FBS Official Rep
FBS Representative
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In my opinion, the optimal decision in such case would be setting the result from the deal to zero.
In addition to this, brokers must pay attention that leverage requirements must be changed several days before such major events and traders must be informed 1 week ( or more ) in advance!
I believe that the broker has acted incorrectly here! No matter what was the leverage at that moment, the deal had been in profit in that past moment when the market had been in a pre-market session, thus adding to account's margin. There were no reason to execute it in the session's friday closing price.
However, in case the broker proves that the trader had acted completely unreasonably by taking too much risk, I would definitely vote for the broker in case this turns into a public voting. There is no place for betting before such major events!
Thank you for your reply and support.
We definitely understand the necessity of timely notification and exactly for this purpose, we have created a Customer Agreement, that covers such situation. Market opening is already the time, when clients’ orders are especially exposed to risks, but in this specific situation the risks were doubled by the upcoming referendum in Greece. And in all bespoken cases our clients are already informed about the possible leverage change by the 3.7.4. paragraph of the Customer Agreement:
3.7.4. In order to minimize Client's risks at the time of market opening on Monday, in case a Client kept open orders during the weekend, the Company reserves the right to lower the leverage and change margin requirements severalfold.
We do understand your point about changing leverage several days before such major events, but as we explained in the previous reply, at that moment such method had been considered as not advantageous for our clients:
“Some of the brokers lower the leverage several hours before Market closure, but this method is quite risky for those clients, who want to close their orders right before Market closure, because they wait for the suitable price, since abrupt leverage decrease can cause unexpected Stop Outs. The other method is lowering the leverage before Market opening. This way, those clients, who want to close orders before Market closure can do it without any difficulties, and those clients, who want to leave their orders for a weekend may foresee the leverage decrease and calculate the needed order volume and margin or even deposit on their account in order to avoid orders closure. FBS company always tries to look into clients’ needs, so in this abnormal situation the second variant has been considered as the most preferable.”
Regarding your comment about profitability of the order, we would like to state that at the moment of the Market Closure the order was with loss even with the leverage 1:2000. Also, we would like to explain why the order was closed not by the current Pre-Market price, but by the price of the Market Closure: the order was just executed during the Pre-Market session, but as a result of the clearing operations, in other words, there was not open Pre-Market trading on the platform.
We would like to provide you with the screenshot of the client’s Trading History: https://image.prntscr.com/image/Jh6cGgZQSz6ys7F2POrBVg.png
As you may see from the screenshot, at the moment of the order opening the client’s balance was 828.02$. The client opened an order with 1.5 lot volume several hours before Market Closure, using news trading strategy, and left it for the weekend. FBS company allows news trading, but since this is very risky strategy, by using it a client accepts the risks of irregular market conditions and supposedly fully understands potential impact of them. More than that, the clients are notified about the probable risk reducing measures (such as leverage decrease) by Customer Agreement in advance.
At the moment of Market Closure the order profit was -495$ (less than the half of the account balance). And after the leverage was lowered, the order margin was 1670.6, which exceeds the account balance twofold. In fact, the time of leverage decrease doesn’t matter (right at the Market Closure or in any other moment).
We would like to state, that the prices of other sources were not analyzed, our actions were just a result of inner operation, which could have been performed any moment earlier or even before Market Closure, on Friday. Yet, we are trying to execute such operations as late as possible in order to give client an opportunity to either close the order or deposit for the order maintenance.
Therefore, the client had a possibility to prevent his balance from going negative, but preferred to take risk, unfortunately.