U.S. FXCM: YOU are (now) LIABLE for any Negative Accnt Balance | Forex Factory

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U.S. FXCM: YOU are (now) LIABLE for any Negative Accnt Balance

  • #1
  • First Post: Edited Apr 12, 2015 10:03am Apr 11, 2015 6:43pm | Edited Apr 12, 2015 10:03am
Well... ain't THIS peachy?

As you may remember ...
The Swiss central bank decided (unannounced) to 'suddenly' decouple from the Euro.
The 'peg' was fixed historically at a set ratio w/ the Euro...
so when the Euro central bank decided to start PRINTING Euros out the ass
to keep up w/ their increasing debt load (i.e. 'monetizing the debt' aka Debasing the currency)...
It in turn meant that the Swiss had to likewise debase their OWN currency (print! print! print!) as well to maintain the peg ratio.
Well...
They decided NOT to 'print' and declared the linkage OVER 'suddenly' one night as I watched the effect on the Pound.
It rocketed 300+ pips in less than 45min.
and so,
a LOT of accounts went belly up... BEYOND belly up.

THAT left MANY Brokers liable to the markets for the difference.
FXCM essentially went 'bankrupt' for about 48 hrs and were in breach of their Federally mandated banking ratios.
They had to borrow 'hundreds of millions' in order to stay open. They weren't the only ones.

and so...
I just received the below:
New Rule: YOU'RE on the hook (in case of another currency 'crash') next time.
Not them.
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Attached Image (click to enlarge)
Click to Enlarge Name: fxcm2.jpg Size: 115 KB
"You Never Know.....Until You Find Out."
  • #2
  • Edited 9:05am Apr 12, 2015 8:51am | Edited 9:05am
All the noise has brought to the attention the fact of FXCM violating the CFTC rule. It appears, the rule has been on books since 2010.

Good ol' USA wants to exploit advances in technology to track you and your activities continuously. It does not want you to exploit advances in technology. It does not want your broker to offer you certain liquidity performance guarantees arising out of that. Forexia will be upset even more now. He has been proponent of regulation enforced liquidity guarantees.

In reality, it is largely business as usual as the guarantee could be triggered only in very rare circumstances. Computers will continue tracking trades in real time and close them before account is out of funds. Brokers also close out positions at some some percentage of margin depletion rather than waiting account to arrive at zero balance. The latter better protects broker from slippage driven losses in event of sudden moves by triggering liquidation of positions earlier.

5.16 Prohibition of guarantees against loss.
(a) No retail foreign exchange dealer, futures commission merchant or introducing broker may in any way represent that it will, with respect to any retail foreign exchange transaction in any account carried by a retail foreign exchange dealer or futures commission merchant for or on behalf of any person:
(1) Guarantee such person against loss;
(2) Limit the loss of such person; or
(3) Not call for or attempt to collect security deposits, margin, or other deposits as established for retail forex customers.
(b) No person may in any way represent that a retail foreign exchange dealer, futures commission merchant or introducing broker will engage in any of the acts or practices described in paragraph (a) of this section.
(c) This section shall not be construed to prevent a retail foreign exchange dealer, futures commission merchant or introducing broker from assuming or sharing in the losses resulting from an error or mishandling of an order.
(d) This section shall not affect any guarantee entered into prior to October 18, 2010, but this section shall apply to any extension, modification or renewal thereof entered into after such date.
  • #3
  • Apr 12, 2015 1:44pm Apr 12, 2015 1:44pm
Quoting goldenequity
Well... ain't THIS peachy? As you may remember ... The Swiss central bank decided (unannounced) to 'suddenly' decouple from the Euro. The 'peg' was fixed historically at a set ratio w/ the Euro... so when the Euro central bank decided to start PRINTING Euros out the ass to keep up w/ their increasing debt load (i.e. 'monetizing the debt' aka Debasing the currency)... It in turn meant that the Swiss had to likewise debase their OWN currency (print! print! print!) as well to maintain the peg ratio. Well... They decided NOT to 'print' and declared...

