1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

FastBrokers and FXDD case

Discussion in 'Scam Alerts' started by Raimundas, Mar 13, 2012.

  1. FreddyFX

    FreddyFX Sergeant

    Joined:
    Oct 3, 2007
    Messages:
    350
    Likes Received:
    138
    Gives me the same feeling about marihuana now getting legalized everywhere.
    What a world we live in today !!!
    Anyhow, meanwhile we keep trading and making money, as long as we can take the monthly payout.
     
  2. Raimundas

    Raimundas Corporal

    Joined:
    Sep 29, 2009
    Messages:
    87
    Likes Received:
    7
    To the best of my knowledge, both branches (FXDD US and FXDD Malta) use the same farm of MT4 trading servers'. Thus, it's very likely, that FXDD Malta's clients also suffered from differential slippage.
     
  3. FreddyFX

    FreddyFX Sergeant

    Joined:
    Oct 3, 2007
    Messages:
    350
    Likes Received:
    138
    Honestly I need to say that I have NEVER noticed anything and I would like to know how one can check for those type of practices ??
     
  4. BigT1

    BigT1 Sergeant Major

    Joined:
    Jan 21, 2009
    Messages:
    951
    Likes Received:
    22
    Hello FreddyFX,
    .
    With respect, do you really think you should have been able to notice? Are you really that nieve?
    You think yourself so knowlegeable and sophisticated as to be able to just 'sense' such activity; you don't know the half of it!
    Every attempt possible to prevent you from "noticing" had already been taken before you were born.
    Only a competent regulator can drill down thru the non-public, internal records of a Broker-Dealer to examine the internals of such transactions.
    .
    THAT IS WHY WE HAVE REGULATORS !!
    .
    Work with unregulated or poorly regulated firms or their off-shore subsidiaries at your own risk.
    .
    Please recognize that firms that are heavily regulated in the USA who own offshore subsidiaries tend to syphon their US-sub profits to offshore accounts, primarily to keep them away from the reach of such US Regulators and tax authorities.
    .
    FXDD and other such firms will surely continue to milk their US markets for all they are worth, until the cost of regulation including fines and disgourgements come to exceed their annual take.
    The longer-term effect of recent regulatory tightness in the US will likely be to force such firms to close their US operations in order to escape effective regulation.
    The US regulators are only too glad to see them leave, rather than to be burdened with the drudgery of complex oversight in a world riddled with fraud.
    Hence the move to lower leverage, FIFO, no hedging; and with more to come.
    .
    You may continue to "buy chinese" as long as it is cheap; but, be prepared for the inevitable WW-III.
    .
    AI
    .
    PS: To answer your question, "How can you know how to check . . . "
    Try 10 years of advanced education in mathmatics and finance, add licensure by examination in a dozen discliplines, and 20+ years of licensed practice, for starters.
    If you are serious, work with a licensed professional instead of blowing balloons after a few months of inexplicable success.
     
    #224 BigT1, Dec 12, 2012
    Last edited: Dec 12, 2012
  5. FreddyFX

    FreddyFX Sergeant

    Joined:
    Oct 3, 2007
    Messages:
    350
    Likes Received:
    138
    EVERY medallion has a flip side.

    WW3 is already upon us, but maybe some people are to naive to understand that.

    Bottom line, most of us here are not really trading the real forex market.
    It is NOTHING more than a sophisticated computer game, but as long as there is money to be made in it, ..............
     
  6. Onyebuchim C. Obike

    Joined:
    May 15, 2008
    Messages:
    180
    Likes Received:
    2
    Hi all, just want to share this below....... (its a mail from ForexVerified.com) I quite agree with the writer.


    December 7, 2012 Headline: NFA Takes Emergency Action Against FXDD

    On Friday the NFA took an emergency action against FXDD (US). Why? FXDD is going to be ordered to pay a yet-to-be-determined restitution (estimated at $3.3 million) and they want to make sure FXDD has enough money to cover it.

