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How does FxPro offer 'negative balance protection' on big lots

  • #21
  • Apr 5, 2015 1:32pm Apr 5, 2015 1:32pm
Quoting skenobi
{quote} The truth: 1. People will continue to believe whatever they want to believe; trying hard to convince people to change their beliefs is fruitless. 2. If there are erroneous beliefs out there, some (if not most) pros will want to hope that the less sophisticated will continue to believe in those erroneous beliefs, for obviously selfish reasons. 3. In regards to the last point, pros have nothing to apologize for. 4. The truth doesn't matter, as long you're making money i.e. it doesn't matter if you're wrong about anything or everything with...
lol.
  • #22
  • Apr 5, 2015 1:38pm Apr 5, 2015 1:38pm
Quoting skenobi
{quote} The truth: 1. People will continue to believe whatever they want to believe; trying hard to convince people to change their beliefs is fruitless. 2. If there are erroneous beliefs out there, some (if not most) pros will want to hope that the less sophisticated will continue to believe in those erroneous beliefs, for obviously selfish reasons. 3. In regards to the last point, pros have nothing to apologize for. 4. The truth doesn't matter, as long you're making money i.e. it doesn't matter if you're wrong about anything or everything with...
Truth is:

Looking at a hard piece of proposal from a bank for FX PB

5 Bucks for 1 Buck for Spot on a give-up

10 Bucks for 1 Buck for Options on a give-up

Minimum of revenue target of $100,000.

Any trades with your FX PB will not cost any fee.

So do the maths, that's 9 yards......
  • #23
  • Apr 6, 2015 9:58am Apr 6, 2015 9:58am
Quoting flinx
{quote} Wow, good find. So by looking at this... it seems you actually ARE responsible for losses should they decide so?? EDIT - Also, where have you actually fond this info? I can't see it.


From the Client Agreement section 24 and Annex A from Client Agreement section 12.

It's not real negative balance protection since they can say any economical event that causes big gaps is force majeur.

Probably they will reset all negative balances if they are not too affected by the event but if they are affected the event may become (in the reasonable opinion of Fxpro) force majeur (look what happened with FXCM). What difference there is between Fxpro and other brokers like Hotforex and Oanda, who don’t have negative balance protection in their client agreements but who in practice forgive them? I’m not worried about tiny gaps I’m worried about huge gaps and when a huge gap happens they can say it’s force majeur.
  • #24
  • Apr 6, 2015 10:07am Apr 6, 2015 10:07am
Would be interested in hearing FX Pro's response to this (Noticed they are viewed the thread)

You are marketing Negative Balance Protection, but only if you decide it's alright? Doesn't this defeat the point of it?
  • #25
  • Apr 6, 2015 11:43am Apr 6, 2015 11:43am
Quoting str8
{quote} From the Client Agreement section 24 and Annex A from Client Agreement section 12. It's not real negative balance protection since they can say any economical event that causes big gaps is force majeur. Probably they will reset all negative balances if they are not too affected by the event but if they are affected the event may become (in the reasonable opinion of Fxpro) force majeur (look what happened with FXCM). What difference there is between Fxpro and other brokers like Hotforex and Oanda, who dont have negative balance protection...


I still can't find where it says this... are you sure it says this??

Client Agreement and Risk Disclosure downloaded from their website:


12.1 FxPro shall, at all times, conclude clients transactions in good faith.

24.1 FxPro shall, in its reasonable opinion, determine that a force majeure event occurred; under such circumstances the Firm shall take all reasonable steps in order to inform the client.

24.2 A force majeure event is as an event or circumstance, including but not limited to any natural, technological, political, governmental, social, economical (including without limitation to the suspension of a currency) or similar event or circumstance that occurred after a transaction in a financial instrument occurred and such event or circumstance has not been anticipated at the date of entering into the transaction. In addition to the above, a force majeure event may include instances of illegitimate actions against the FxPro servers that may be outside the control of with the client or FxPro

  1. 24.3 If FxPro determines that a force majeure event occurred, without prejudice to any other rights of the client under the Client Agreement, the Firm may:

    1. 23.5.6 suspend the provision of investment and/ or ancillary services to the client; and/ or
    2. 23.5.7 amend any of the content of the Client Agreement on the basis that it is impossible for FxPro to comply with it.


