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FXCM fined for for failing to treat its customers fairly


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FXCM fined for for failing to treat its customers fairly

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  #11 (permalink)
 Jason Rogers 
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Peter View Post
After the NFA 2011 ruling FXCM only reimbursed their American clients. To the best of my knowledge FXCM did not refund their international customers with accounts in the US. Of course FXCM did not have to as per strict interpretation that the NFA ruling only applied tot their American customers.

Hi Peter,

That was not the case. We gave price improvement credits to all current and former FXCM US clients who were affected, whether they lived in the US or internationally.


Peter View Post
Furthermore it is quite obvious that the business practices for which FXCM was fined in the US in 2011, had also been practiced at other FXCM branches. FXCM apparently deemed it appropriate to wait 3 year for another ruling (now in the UK) to be ordered to compensate the UK clients. BTW...Is it all UK clients or only clients with a UK residency?

It's important to note that each jurisdiction has its own requirements which we must follow. While it took longer for the FCA to complete their review, once the settlement was reached, we gave price improvements to all current and former FXCM UK clients who were affected, whether they lived in the UK or internationally. Furthermore, we took the proactive step of making sure the updates we made to our execution system in 2010 benefited all of our clients worldwide regardless of their jurisdiction. That means FXCM is currently one of the only firms in the industry to give price improvements on both limit orders and market orders.

By contrast, when a dealing desk broker re-quotes traders, the trader often receives a re-quote when the market moves in their favor, but does not receive a re-quote when the market moves against them. In other words, the process is asymmetrically applied to the brokerís benefit. It's possible that this asymmetrical application of re-quotes could cause traders to miss out on potential price improvement. That's why we welcome the FCA's announcement that they're conducting a review of the execution practices of 40 firms in the industry, which we hope will uphold the same high standards and execution policies FXCM implemented back in 2010.

If you have questions about our services at FXCM please send me a Private Message.
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  #12 (permalink)
 Peter 
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Jason Rogers View Post
Hi Peter,

That was not the case. We gave price improvement credits to all current and former FXCM US clients who were affected, whether they lived in the US or internationally.

Thanks Jason,
I have to assume you must be better informed than me, so my apologies on this point.
My opinion was based on statements from some former international FXCM clients with accounts in the US, who claim that they were not reimbursed.
But apparently they were wrong, so I will follow this up with them.

Just to be clear as I like to have the facts right when following this up.
You say you gave 'price improvement credits'. Were these credits in the sense of 'available credit' to be used in further trading? If so, how would that benefit 'former' US clients that may not be trading anymore at FXCM?
Or did you credit the monetary amount into the bank account of current and former US clients?


Quoting 
It's important to note that each jurisdiction has its own requirements which we must follow. While it took longer for the FCA to complete their review, once the settlement was reached, we gave price improvements to all current and former FXCM UK clients who were affected, whether they lived in the UK or internationally.

Here I can not agree with you.
I can not imagine any legal reason that would have prevented FXCM from it own free will to reimburse your UK clients before the settlement. I can even imagine that the FCA might have looked positively on such action.

Why wait 3 years? With the turnover of clients, en people moving and changing banks, etc. .....how do you even want to contact your former clients to reimburse them?

But please correct me if I am wrong.
Was there any legal reason that impeded FXCM to reimburse all clients at all FXCM branches/jurisdiction?


Quoting 
Furthermore, we took the proactive step of making sure the updates we made to our execution system in 2010 benefited all of our clients worldwide regardless of their jurisdiction.

That action appears more as common sense to me (to prevent future liabilities and problems) than anything else.


Quoting 
That means FXCM is currently one of the only firms in the industry to give price improvements on both limit orders and market orders. By contrast, when a dealing desk broker re-quotes traders, the trader often receives a re-quote when the market moves in their favor, but does not receive a re-quote when the market moves against them. In other words, the process is asymmetrically applied to the brokerís benefit. It's possible that this asymmetrical application of re-quotes could cause traders to miss out on potential price improvement. That's why we welcome the FCA's announcement that they're conducting a review of the execution practices of 40 firms in the industry, which we hope will uphold the same high standards and execution policies FXCM implemented back in 2010.

I think there is an apples vs oranges comparison going on here. I don't think the FXCM fines were related to dealing desks re-quoting.
But anyway, ...it will be interesting to see then if the FCA will fine these 40 firms similarly as FXCM.


But I notice that you did not answer my question:
Will now all of your clients be reimbursed for actions/issues related to the NFA and FCA ruling?
By Ďallí I mean independent of where they live and independent at which FXCM branch they had their account?

E.g. your AU customers....