The broker must survive (they have mortgages to pay), traders are expendable (and a dime a dozen)
  • #4
  • Apr 12, 2015 8:09pm Apr 12, 2015 8:09pm
Quoting Mingary
{quote} The broker must survive (they have mortgages to pay), traders are expendable (and a dime a dozen)
i have no problem with it, the broker should not have to pay for your loses due to crazy market action, that's part of trading in any market that's the risk we take.
  • #5
  • Edited 12:56am Apr 13, 2015 12:45am | Edited 12:56am
Quoting PoundTrader
{quote}i have no problem with it, the broker should not have to pay for your loses due to crazy market action, that's part of trading in any market that's the risk we take.
I certainly do not have a problem with this either.
It just shows that "the greater the risk, the greater the reward" is a fallacy.
Brokers position themselves to take none of the risk and they have all the reward (long term)
Therefore, what actually works is "The smaller the risk, the greater the reward"
Obviously, not many apply the correct principle in their trading (:
  • #6
  • Jul 21, 2015 10:07am Jul 21, 2015 10:07am
Only FXCM US traders don't have the negative balance protection now? But why did FXCM offer it to US traders all this while but stop now?
  • #7
  • Jul 27, 2015 3:21am Jul 27, 2015 3:21am
Quoting goldenequity
New Rule: YOU'RE on the hook (in case of another currency 'crash') next time.
Yeah, basically that means traders are put at great disadvantage and risky enough FX trading becomes even riskier which can easily drive you into indefinite losses with your petty 300-400$ of deposit. I heard FXCM chase some big lots clients to reimburse negative balance and it was a clear signal for me to jump off from the train falling into abyss. After CHF crisis I finally withdrawn all my monies from FXCM and moved to Hotforex.
Now I see it was quite wise decision
  • #8
  • Jul 27, 2015 3:50am Jul 27, 2015 3:50am
No problem on my end...i have no equity there
i worshipped... Momentum
  • #9
  • Jul 27, 2015 5:57am Jul 27, 2015 5:57am
Quoting leebsurag
{quote} Yeah, basically that means traders are put at great disadvantage and risky enough FX trading becomes even riskier which can easily drive you into indefinite losses with your petty 300-400$ of deposit. I heard FXCM chase some big lots clients to reimburse negative balance and it was a clear signal for me to jump off from the train falling into abyss. After CHF crisis I finally withdrawn all my monies from FXCM and moved to Hotforex. Now I see it was quite wise decision
  • #10
  • Jul 27, 2015 10:49am Jul 27, 2015 10:49am
This is the final death rattle of the PONZI SCHEME which is FXCM INC.

FXCM stands now with almost ZERO stock value, -60% operating margin and -300% profit margin (NET).

Going after FAKE negative balances is the last effort of the folks who still work there to get their hands on some hard cash and jump out of this train which is headed for a cliff.

I won't see them catching up to 2015 fiscal year.

Pull your funds out if you can and forget about anything it's due to you. They are at the edge of bankruptcy.
Best regards, Zef
  • #11
  • Jul 27, 2015 1:07pm Jul 27, 2015 1:07pm
Quoting ZeF
This is the final death rattle of the PONZI SCHEME which is FXCM INC. FXCM stands now with almost ZERO stock value, -60% operating margin and -300% profit margin (NET). Going after FAKE negative balances is the last effort of the folks who still work there to get their hands on some hard cash and jump out of this train which is headed for a cliff. I won't see them catching up to 2015 fiscal year. Pull your funds out if you can and forget about anything it's due to you. They are at the edge of bankruptcy.
It appears you are quite good at the art of exaggeration.
  • #12
  • Jul 27, 2015 2:14pm Jul 27, 2015 2:14pm
Quoting zznbrm
{quote} It appears you are quite good at the art of exaggeration.
https://www.google.com/finance?q=NYS...OJDksAHzy4fQDw

The beauty of listing is that their numbers got to be public. Scroll down for key stats for Q1. Also go to EDGAR and see for yourself when 2015 numbers are up. Not sure how they gonna turn these figures around. Magic is one option.

