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FXCM use sync to scam its clients

Discussion in 'Scam Alerts' started by Scoony, Feb 1, 2011.

  1. Jason Rogers

    Jason Rogers FXCM Representative

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    Hi vincam,

    There are 10+ banks quoting prices on FXCM's platform. Out of the 10 separate bid and ask prices being quoted by those banks, the best bid/ask is streamed onto the platform. No one bank can control or manipulate pricing since the quotes reflect the best bid/ask out of all the prices. I could understand there being a concern if there were only one market maker on the platform taking all trades.

    No one market maker can control pricing, spreads, or execution on NDD execution since there is competition from multiple market makers. It ensures a transparent, anonymous, and fair trading environment.

    -Jason
     
  2. vincam

    vincam Sergeant

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    I understand what you are saying Jason but how can we know, in the cheap seats, that all banks are quoting and that you are displaying the best price? We have no way to verify that. If the broker says we closed your trade at the best price offered to us what can we say or do? If the price was the best you could get great, I can't dispute it, the broker may be telling the truth but we have no way to know if that is what actually happened, and it rarely, if ever, happens that our fills are at better prices than we ask, always worse. On a slip for example I have never experienced a slip in my favor, always against me, it makes us all wonder why various errors that occur are always against the trader.

    The confict of interest may be reduced but the potential will always exist that the broker of a NDD manipulates the price for the Market Maker, while the Market Maker may be the one who wins the trade and funds they may compensate the broker in other ways for performing the manipulation for them. Do you guys do that? I have no idea but it is possible, only a dishonest broker would do such a thing but only a dishonest dealing desk would do the same acting as Market Maker.

    Just to be clear I am not implying that FXCM does this kind of thing, I have no idea, just stating that I see how it could be done in this type of arrangement.

    There is also a case in the Trader's court dealing with this thread, I am not sure how to get you in there or if you would be the one to go in there in FXCM's defense. I will check with the Mod and we can talk in there maybe.
     
  3. SMFX

    SMFX Private

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    A few points...

    1. FXCM, like all companies, go public to raise capital for their business and owners. It has nothing to do with "pride".


    2. " They know our interests are aligned with theirs". Really?

    I've already shown in your company's own SEC documents how FXCM are outsourcing their market making services, and are getting paid by the Market Makers for doing so. FXCM's spread markup is only one component of this revenue. There are also other payments made by the Market Makers to FXCM. This is described in your company's SEC filings. Market Makers often make their money by trading against their customers.

    You seem to think that just because FXCM outsource their market making operations, you're justified in advertising FXCM as a "NDD broker". I'll leave that to the regulators to decide whether that advertising is misleading or not.
     
  4. Scoony

    Scoony Private, 1st Class

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    Hello Jason,

    thank you for your comments. I understand that your job is to make FXCM look good and to use ever possible excuse and explanation to do so. That is fine - really. I have worked for retail brokers and I know the problems and the possiblities and I know what an oursourced Dealing Desk is and does. And I do know that many brokers or market makers do offer a percentage of the customers losses as commissions. But that is not what I want to discuss here as this would fill hundreds of pages.

    ALBERT concluded that there ALWAYS has to be a MARKET MAKER to be able to trade. NO, THAT IS NOT THE CASE! A market maker in ONLY needed when the market does not make itself. This means that the seller wants too much for his position and the buyer is not willing to pay as much. So there is a GAP between the price of supply and demand. Nomally the market would just stop there and nothing would happen (=no liquidity). So BROKERS who want the market to keep doing transaction (so that they can make commissions) start MAKING THE MARKET by buying at the higher price (from the seller) and/or selling to the buyer at a lower price. On the outside it apprears that the market has liquidity (because nobody knows who is really buying and selling). So the broker who is also the market maker builds up all these positions and he hopes to be able to close them (with profit) or at least to hegde the position on another market.

    As a conclusion: The market does not need Market Makers (the seller sells to the buyer without anybody inbetween) and that is the natural condition of the market - a Market Maker is an artificial participant to ingnite some transaction.

    Best reagards.

    Florian
     
  5. Jason Rogers

    Jason Rogers FXCM Representative

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    ...When you want to buy shares of stock, where do you go to find a seller?
    ...When you want to buy a futures contract, where do you go to find a seller?
    ...When you want to buy Euros where do you go to find the seller?

    (When was the last time you bought stock without having to find a seller through a broker and pay a commission.)

    There's going to be an in-between in each one of these transactions. The difference is whether that in-between is acting directly as the market maker, creating the market and taking on the other side of your position, or simply finding a seller for your request to buy and then being compensated by a commission (and all within a fair and transparent framework).

    With FXCM's NDD forex execution, your order is executed back to back with one of several banks providing liquidity and willing to take one the other side of that transaction. You see the best bid/ask price streamed onto the platform with a pip mark-up, and your trading is anonymous. In return, FXCM is compensated by the pip mark-up on that transaction. The more transactions you complete on our platform the more revenues generated for FXCM.

    I'm on the forums to help with any questions about FXCM. If information is clearly wrong, false, or appears to be made up, I will provide as much explanation as necessary to explain how our system works. Are we perfect? No. Do mistakes happen? Yes. But I will do my best to help solve any problems or answer any question as I have done over the years.

    -Jason
     
  6. Jason Rogers

    Jason Rogers FXCM Representative

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    Hi vincam,

    I appreciate the questions and can understand the doubts. In the months ahead, we plan to release even more information through the Forex Execution Center to add additional transparency about NDD forex execution on top of what is already available.

