Forex Capital Markets LLC Ordered to Pay More Than $14.2 Million to Settle CFTC Charg

Jason Rogers

FXCM Representative
Messages
510
So much for those commercials that said they don't take the other side of the trade or trade against you.

Intentionally promoting slippage against a customer is trading against a customer.
Hi strangelove,

With FXCM's NDD forex execution, every order is immediately executed back to back with one of multiple banks or financial institutions. Every FXCM NDD forex trade is automatically offset in a two-step process, designed to ensure that FXCM does not profit from a trader’s losses. In the first step of the execution process, a trader clicks on the price and the order is sent to FXCM. In the second step, FXCM automatically sends the client’s order to one of its liquidity providers to offset the trade. The NFA and CFTC cases have to do with positive slippage in the second step of the off-setting transaction not being passed on to the trader.

All orders on FXCM's NDD forex execution can now receive positive slippage dependent on liquidity.

-Jason
 

Jason Rogers

FXCM Representative
Messages
510
What's disturbing is this is common practice among all brokers. They guarantee limit order prices (pending limit orders, and Take Profit limits) but don't guarantee stop orders (pending stop orders, and Stop Losses)....
Hi Scott,

Whether other brokers offer positive slippage is something traders will need to review through the execution on their trading activity. All orders with FXCM's NDD Forex execution are filled at the best price available which includes FXCM's mark-up, and orders can experience both positive or negative slippage dependent on available liquidity.

FXCM has released data from July 1, 2010 through June 30, 2011 displaying the percentage of orders positive slipped and negatively slipped, and which orders most frequently experience each. I have included the tables below:


And we have broken this down even further to display the number of orders on a monthly basis positively and negatively slipped:


Limit and limit entry orders are the most likely to experience positive slippage which is why we highlight using limit and limit entry orders in the execution center on our website. You can find even more data on slippage broken down per order type in the complete report here: Slippage Statistics

-Jason
 

Jason Rogers

FXCM Representative
Messages
510
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Why was I taken out of a short trade on EURCAD 2011-09-20 at 21:06?

My StopLoss was at 1.36140. The high at that bar is 1.36029

That is a difference of 112.

Checking the spread it seems to range between 60 an 70 and you list a typical spread of 44 on your website.

Or if I use the price where it was bought, 1.36144, the spread is 116
Hi ingvar_e,

If you have a short position, meaning you have sold the currency pair, the order to close the trade will be a buy order executed at the buy price. Most charts will automatically display the sell price, which means you need to factor in the spread to determine what the buy price was at that time and if your order price was reached.

The Marketscope charts in the FX Trading Station II platform gives you the option to view either the bid(sell) or ask(buy) price. You mentioned your EUR/CAD trade was closed on Sept 20th at 21:06 (GMT) so I have posted a screenshot below to display the bid versus the ask chart at that time. The bid chart is on the left and the ask chart is on the right. Additionally, I have drawn a line at 1.3614 where you mentioned your stop loss order was located. (Note: my chart says 17:06 for the time since it is in eastern time and 4 hours behind GMT)


According to the ask(buy) chart on the right, the price 1.3614 was reached. This period was right after rollover, and we tend to see volatility increase during the rollover period starting at 17:00 ET (21:00 GMT). With FXCM’s NDD forex execution, we automatically take quotes from 10+ liquidity providers and display the best bid/ask price with our pip mark-up. This means that FXCM does not control the prices you see on the screen or where the market is moving.

If bid vs. ask charts were not clearly explained by our audit team, I do apologize. I can't publicly post about the details of your audit, but please feel free to email me if you have any questions (jrogers@fxcm.com)

-Jason
 

Scoony

Private, 1st Class
Messages
41
Isn't there a law that punishes someone for lying online ??? For this BS you should..

Hi strangelove,

With FXCM's NDD forex execution, every order is immediately executed back to back with one of multiple banks or financial institutions. Every FXCM NDD forex trade is automatically offset in a two-step process, designed to ensure that FXCM does not profit from a trader’s losses. In the first step of the execution process, a trader clicks on the price and the order is sent to FXCM. In the second step, FXCM automatically sends the client’s order to one of its liquidity providers to offset the trade. The NFA and CFTC cases have to do with positive slippage in the second step of the off-setting transaction not being passed on to the trader.

All orders on FXCM's NDD forex execution can now receive positive slippage dependent on liquidity.

-Jason
I find it incredible that everybody is allowed to BS everybody else as long as it is online. Jason, would you make that statement under oath? I guess not because you would probably end up in jail... FXCM is a scam...bigger and better than most others but in the end it is a SCAM, no matter what you say. And that is the reason why the CFTC to the same conclusion... I have experienced it a few times and I am confused why people still trade with FXCM...but I dont have to understand everything.
 

WaverunnerSD

Recruit
Messages
1
to answer your 1st question, it's hard to say. it's pretty much a trial & error process. start with small amounts, i.e. 10K USD, and brokers such as MBTrading, Dukascopy, PFGBest, FinFx, Pepperstone, seem to behave properly. However, as soon as your account size increases to more than 100K, you may start seeing slow fills, slippage and so on... which might have more to do with the amount of lots you trade per trade and thus lack of liquidity to fill your order, not necessarily due to nefarious broker behavior. size does matter and beyond a certain size, a prime broker is the way to go, not a retail broker.

i don't want to sound like THE authority on this, but this is based on my personal investigations. i might be wrong so anyone who knows more please feel free to correct me here.
Which brokers are the prime broker as you call it? Can you recommend a few of them?