Attached Image


Well based on 2014 performance, they need about 80 years to turn that figure around. That is if they get out of FY2015. Good luck
Best regards, Zef
  • #13
  • Aug 2, 2015 10:05pm Aug 2, 2015 10:05pm
I currently (and am looking around to get out of) using etrade, who I believe actually uses FXCM. It's interesting I didn't see a notification for this (though the past several months I haven't been able to trade due to life getting too busy, so maybe I just missed it). Is it the general consensus to stay away from FXCM at the current time? Everywhere I'm reading seems to suggest this.
  • #14
  • Aug 2, 2015 10:29pm Aug 2, 2015 10:29pm
I don't think most of you are getting the fact that most of the negative accounts came from the fact, that nobody could connect to banks or their ( The brokers) liquidity networks, everything froze. Stoplosses weren't triggered people couldn't trade. Thats not the clients fault. Thats the broker, and they should be held responsible.
  • #15
  • Aug 3, 2015 1:10am Aug 3, 2015 1:10am
some men trade for a living and some men wear skirts for a living, you have to ask yourself if your a B or a MAN
  • #16
  • Aug 3, 2015 1:35am Aug 3, 2015 1:35am
Quoting PoundTrader
some men trade for a living and some men wear skirts for a living, you have to ask yourself if your a B or a MAN
That was amusing and funny mate! In today's world I would suggest members to open account which comes with -ve balance protection.
Meditate -> Workout -> Good Food = Good Life!
  • #17
  • Aug 3, 2015 1:59am Aug 3, 2015 1:59am
Quoting PoundTrader
some men trade for a living and some men wear skirts for a living, you have to ask yourself if your a B or a MAN
in other words you can complain and waste your time or you can focus and make a living, the choice is yours
  • #18
  • Aug 4, 2015 2:50pm Aug 4, 2015 2:50pm
Hi Shortyski,

Sorry you haven't had time to trade. Things have been quieter this month following Greece, but with NFP this week and everyone looking forward to Sept FOMC things could get exciting.

Quoting shortyski13
Is it the general consensus to stay away from FXCM at the current time?
As a publicly-traded company (NYSE ticker: FXCM) we publish monthly trading metrics, and we remain a leading global forex broker. Retail customer trading volume of $363 billion in June 2015 was 10% higher than May 2015 and 43% higher than June 2014. Retail customer trading volume for the second quarter 2015 was $1 trillion, 7% higher than the first quarter 2015, and 40% higher than the second quarter 2014.

Quoting shortyski13
I currently (and am looking around to get out of) using etrade, who I believe actually uses FXCM.
Despite the events of January 15 FXCM remains in a strong competitive position with excess regulatory capital (over $200 million worldwide) and operating cash (over $300 million) similar to before the event. The fact that eTrade continues to use our platform also speaks a lot towards this strength.

If you have any other questions about FXCM, please feel free to reach out to me in our discussion thread: http://www.forexfactory.com/showthre...newpost&t=8960
  • #19
  • Aug 4, 2015 2:51pm Aug 4, 2015 2:51pm
Quoting YellowFellow
{quote} That was amusing and funny mate! In today's world I would suggest members to open account which comes with -ve balance protection.
FXCM offers negative balance protection of up to $50,000 per client through our UK and AU entities. However, this protection cannot be extended to US clients because of CFTC regulation 5.16 which states that a broker may not in any way represent that it will guarantee against losses. This rule applies to all US forex accounts.
  • #20
  • Aug 4, 2015 3:03pm Aug 4, 2015 3:03pm
Quoting Jason Rogers
{quote} FXCM offers negative balance protection of up to $50,000 per client through our UK and AU entities. However, this protection cannot be extended to US clients because of CFTC regulation 5.16 which states that a broker may not in any way represent that it will guarantee against losses. This rule applies to all US forex accounts.
That's very interesting, thanks for the information mate.
Meditate -> Workout -> Good Food = Good Life!
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