  2. 25.3.1 increase margin requirements; and/ or

    1. 25.3.2 increase spreads; and/ or
    2. 25.3.3 decrease leverage; and/ or
    3. 25.3.4 close‐out, in good faith, any open positions at a price that the Firm considers reasonable; and/ or
    4. 25.3.5 request amendments to any closed positions; and/ or


Unless required by Law, FxPro in entitled to refuse the provision of any investment or ancillary service to the client, at any time, without being obliged to inform the client of the reasons to do so in order to protect the legitimate interests of the Firm.

Nothing here matches up to what you said?

  • #26
  • Edited Apr 7, 2015 5:43am Apr 6, 2015 12:12pm | Edited Apr 7, 2015 5:43am
Quoting flinx
{quote} I still can't find where it says this... are you sure it says this?? Client Agreement and Risk Disclosure downloaded from their website: 12.1 FxPro shall, at all times, conclude clients transactions in good faith. 24.1 FxPro shall, in its reasonable opinion, determine that a force majeure event occurred; under such circumstances the Firm shall take all reasonable steps in order to inform the client. 24.2 A force majeure event is as an event or circumstance, including but not limited to any natural, technological, political, governmental,...
You found all except 12.1 is from Annex A. Have you read Annex A? The important sections are 24.1 24.2 24.3 (which you found them) and from Annex A from Client Agreement 12.1
It clearly says they can amend any of the content of the Client Agreement on the basis that it is impossible for Fxpro to comply with it. The client isn't exonerated from obligations if a FME happens. And if you read Annex A they say on FME you should accept any losses.
  • #27
  • Apr 6, 2015 12:45pm Apr 6, 2015 12:45pm
Quoting str8
{quote} I didn't find until now any broker with real negative balance protection. Only the contract matters (and many contracts have hidden sections, you should read a contract very careful, when you sign a contract you agree with all parts from it even if you don't understand all of them). The marketing has 0 value. A single section might change important things from a contract. You found all except 12.1 is from Annex A. Have you read Annex A? The important sections are 24.1 24.2 24.3 (which you found them) and from Annex A from Client Agreement...
I have just been on the Live Chat with them and they continuously assure me you can NOT go into negative equity.

They say that section 12.1 is referring to the fact in big events where you get slipped lots, you accept that's just the process of being in the markets (e.g., that slippage happens)

They have forward my question into the compliance department so will post back tomorrow.
  • #28
  • Edited 5:27am Apr 7, 2015 2:17am | Edited 5:27am
Dear Members,

Please allow me to clarify your concerns raised:

First and foremost, Negative Balance Protection (NBP) is guaranteed irrespective of the size of an order or event, including but not limited to, Force Majeure; FxPro will honour its NBP commitments whether these occur on positions of 0.01 lot or 100 lots.

Force majeure and NBP are two distinctly separate matters, whereby one does not render the other null and void.

Force majeure in essence is an event or circumstance which has not and/ or cannot be anticipated, occurring in a variety of potential scenarios outside the control of either parties affected. This may consequently have an unprecedented impact on the operations of the Firm, and as a result potentially any transactions entered into by clients which were entered into and remain open at the time. Under a force majeure event, NBP will still be guaranteed as mentioned above however, FxPro may be required to undertake certain course(s) of action, which could affect the orderly operations of the Firm and its licensed offerings.

Allow us to demonstrate with a real-case scenario.

The events surrounding the Swiss Franc on January 15, 2015, constituted a Force Majeure event. Due to the unexpected magnitude which affected most FX brokerage firms and clients (especially those who were short CHF), unprecedented levels of slippage were experienced. FxPro consequently informed its clients that it was suspending the offerings of CHF pairs to be traded, and all positions closed with negative equity were covered by the Firms NBP policy, however normal losses occurred due to the vast levels of slippage where the orders were executed correctly in accordance with FxPros Order Execution Policy, were not.

I hope this clarifies your concerns, and clears your doubts.

Kind regards,

FxPro Team
Trading CFDs involves significant risk of loss.
  • #29
  • Edited 7:02am Apr 7, 2015 4:37am | Edited 7:02am
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I sincerely hope you meant "...CLEARS your doubts".

If you RAISED our doubts, you'd be in trouble.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #30
  • Apr 7, 2015 5:27am Apr 7, 2015 5:27am
Quoting skenobi
{image} I sincerely hope you meant "...CLEARS your doubts". If you RAISED our doubts, you'd be in trouble.
Ooops.. Clears is exactly what I meant!

