FXCM gets another CFTC fine, while Drew Niv leaves FXCM UK board | Forex Factory

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FXCM gets another CFTC fine, while Drew Niv leaves FXCM UK board

  • #1
  • First Post: Feb 13, 2017 1:51pm Feb 13, 2017 1:51pm
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And, FXCM CEO Drew Niv and FXCM PRO head Brandon Mulvihill have withdrawn from the board of the company's FCA regulated UK subsidiary.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.
  • #2
  • Feb 13, 2017 4:24pm Feb 13, 2017 4:24pm
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
  • #3
  • Feb 13, 2017 5:40pm Feb 13, 2017 5:40pm
Quoting hilmy83
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
lol so true
  • #4
  • Feb 13, 2017 11:07pm Feb 13, 2017 11:07pm
Quoting PoundTrader
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 And, FXCM CEO Drew Niv and FXCM PRO head Brandon Mulvihill have withdrawn from the board of the company's FCA...

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.
  • #5
  • Feb 13, 2017 11:17pm Feb 13, 2017 11:17pm
Quoting Bicarus
{quote} 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.
only oanda, Gain is worser than fxcm
will I get banned by posting this link ? http://www.forexfactory.com/showthread.php?p=7853352
  • #6
  • Feb 13, 2017 11:41pm Feb 13, 2017 11:41pm
Quoting fifaman2009
{quote} only oanda, Gain is worser than fxcm 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.
  • #7
  • Feb 14, 2017 2:23am Feb 14, 2017 2:23am
Quoting PoundTrader
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...
OMG!!! WHY are they still picking on that? CFTC is REALLY sticking it to FXCM that they are just milking FXCM as dry as possible that they are charging FXCM on anything, even crap that happened that TWO years ago that I thought FXCM got cleared on because we never heard anything about this after what FXCM stated: http://www.financemagnates.com/forex...isappointment/. They know that FXCM is short of funds and don't have the money to hire lawyers to fight these s***. All those fines, honestly they should ALL give it back to the traders if they are REALLY doing this in the name of "protecting the investors". They collected $14 million for the unfair slippages the first time now $7 million for the failure disclosure now extorted again $645K for this failure to notify for undercapitalization crap.

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.
Make your losses in demo. Earn your profits live.
  • #8
  • Feb 14, 2017 2:24am Feb 14, 2017 2:24am
Quoting fifaman2009
{quote} only oanda, Gain is worser than fxcm will I get banned by posting this link ? http://www.forexfactory.com/showthread.php?p=7853352
No it's still very puzzling why that trader Yueben is labelled "Commercial Member" to begin with. It's Gain at its best.
Make your losses in demo. Earn your profits live.
  • #9
  • Feb 16, 2017 5:47am Feb 16, 2017 5:47am
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 don’t have the luxury to be a victim as traders did with IronFx fate.
  • #10
  • Feb 17, 2017 5:15pm Feb 17, 2017 5:15pm
Quoting Forexia
{quote} OMG!!! WHY are they still picking on that? CFTC is REALLY sticking it to FXCM that they are just milking FXCM as dry as possible that they are charging FXCM on anything, even crap that happened that TWO years ago that I thought FXCM got cleared on because we never heard anything about this after what FXCM stated: http://www.financemagnates.com/forex...isappointment/. They know that FXCM is short of funds and don't have the money to hire lawyers to fight these s***....
While I can't comment on the CFTC complaint specifically due to the nature of our settlement with them, I will say FXCM stands by our No Dealing Desk (NDD) model. It's worth noting that FXCM would not have suffered more than $200 millon dollars in losses during the SNB flash crash had it been taking the other side of client trades unlike so many of the DD firms in the industry.

Quoting Bd888
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.
There seems to be some confusion about why some EUR/CHF traders had a negative balance due to the SNB flash crash, so I will clarify.

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.

Attached Image (click to enlarge)
Click to Enlarge Name: liquidity-providers-figure-1-desktop.jpg Size: 83 KB

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.

