FXCM slipage accountability - Good news for us

[Normbell]

Waverider, thank-you for posting this in the first place.

It's great to know someone is looking out for us small fry.

Jason, I assume the $2,000,000 fine was in relation to the USA branch of FXCM.
Were the UK branch of FXCM also investigated and made to pay a fine?
I assume they have the same positive slippage issues.

This is a relavant question as I use an FXCM demo but have found the customer service awful at answering a straight question.
I have saved all the correspondence which is frankly laughable.

 

[Tank]

waverider you sure are negative hey i only have a micro account with fxcm but over the 12 months ive been with them i havent noticed slippage to be honest. the 1 time i thought there was i complained and they did a proper audit and explained things in detail, i checked the bid and offer prices wrongly. i should also mention that the trade was only for a couple of micro lots, less then 10, so if they go through so much trouble for a tiny trader it says allot to me

 

[Triantus Shango]

My experience with FXCM and conclusions

waverider you sure are negative hey i only have a micro account with fxcm but over the 12 months ive been with them i havent noticed slippage to be honest. the 1 time i thought there was i complained and they did a proper audit and explained things in detail, i checked the bid and offer prices wrongly. i should also mention that the trade was only for a couple of micro lots, less then 10, so if they go through so much trouble for a tiny trader it says allot to me

Tank

First, I was an FXCM client about 5 or 4 years ago when they were using the market maker business model and basically all the dirty tricks in the book. The NDD model came about because the competition was giving them a run for the money and only then did they think to offer a slightly better service to their clients, which means they don't really care about their clients since they could have had an ECN with STP from the start instead of choosing to operate as a bucket shop in the first place.

Second, when there are so many ECNs out there offering STP it truly, but TRULY, boggles the mind that people would still choose FXCM as their broker. I... frankly... that always leaves me utterly speechless. One can do so much better than this broker. For God' sake, people wake up!

Third, and what is even more mindboggling, is that now that they claim to have switched to an ECN/STP model, some of the early scam issues still do occur! So you gotta ask yourself: what kind of ECN/STP is this really? I use the ECN/STP term for NDD.

And fourth, micro account traders don't have to worry. They are too small. Micro accounts are a marketing gimmick to hook you and reel you in. So micro should give you the best impression possible because that way they hope you will deposit much more money later to trade a regular account. That's when they can start making real money off of you.

Hope this helps open eyes. Finally.

 

[Jason Rogers]

Jason, I assume the $2,000,000 fine was in relation to the USA branch of FXCM.
Were the UK branch of FXCM also investigated and made to pay a fine

Hi Normbell,

The change to our execution process made last year adds positive slippage on all orders to all clients regardless of their jurisdiction. However, the settlement only impacted FXCM US accounts. No other accounts are eligible for a credit.

-Jason

 

[Pharaoh]

Does that mean that FXCM UK is just going to pocket the money that should never have been taken from traders?

If it's wrong in the USA, why is it ok in the UK?

If FXCM really intends to do this, I hope that UK clients all file complaints with the FSA.

 

[Jason Rogers]

The NDD model came about because the competition was giving them a run for the money and only then did they think to offer a slightly better service to their clients, which means they don't really care about their clients since they could have had an ECN with STP from the start instead of choosing to operate as a bucket shop in the first place.

Hi Triantus Shango,

FXCM transitioned to NDD forex execution starting in 2006 during which time most of our competition was still operating a dealing desk and before it became vogue for brokers to start applying STP/ECN to their marketing. This was a big business risk we took at the time since it was basically uncharted territory for retail forex trading, but the adoption of STP execution by other brokers since then leads me to say our decision was the right one to make both for our clients and our business.

We introduced NDD forex execution because of the benefits of no re-quotes, no dealer intervention, and no order restrictions on how close you can place stop/limit/entry orders to the current market price. These were the biggest hindrances I can remember hearing from traders before introducing NDD and still the most annoying things you will likely run into when trading with a dealing desk broker. The type of volume coming in during news events and active trading strategies can make it difficult for a dealing desk to manage their own risk. Having every order offset one for one with another liquidity provider via NDD forex execution eliminates this risk. From a business stand-point, it also means not having to rely on the trading abilities of the brokers dealing desk to not make poor trading decisions in managing their own risk. If a broker making the market manages their risk incorrectly, then there’s a big business risk for traders and shareholders.

Micro accounts are a marketing gimmick to hook you and reel you in. So micro should give you the best impression possible because that way they hope you will deposit much more money later to trade a regular account. That's when they can start making real money off of you.

Micro lot trading is available in standard 10k accounts. The reason why there’s a separate micro account from standard 10k account is due to the operating costs associated with offering an account with a $50 minimum. The cost of supporting a $50 minimum balance micro lot account would likely exceed the pip mark-up being paid on micro lots in the $50 micro account which is why there’s an emphasis on online support to keep costs lower. The micro account allows new traders to test our execution and services with a small account balance, and they can later switch to a standard 10k account later for added benefits if they choose.


- Jason

 

[Pharaoh]

Hi Normbell,

The change to our execution process made last year adds positive slippage on all orders to all clients regardless of their jurisdiction. However, the settlement only impacted FXCM US accounts. No other accounts are eligible for a credit.

-Jason

I see you edited your original wordng, but my question still stands.

Does FXCM plan to keep positive slippage that was taken from traders at the UK branch?

If it's wrong to pocket that money in the USA, why is it ok to pocket it elsewhere (other than the NFA not being able to force credits elsewhere)?

 

[Jason Rogers]

I see you edited your original wordng, but my question still stands.

Does FXCM plan to keep positive slippage that was taken from traders at the UK branch?

If it's wrong to pocket that money in the USA, why is it ok to pocket it elsewhere (other than the NFA not being able to force credits elsewhere)?

Hi Pharaoh,

I hit the edit button yesterday, but this was an accident. The original information I posted remains the same.

While I wish I could answer every question for you, I'm only able to discuss what is listed in the FAQ found through the press release . Any questions beyond this, and you will need to email compliance@FXCM.com.


-Jason

 

[Triantus Shango]

I see you edited your original wordng, but my question still stands.

Does FXCM plan to keep positive slippage that was taken from traders at the UK branch?

If it's wrong to pocket that money in the USA, why is it ok to pocket it elsewhere (other than the NFA not being able to force credits elsewhere)?

now that's a great question pharaoh. i'd like to add my 2 cents to this, if i may.

jason, you stated that FXCM started implementing these changes in execution in 2010. (and now, please don't take this personally, i understand, it's your job.) what i don't and can't understand is how on earth a company that is listed on the NYSE with $200+ mil in capitalization wasn't able to offer better execution way before 2010 as a few of its smaller sized competitors were already doing way before 2010, and we are talking years before 2010.

certainly, it wasn't because of a technological impediment as the technology was well understood and available.

therefore i can only conclude it was a business model choice made on the part of management. and that is, how shall say, a resounding indictment.

furthermore, i have an inside scoop on what was going on at the time and the actual company ethics or lack thereof ... so all i can say is that it ain't pretty and since i can't prove it without revealing my sources i will have to stop here.

 

[Amanda_pips]

wow, 2Million of fine against the brokerage?

This is a very strong signal against the reputation against this brokerage.