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  #13 (permalink)
 Jason Rogers 
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Peter View Post
Thanks Jason,
I have to assume you must be better informed than me, so my apologies on this point.
My opinion was based on statements from some former international FXCM clients with accounts in the US, who claim that they were not reimbursed.
But apparently they were wrong, so I will follow this up with them.

Just to be clear as I like to have the facts right when following this up.
You say you gave 'price improvement credits'. Were these credits in the sense of 'available credit' to be used in further trading? If so, how would that benefit 'former' US clients that may not be trading anymore at FXCM?
Or did you credit the monetary amount into the bank account of current and former US clients?


Here I can not agree with you.
I can not imagine any legal reason that would have prevented FXCM from it own free will to reimburse your UK clients before the settlement. I can even imagine that the FCA might have looked positively on such action.

Why wait 3 years? With the turnover of clients, en people moving and changing banks, etc. .....how do you even want to contact your former clients to reimburse them?

But please correct me if I am wrong.
Was there any legal reason that impeded FXCM to reimburse all clients at all FXCM branches/jurisdiction?


That action appears more as common sense to me (to prevent future liabilities and problems) than anything else.


I think there is an apples vs oranges comparison going on here. I don't think the FXCM fines were related to dealing desks re-quoting.
But anyway, ...it will be interesting to see then if the FCA will fine these 40 firms similarly as FXCM.


But I notice that you did not answer my question:
Will now all of your clients be reimbursed for actions/issues related to the NFA and FCA ruling?
By ‘all’ I mean independent of where they live and independent at which FXCM branch they had their account?

E.g. your AU customers....

Each jurisdiction has its own rules which we must follow. With both the NFA and FCA settlements, our clients and former clients were able to withdraw any price improvement credits received to their bank accounts. While those settlements applied specifically to our clients trading with FXCM US and FXCM UK prior to 2010, we made changes to our execution system in 2010 to benefit all our clients worldwide. In the last six months alone, FXCM clients have received price improvements totaling over $15 million.

If any of the people you spoke with still have questions, please let them know they are welcome to ask on our FAQ.

If you have questions about our services at FXCM please send me a Private Message.
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  #14 (permalink)
 Peter 
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Jason Rogers View Post
Each jurisdiction has its own rules which we must follow. With both the NFA and FCA settlements, our clients and former clients were able to withdraw any price improvement credits received to their bank accounts. While those settlements applied specifically to our clients trading with FXCM US and FXCM UK prior to 2010, we made changes to our execution system in 2010 to benefit all our clients worldwide. In the last six months alone, FXCM clients have received price improvements totaling over $15 million.

If any of the people you spoke with still have questions, please let them know they are welcome to ask on our FAQ.

Thank you for your clear answer regarding the 'price improvement credits'. If the US was handled in the same way as described in the UK FAQ, then some statements of previous international US customers that claim that they were denied such 'price improvement credits' in 2011 after the US NFA ruling are apparently wrong.
As mentioned, I will follow that up at another Forex related forum.... if FXCM did right .... FXCM did right ....
I think the English expression is ... calling a spade a spade ...or something.
I am certainly not biased against FXCM... I am even trialling your services.

But you still didn't answer my other questions, may-be I was not clear.
So let me re-phrase my questions again (numbered for your convenience).

After the 2011 NFA ruling, FXCM knew that the same practices for which FXCM was fined had also been practiced at other FXCM branches.
And as you repeatedly stated ....After the NFA ruling FXCM decided to pro-actively adapt its practices word-wide (I don't question that point).
But my questions remain:

1. What was the reason that FXCM in 2011 did not extend the 'price improvement credits' to all FXCM clients at all FXCM branches word-wide? Why did DXCM wait until after the 2014 UK ruling to reimburse their UK clients?

To preempt that you may answer that there are 'rules that FXCM must follow'.
I can't imagine any rule of regulators or legal impediment that would have prevented FXCM to start such 'price improvement credit' action word-wide in 2011.

2. Can you please explain which rules would prevent FXCM to reimburse clients if FXCM had wished to do so?

3. I note that you missed the question about other geographies. There are now rulings against FXCM and fines in two geographies (US in 2011 and UK in 2014). But FXCM has as far as I know also a branch in Australia and had a branch in Canada.
Will now all FXCM clients be reimbursed for actions/issues related to the NFA and FCA ruling?
By Ďallí I mean independent of where they live and independent at which FXCM branch they had their account?
Will Australian and Canadian clients of before 2011 receive 'price improvement credits'?

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  #15 (permalink)
 Big Mike 
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One thing that comes to mind @Peter is FXCM is a public company, and shareholders generally prefer profits over giving them away. Obviously there is a balance between profits and 'doing the right thing', but this is not limited to FXCM, but any public company.

Mike

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