Material Assumptions
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.
  • #11
  • Feb 18, 2017 3:22am Feb 18, 2017 3:22am
Jason,
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.
  • #12
  • Feb 18, 2017 4:07am Feb 18, 2017 4:07am
Quoting RebeccaH
Jason, 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.
Personally I like Oanda better than Gain so if you ask me, I would recommend you to move your accounts over to Oanda instead of to Gain if you want to continue to trade Forex. And since the MarketScope is such a popular platform, if I were FXCM, I would license it to Oanda. Really they have already been almost forced to sell their retail clientele to Gain, they should have the right to retain their intellectual rights to their platform MarketScope and give or sell it or license it whoever they want.
Make your losses in demo. Earn your profits live.
  • #13
  • Feb 18, 2017 8:36am Feb 18, 2017 8:36am
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?
  • #14
  • Feb 18, 2017 11:21am Feb 18, 2017 11:21am
Quoting RebeccaH
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?
I didn't want to leave FXCM either but as a US Trader it's Forex.com, Oanda, or offshore. After Demoing Oanda FX Trade for a week I decided to open up a corporate account and in the process of funding. I use MT4 for charting only, not order execution/management and after playing around with FX Trade for a while it has enough functionality that I feel comfortable with.
  • #15
  • Edited 4:41pm Feb 19, 2017 1:20am | Edited 4:41pm
Quoting RebeccaH
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?
Oanda have been around 10+ years, even longer than FXCM I believe so they are a very experienced and established forex broker. Unlike Gain where they are a pure market maker, Oanda actually hedges their net client positions so they remain risk-neutral in that it removes or at reduces their incentive to trade against you. They were the FIRST broker to do that when all the other brokers were still trading against their clients. They maintain as one of the top brokers that has the highest client profitability since 2009 when all US forex brokers are required to report client profitability until now. You can find client profitability reports for US forex brokers all over the internet. They are one of the biggest forex broker where they get consulted for foreign exchange rate.

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.

Good luck!
Make your losses in demo. Earn your profits live.
  • #16
  • Feb 19, 2017 1:56am Feb 19, 2017 1:56am
Next month I will complete 10 years as a trader.

Two and a half years ago I stopped trading forex.

Why?

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 !!!!
So, you think you have rights? LOL
  • #17
  • Feb 19, 2017 1:59am Feb 19, 2017 1:59am
Quoting Forexia
{quote} Oanda have been around 10+ years, even longer than FXCM I believe so they are a very experienced and established forex broker. Unlike Gain where they are a pure market maker, Oanda actually hedges their net client positions so they remain risk-neutral in that it removes or at reduces their incentive to trade against you. They were the FIRST broker to do that when all the other brokers were still trading against their clients. They maintain as one of the top brokers that has the highest client profitability since 2009 when all US forex brokers...
I joined Oanda in 2006. I got lucky with my broker on the first try and have nothing but good things to say about them. They give supreme control over risk management. I use MT4 for charting but there is not a better platform than fxtrade. I also was very impressed with the way they handled the CHF crash. Oanda is the only broker to go with if you are a US client.
If you are good at something, never do it for free--Joker
  • #18
  • Last Post: Feb 19, 2017 4:39pm Feb 19, 2017 4:39pm
Quoting ForexOracle
Next month I will complete 10 years as a trader. Two and a half years ago I stopped trading forex. Why? 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...
Well there are spread and slippages in ALL financial instruments. Spread is inherent in the structure of market quotes and slippages are unavoidable but the only difference is the spreads and slippages in other instruments like stocks, equities and futures are accountable and you never to doubt whether that's just how the market is or whether it's a result of manipulation by the brokers simply because they are traded on a central exchange where all the big players' action are under the scrutiny of the general public and regulators; they cannot hide behind the excuse of protecting anonymity; there is complete transparency unlike in FX, NOT just retail FX, everything happens in a "black box". What happens when you clicked that "submit" to submit your order? Nobody knows. If you want to know who was on the other side of my transaction, who filled my order, how did my transaction get filled, where did my transaction get filled, nobody can tell you.

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.
Make your losses in demo. Earn your profits live.
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