Thank you, and the word is corrected!!
Trading CFDs involves significant risk of loss.
  • #31
  • Apr 11, 2015 7:54am Apr 11, 2015 7:54am
Seems impossible for me to have this feature offered without pitfalls.
Common sense says that brokers will always seek the opportunity to wriggle out of such type of burdens as loss liability. It simply can't fit financial interests and risk policies of any entity in that overleveraged market.
  • #32
  • Apr 19, 2015 1:57pm Apr 19, 2015 1:57pm
Quoting leebsurag
Seems impossible for me to have this feature offered without pitfalls. Common sense says that brokers will always seek the opportunity to wriggle out of such type of burdens as loss liability. It simply can't fit financial interests and risk policies of any entity in that overleveraged market.
yeah but these protection seem a good deed too, seem most of traders need such additional protection too. continue my searching related to SNB event, got several article put a timeline review about past market crash, flash crash, japanesse tsunami crash, and now we had recent SNB black swan. in conclusion these expert "economist" said the market crash event seem had a pattern, a cycle of when it gonna happen next. about 4-5 year later we gonna had similar event they said, so 2020 are the year when the market will put another 'unexpected force majeure'. hope they wrong though, but if it so the NBP policy I had with my current broker account should taking care of it, as another survival test which they already pass previously.
  • #33
  • May 3, 2015 11:38am May 3, 2015 11:38am
Negative Balance Protection and Not A Market Maker, Do not match.
  • #34
  • May 4, 2015 7:15am May 4, 2015 7:15am
Yeah Harris27, that seems strange. Actually, I have some doubts regarding FxPro being an agent broker. I've checked their client agreement (http://www.fxpro.co.uk/trading/products/legal), and there is clearly stated "6.1 FxPro is authorised by FCA to act as a matched Principal Broker". I have checked what a "Matched Principal Broker" is and it seems like that means that the Broker can act only as a counterparty to all clients deals. Here is the explanation http://www.investopedia.com/articles/03/012403.asp

So what is this "Agent Model" that is advertised all over the web about? Just a marketing trick?
  • #35
  • May 4, 2015 7:23am May 4, 2015 7:23am
Akiciym, they all say the same in their client agreements. None of these retail Stp or Ecn brokers are truely so!
  • #36
  • May 4, 2015 7:46am May 4, 2015 7:46am
Ok, just seemed a bit strange. Anyway, as for me it is nothing criminal in being a principal broker. As long as they don't manipulate the prices But I suppose it gives more credibility to the broker, who clearly states that they are a market maker.

Anyway, thanks for clarifying mitch, didn't know that.
  • #37
  • May 4, 2015 7:51am May 4, 2015 7:51am
Quoting Akciym
Ok, just seemed a bit strange. Anyway, as for me it is nothing criminal in being a principal broker. As long as they don't manipulate the prices But I suppose it gives more credibility to the broker, who clearly states that they are a market maker. Anyway, thanks for clarifying mitch, didn't know that.
yes please read here https://www.ecb.europa.eu/paym/group...bebe1c60d92ce4

Quoting onlyufx
{quote} yes please read here https://www.ecb.europa.eu/paym/group...bebe1c60d92ce4
choose broker with low maximum leverage if you know what i mean.
  • #38
  • May 4, 2015 8:14am May 4, 2015 8:14am
"Matched principal limitation" just means that they have to immediately offset every client trade with a thrid party (pb in most cases i would assume). They are not allowed to take the trade on their own book or warehouse any risk from clients. A marktmaker cant use a matched principal license - he needs to get a license without this limitation, which is more expensive to maintain and has higher minimum capitalisation requirements too.
  • #39
  • May 5, 2015 6:19am May 5, 2015 6:19am
Thanks onlyufx.

Hi Shrike,

I suppose that you are wrong. Please check here http://www.mondaq.com/x/32756/Financ...pdate+May+2005

Matched principal broker

Has permission to deal in designated investments as principal but satisfies the following conditions:
(1) deals as principal only to fulfil customer orders;
(2) holds positions for its own account only as a result of failure to match customer orders precisely;
(3) the total market value of positions held for own account are not more than 15% of Core Tier 1 capital plus perpetual non-cumulative preference shares; (4) the positions held for own account are incidental and provisional in nature and limited to the time required to carry out the transaction.

I do not know what do you mean by "Matched Principal Limitation", but I see that "Matched principal broker" can act only as a principal for it's clients = the client trades only with the broker.
  • #40
  • May 5, 2015 6:36am May 5, 2015 6:36am
Akciym: if you go the FCA website, search for fxpro, then click on permission, it says under "Dealing in investments as a principal" that it only is a limited license for "matched principal broker" and that they are not allowed to hold financial instruments for their own account. For example Oanda does not have this limitation - meaning they do not have to immediately hedge the customer trades but can bet against it.
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