    Regarding Forex Peace Army's Traders Court, I think it's a noble service FPA has setup to get unresponsive brokers to listen to their traders. As a regulated broker, FXCM has a complaints procedure through which traders can bring disputes. If traders are unsatisfied with FXCM's resolution, traders can always escalate the issue to our regulator. This is why you should always check on whether your broker is regulated and what type of dispute resolution is available. In the case of FXCM UK, there's even an independent financial ombudsman service required by FSA regulations which retail traders have access to to settle disputes.

    So I could understand responding to the Trader's Court if this issue were being ignored and not investigated, but it has been carefully reviewed by FXCM, and up to the FSA and financial ombudsman according to Florian's video.

    -Jason
     
  7. Scoony

    Scoony Private, 1st Class

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    Hello Jason,

    please do not confuse the term "Market" with "Market Maker". The Market is where you (as a seller) find a buyer and vice versa. The Market can be a technical platform such as XETRA in Germany that matches buyers and sellers. The conflict of interest happens when the Market/Platform supplier becomes a Market Maker buy being the (artificial) counter party of the transaction because as the platform provider you have a lot more information and possiblities to sell what your clients are doing - that gives you an unfair advantage (like a short squeeze). I personally think that a market provider or broker should never be allowed to be a market maker. But of course there are ways around that such as an " outscourced dealing desk". Just the fact that they do not belong to the same entity or are in the same location does not mean they do not share information for a common interest...I am sure you do know what I mean...

    I was wondering if you still think that closing my position on MT4 and closing them again (with a higher loss) is a ligit transaction or would you talk to your colleagues to refund my losses. That at least would leave a better impression about FXCM to all people in this forum.

    Have a good day.

    Florian
     
  8. vincam

    vincam Sergeant

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    I belive what Scoony is trying to do is warn others about the syncing procedure and to watch out for it when dealing with FXCM, and at this point I am with him.

    1.Scoony, can you post the combined statement that Jason talked about in the beginning of this thread that he says will shed more light on the situation? I believe you posted it in the Traders Court but if you post it here maybe we can have Jason expand on it.

    2. So far Jason this is what I see, the MT4 station margin called at one time and at one price. The Trader Station did not margin call until 4 hours later at a worse price then synced an hour later with that worse price factored in. Why would that be?

    3. If he had had both stations open it does not seem like it would help him. He would have seen on the MT4 that he was called, but would have seen no call on the Trader Station. Then what is he supposed to do? Did he get called or not? Was it at the price on MT4 or not? This seems very strange that discrepencies can exist between the two stations, how do you know what really happened? If I open a trade on MT4 and it does not open on Trader Station is it going to open later? If it opens later will the price on Trader Station match?

    Maybe I am missing something here if so please let me know, while the FSA and ombudsman may say this is okay according to how you operate, most traders in here would say it is something to definately be watching for on FXCM.
     
  9. SMFX

    SMFX Private

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    Jason, for the sake of transparency, would you be able to state your job function with FXCM.

    Do you work in their sales and marketing department?
     
  10. Albert.b

    Albert.b Sergeant

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    Are We Asking The Right Questions?

    There has been a bit of banter on this thread and I am beginning to think that we have been focusing on the wrong points!

    I think we all agree that there has to be, at some point, a market maker!

    A broker can be a market maker or they can do business through a market maker, but there just has to be a market maker, somewhere out there.

    Lets assume that FXCM are true 'white knights', who obey all the rules and only have their client's best interest at heart.

    If this is the case, I think we have been going in the wrong direction.
    I believe that the question really is, HOW GOOD IS THE FXCM SOFTWARE?


    I am a customer of FXCM and in the time I have been with them, I have had lots of Trade Syncs between the MT4 Platform and the Read Only!

    It is a major point with FXCM, that you must keep accessing the Read Only while you are trading.

    Why should this be?

    I also have two live accounts, with two other brokers and to date, I have never had a trade sync from either of them!
    With these brokers, what I see on their MT4 platform, as far as trades are concerned, is actually what the account is at that point.

    So, seeing that FXCM is a far larger broker than these two, why are their systems far superior to the system FXCM uses?

    In the past I have had a couple of real issues with the FXCM system!

    One day some time ago, I opened the Read Only and found that there were two open trades which I new nothing about, as these trades were not showing on the MT4!

    The FXCM system had somehow opened these two trades, which, winning or losing, I could not close!

    I had to telephone them to get these trades closed at a loss. I claimed and was reimbursed these losses, so no problem there.

    I also have had the MT4 showing I had a balance of about £70.00, when there was really over £700.00 in the account. Some times, it can take quite a while for this to be synced correctly.

    In this high speed electronic age, this is just a joke!

    Even at close last Friday, my FXCM account is showing different balances for the MT4 and the Read Only.

    This is when all the other MT4 platforms I had open, where showing virtually the same prices for the pair!

    FXCM will tell you that the MT4 platform is only an interface!

    This may be so, but surely, it would be better all round, if it was at least the quality of other MT4 systems.

    Others manage to do it, so why can't FXCM?

    I could go on and on, relating other instances, but I would rather sum up and say that the FXCM system/software looks to be second rate, when compared to the other brokers I use.
     
    #20 Albert.b, Feb 6, 2011
    Last edited: Feb 8, 2011
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