Hello Everybody,Originally Posted by ;
I would have responded earlier but had been outside of the office the past four days: https://www.forexsoutheast.asia/gene...ent-egies.html
Now I have returned, I want you to know I am happy to tackle the regulatory actions you mentioned along with any further questions you may have. No doubt there are many others on this forum who share your concerns, so I would like to take this chance. FXCM should have passed optimistic slippage to our clients from the start:
For caution, although this SFC announcement was made only a few days past, the time period it relates to occurred between 2006 and 2010. FXCM took major actions to address potential conflicts of interest when we introduced the No Dealing Desk (NDD) FX implementation model in 2006 back when the huge majority of brokers in the industry were still using a coping desk model. We made this change because we believed and we still believe now that the NDD model is more fair and transparent since it offers competitive, market driven prices that are sourced from http://bit.ly/2bhuUmE.
In switching into the NDD model, we left behind the fixed-spread dealing desk model that was the norm at the time. This meant that our clients appreciated benefits that weren't traditionally available to retail FX traders in the past like the capability to set stops and limits as near as 1 pip from the market price, with no limitations on placing orders during news events, without any re-quotes. This removed a lot of the conflicts of that can exist with the dealing desk model, and has helped FXCM develop with $875 billion in retail client trading volume in the third quarter of 2016.
That is not to dismiss what happened from 2006 to 2010, and we apologize for not passing positive slippage in total to our clients in the past. Like the NFA and CFTC settlements (FXCM US) at 2011 and the FCA settlement (FXCM UK) in 2014, the SFC settlement (formerly FXCM HK, but currently called Rakuten Securities HK) has to do with positive slippage not being passed in full when transactions were offset with liquidity providers before the 2010 update. As with these preceding settlements in the united states and UK, FXCM has consented to pay fines into the local regulator in Hong Kong (HK$4 million into the SFC) and make full restitution to the affected clients (US$1,452,926.69 into a total of 3,739 accounts belonging to current and former FXCM HK/Rakuten clients). This settlement is a substantial step in our attempts to put this heritage trade implementation issue.
As a result of the modifiions we made to our implementation system in 2010, FXCM currently passes on all available positive slippage in total to our clients on all orders types including market and limit orders. FXCM US is regulated by the CFTC and NFA the two bodies that oversee futures trading on the CME as mentioned above. Furthermore, in compliance with rules regarding price slippage and price re-quoting that were finalized in 2012, FXCM US provides daily trade reports to the NFA which monitors and supervises FXCM US's action including information on the price at which all client orders are filled and the corresponding price where these orders are offset with our liquidity providers.
All of FXCM's international trading entities including FXCM UK and FXCM Australia execute client rolling spot FX transactions as a riskless principal with FXCM US, so the exact same implementation standards are employed for all of our clients globally. Http://bit.ly/2egIus1 from January 2015 through March 2016 showed the following:78.71% of all orders had NO SLIPPAGE. 12.77% of all orders received positive slippage. 8.52 percent of all orders received adverse slippage. 50.2 percent of all limit and limit entry orders received positive slippage. 39.9 percent of all stop and stop entry orders obtained negative slippage.
By contrast, although there are not any re-quotes in FXCM, there are nonetheless some brokers today that re-quote their clients. Clients of brokers receive a re-quote when the market moves in their favor, but do not receive a re-quote when the market goes against them. It is likely that this program of re-quotes could cause clients of these brokers to miss out on slippage that is positive.