plenty of negative slippage but never positive slippage.... hmmmm
Not all brokers may offer positive slippage, but it is something that FXCM's NDD forex execution offers on all order types.
  • #20
  • Aug 15, 2011 8:04am Aug 15, 2011 8:04am
Quoting Jason Rogers
Not all brokers may offer positive slippage, but it is something that FXCM's NDD forex execution offers on all order types.
Well you do now that you have been forced to. I see you owe clients about $8 million as a result of this case, thats not small change.
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