As how to find a fair broker, you can't. My way of dealing with this is to open an account with 2-3 brokers and install the same EA on all of them. If you see any one of them executed your trades at a much worse price than the others, you can then bring the complaint up to the broker and ask the broker to match to the other brokers' price or you will move your business to the other broker. This is not a threat to the broker. This is to protect ourselves.

If we all run our trading business this way, we will help cleaning up this industry.
 

GhostCat

Recruit
Messages
4
@ Waverunner...i salute you..thank you for your input

Which brokers are the prime broker as you call it? Can you recommend a few of them?

As how to find a fair broker, you can't. My way of dealing with this is to open an account with 2-3 brokers and install the same EA on all of them. If you see any one of them executed your trades at a much worse price than the others, you can then bring the complaint up to the broker and ask the broker to match to the other brokers' price or you will move your business to the other broker. This is not a threat to the broker. This is to protect ourselves.

If we all run our trading business this way, we will help cleaning up this industry.
Thank you for your imput..i will keep this in mind..as i go hot again...thanx
 

Triantus Shango

Sergeant Major
Messages
1,372
GhostCat/waverunner

As regards prime brokers here are a few names (ghost cat is right):

FXAll, Deutschebank, citi, the big names basically.
 

Montag

Recruit
Messages
1
I know this post is a couple of months old, but hopefully you are still traking it.

Do you stay out of the Forex market then?

You are absolutely correct about the fines being lame at best. It seems there are crooks in both the Forex and Stock markets. The financial waters are hard to navigate for all the sharks out there. It would be nice to be able to trade in a resonably honest market. If I lost in such a market, my bad. It's losing to crooks that's hard bear.

Brokers get fined all the time for their incompetence and negligence toward their suckers, err customers.

I started trading commodities back in the early 1980's and one of the first things I realized when I started doing research on brokers is how many of them get fined and penalized for this very offense and many other things. They get a little slap on the wrist by the authorities and then spend a little time on "probation" where they have to monitor themselves but then it's back to business as usual.

The fines seem large to us but when a corporation that deals in hundreds of millions of dollars has to pay a few percent in punishment for their misconduct they aren't taking much of a hit. Kind of like having to pay a speeding ticket to us. More of an inconvenience or a price of doing business, nothing more. It doesn't change their policies at all. Other than maybe giving their sales reps a good ass chewing and maybe firing a few people to make it look good it seems like the same old song and dance to me.

Keep in mind, from a brokerage perspective, there is a constant flow of new traders depositing funds and staying around for a relatively short time during which they lose all their account and either quit or move on, so there is an urgent need to make sure they lose all their account at THIS firm since it will happen somewhere anyway, and the real profit is taking the other side of the newbies trades since if overall they are going to be net losers then the broker will be the net winner if they do nothing but take the opposite side. Combine that with commissions and slippage it starts to become clear how much they stack the deck against you. You already have to be doing exceptionally well just to break even, and even better to actually profit.

* Note that most brokers state in the account opening documents that they "may" take the opposite side of your trades. (So you can't say you weren't warned.)

Wake up and smell the Folger's crystals folks.
 

FX 13

Recruit
Messages
8
Did anyone else see this...

Firm also sanctioned for failing to promptly produce certain records to the CFTC’s Division of Enforcement.
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and simultaneously settling charges that Forex Capital Markets LLC (FXCM) failed to supervise diligently its personnel’s handling of more than 57,000 customer accounts that traded on FXCM’s forex trading platforms. FXCM is a registered retail foreign exchange dealer and futures commission merchant headquartered in New York, N.Y. The order also settles charges that FXCM failed to produce certain records promptly to the CFTC’s Division of Enforcement during its investigation.

The CFTC order requires FXCM to pay a $6 million civil monetary penalty and restitution of $8,261,937 to its customers and former customers. In addition, the CFTC order requires FXCM to retain, at its own expense, a monitor to review for three years: (1) its trade execution practices and policies as they relate to the change in price between the time the customer places the order and the time the order is executed by FXCM; and (2) its compliance with its restitution obligation.

According to the CFTC order, from at least June 18, 2008 until December 17, 2010, FXCM failed to supervise diligently the handling of customer accounts traded on the FXCM platforms by its officers, employees, and agents with respect to changes in price between order placement and execution on both market orders and margin liquidation orders. The order finds that FXCM’s failure prevented its customers from receiving the benefit of price movements in customers’ favor, but allowed its customers to suffer detrimental price movements. The CFTC order finds that had FXCM diligently supervised its personnel, FXCM would have discovered these problems with its trade integrity and would have had the opportunity to correct them before its customers were deprived of, and FXCM benefitted by, approximately $8,261,937.

Further, the CFTC order finds that FXCM failed to produce certain records promptly in its capacity as a CFTC registrant and thereby required the CFTC to issue a subpoena to attempt to obtain required records from FXCM.

The CFTC thanks the National Futures Association (NFA) for its assistance. On August 12, 2011, the NFA issued a Decision imposing a $2 million monetary sanction against FXCM in settlement of an NFA action (NFA Case No. 11-BCC-016) involving some of the same practices identified in the CFTC order.

CFTC Division of Enforcement staff members responsible for this case are Charles Marvine, Christopher Reed, Rachel Hayes, Stephen Turley, Rick Glaser, and Richard Wagner.

Media Contacts
Dennis Holden
202-418-5088

EDIT: Original CFTC Press Release is here...

Forex Capital Markets LLC Ordered to Pay More Than $14.2 Million to Settle CFTC Charges Relating to Its Failure to Supervise Customer Accounts
The bad part here that all customers worldwide were gamed by FXCM & only US customers will be paied back as NFA forced FXCM to do so. Shows that FXCM looking only for fast profits & not so fair for customers in UK & elsewhere.

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