    So they asked FXDD to put some money in an escrow account to make sure they'll have enough money. This is great but was an "Emergency Action" necessary?

    In the last CFTC capital report (Sept 2012), they showed that FXDD has over $27 million in net capital on reserve. Those funds are already set aside to handle unforseen expenses like this. The NFA requires a minimum of $20 million on reserve.

    The history: slippage scam?

    It doesn't take much digging to find the history of this case. Between December 2009 and June 2011 FXDD did what was commonplace in the industry.

    Positive Slippage: from the moment you presed the "buy" or "sell" button, if the market slipped in your favor (in the direction of your trade), they would still fill you at your originally quoted price. It's called "positive slippage", but FXDD limited it to 2 pips. They were willing to eat the loss on up to 2 pips of slippage in order to give you the originally quoted price. But if it was more than 2 pips, they would reject the order "Off-Quotes".

    Negative Slippage: on the flip side, if the market slipped against you, rather than giving you the 'new' price at the better position, FXDD still filled you at the originally quoted price. Even if the market slipped against you by more than 2 pips.

    "Asymmetrical price slippage practice" is what the NFA calls it. FXDD wanted to fill customers' orders at the requested price but were only willing to eat up to 2 pips of a loss to do it, while they were willing to take more than 2 pips of profit if the market had slipped the other direction.

    Evil corporation. How dare they fill our orders at the price we clicked?!

    But wait, there's more!

    FXDD already stopped this practice in June, 2011. That's right; in June 2011 they changed the slippage allowance to only 2 pips on either side before the order was rejected.

    In fact, this "issue" was mostly resolved a year before that, June 2010. Between December 2009 and June 2011 (19 months), the NFA found a total of 265,696 trades that had more than 2 pips of slippage benefiting FXDD. The first 7 months (thru June 2010) accounted for 215,464 of those trades (avg 30,780 trades per month). The last 12 months (July 2010 thru June 2011) only had 50,252 affected trades (avg 4,187 trades per month).

    Here's a summary:

    For a 7-month period through June 2010, FXDD gave customers the price they clicked even when FXDD benefited from it by more than 2 pips, with 215,464 trades affected.

    For the next 12 months, the issue was largely resolved (perhaps due to faster trade execution?), with only 50,252 affected trades over the entire 12-month window.

    In June 2011 FXDD updated their policies and started rejecting any trades that had more than 2 pips of slippage.

    Does this sound like a scammer company that was trying to rip off its clients? Or does it sound like a company that started out with normal industry practices, improved their execution speed and order fills, and worked to resolve issues whereby clients had too much slippage?

    Keep in mind we're talking about 2009 and 2010. Our demands from brokers are far more advanced now. Back then execution was slower, slippage was more common, spreads were significantly wider. The retail Forex market was still in its infancy and computer technology, in general, was a bit slower. By 2012 our standards have risen and this type of slippage practice may sound horrible, but 3 years ago it was simply part of trading the massive Forex market from the comfort of your home.

    June 29, 2012 (over 1 year later) the NFA issued the complaint against FXDD for the asymmetrical price slippage settings that mostly affected trades between December 2009 and June 2010, and which were completely stopped by June 2011.

    December 7, 2012 culminates with an emergency action against FXDD demanding that they set aside money to cover the restitutions that are yet to be determined for clients that were affected by slippage 2-3 years ago.

    The net result of this? Nothing changes at FXDD because they already took care of the slippage setting in June 2011. But now, over a year later, FXDD's reputation is hurt and those who do not read the details of the complaint think that FXDD was scamming people and the NFA "just" stopped them now. Thanks to the "emergency action" of course.

    Don't get me wrong - I am thankful that we have a regulatory agency like the NFA that is looking out for the traders and keeping brokers in line. And I understand that it can take time to sift through millions of trades looking for slippage that benefited a broker.

    But I seriously wish there was a better way to handle it. The recent news and emergency alerts floating around right now are demonizing FXDD as if they were still involved in some evil scam. First: it wasn't a scam, and second: the policy ended over a year and half ago.

    If the NFA wants to fine FXDD and demand restitution, that's fine, but let's also emphasize that this is old news that mostly affects trades that were placed over 2.5 years ago.

    NFA Case Summary:
    Case Summary

    NFA Complaint against FXDD (June 29, 2012)
    http://www.nfa.futures.org/basicnet/CaseDocument.aspx?seqnum=3347

    NFA News Release - Emergency Enforcement Action (December 7, 2012)
    NFA takes emergency enforcement action against New York forex dealer member, FX Direct Dealer, LLC (FXDD)

    --
    Scott Wang
    Forex Verified Admin
    Forex Verified Performance Testing
     
  7. BigT1

    BigT1 Sergeant Major

    Joined:
    Jan 21, 2009
    Messages:
    951
    Likes Received:
    22
    Hello Corporal Obike,
    .
    Scott Wang's remarks are well taken. A few points:
    1 - The MRA was likely issued this month because the broker has exhibited a pattern of systematically syphoning off capital increases generated from profits once they exceed the NFA minimum requirements, and have done so regularly on December 31 of each year. See my post# 216. This action specifically ties their hands from doing so again this year-end and until the complaint is resolved, unless they post bond. This has the net effect of forcing the minimum capital to be increased by the amount of the escrow or bond. It would be interesting to see the price FXDD would have to pay to secure such bond from a hard-nosed guarantor like Lloyds of London, AIG, or General Re; a fine barometer of corporate 'trustworthiness'.
    2 - I believe their is an inversion in the way Scott discussed neg & pos slippage, but you get the idea.
    3 - However, Scott's suggestion that 2010 were the technological Neanderthal days is absurd. I traded Duetsche Marks before 1990 with computer technology, without any such issues.
    4 - You can't legislate morality, it has to come from within the culture of a firm's management. FXDD had the audacity to attempt to sue it's own clients on false grounds.
    If they hadn't been investigated for that, they would still be bilking their clients in the same manner.
    5 - Management's holding firm's capital near the NFA minimum as it grows is not a characteristic that as a CTA, would permit me to place sizeable funds with them.
    6 - In general, I see no reason to use any marketmaker as my broker dealer, and don't understand why anyone else would. You are always better to pay a broker a fixed lot commission, and get Straight-thru pricing.
    .
    AI

    .
     
    #227 BigT1, Dec 12, 2012
    Last edited: Dec 12, 2012
  8. PipStar

    PipStar Sergeant

    Joined:
    Oct 14, 2007
    Messages:
    223
    Likes Received:
    5
    I think that they would have been investigated anyway but you could be right that it may have been prompted by FXDD's decision to sue its customers.
    NFA knows that almost all forex brokers have used asymmetrical slippage practices. They are going after them all one by one to eventually shut down as
    many of them as they can if not all.

    You will get straight-thru pricing to .......uhh.......a market maker.
     
  9. BigT1

    BigT1 Sergeant Major

    Joined:
    Jan 21, 2009
    Messages:
    951
    Likes Received:
    22
    No sir PipsStar, I get straigtht thru to Banks directly, but I can't speak for you.
    There is no question that the legal discovery process and the victim filings with the NFA at our behest here on FPA led directly to the NFA audit of FXDD that resulted in the citations, their management cleanout, their liability, their settlement of the prosecutorial case, and their current public exposure.
    .
    AI
     
  10. FreddyFX

    FreddyFX Sergeant

    Joined:
    Oct 3, 2007
    Messages:
    350
    Likes Received:
    138
    Interesting conversations here.
    But I am not going to lay awake at night worrying about what might be wrong with what I eat or drink.
    I have been doing a lot of business in the past with USA firms (banks) during the time I had my contractor activities.
    Some claim to be holier than the pope..........and those cheat the most.

    I expect FXDD to solve the matter, Big Boys always do.

    They are making good money with the Managed Accounts I run there, so NO reason to run or get stopped doing business.
     

Share This Page