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This is a discussion on FxPro Discussion within the Forex Brokers forums, part of the Commercial category; Slippages is part even in regulated exchanges true not denying that ...The point I am trying to make is why ...

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Old Mar 16, 2015, 2:18pm   #17
Joined Aug 2012
Slippages is part even in regulated exchanges true not denying that ...The point I am trying to make is why does OTC fx has to explain so many things as compared to a regulated exchange!

Points such as
- Slippages
- Market Maker or Dma ( conflict of interest or no conflict of interest
- Where they are regulated
- How is client money is handled
- Stop hunting!
True reasons being many dodgy operators in this filed and ability to get a $2 company to start a"Broker business"
How many times have we have seen true exchanges going burst NYSE/CME/CBOT/ LSE/ASX/SGX
On the other hand "Large " so called honest brokers (who are essentially are acting as exchanges" have gone burst
Sooner FX OTC and CFD businesses act as true exchange and introduce more robust client money safety cover like SIPC/ FICS better for everybody ...then traders only will have to worry about market risk not the silly Counterparty risk.
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Old Mar 17, 2015, 8:22am   #18
 
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Quote:
Originally Posted by moka2 View Post
Slippages is part even in regulated exchanges true not denying that ...The point I am trying to make is why does OTC fx has to explain so many things as compared to a regulated exchange!

Points such as
- Slippages
- Market Maker or Dma ( conflict of interest or no conflict of interest
- Where they are regulated
- How is client money is handled
- Stop hunting!
True reasons being many dodgy operators in this filed and ability to get a $2 company to start a"Broker business"
How many times have we have seen true exchanges going burst NYSE/CME/CBOT/ LSE/ASX/SGX
On the other hand "Large " so called honest brokers (who are essentially are acting as exchanges" have gone burst
Sooner FX OTC and CFD businesses act as true exchange and introduce more robust client money safety cover like SIPC/ FICS better for everybody ...then traders only will have to worry about market risk not the silly Counterparty risk.

Dear Moka2,

I’m afraid there is always, and will probably always be, counterparty risk. 2008 was a big lesson for us all in this respect. Also, in the interests of balance it’s only fair to point out that exchanges have had their fair share of issues too, as well as a great deal of potential funny business to explain. Take the numerous and frequent allegations of rigging by Wall Street banks in concert with some of those very same exchanges you mention. That’s to say nothing of co-located high frequency trading funds that are able to move much faster and see the market at a far higher resolution than retail traders. Institutional algos that are able to identify the levels at which you are willing to buy or sell and then frontrun your orders for a profit, hundreds of thousands of orders per second, all day every day. If you go into the history of markets you’ll see that stop hunting, and in fact many of the tricks employed by disreputable FX brokers are not new at all, they were invented on the stock and bond markets.

As for how many times we’ve heard of a big exchange going bust; I think you’re confusing the market with the broker here. We’ve not had the FX market go bust either. Stockbrokers on the other hand, much like FX brokers, go bust all the time.

Regarding bringing FX on-exchange, there is a great deal of debate surrounding this issue; however, it’s unlikely that you’ll ever see FX being traded exclusively on exchanges. FX is a 24 hour, global, decentralised market. Currency flows are the lifeblood of nations and the businesses they comprise. Whatever the time of day or night someone somewhere is making a market by exchanging one currency for another; this is its beauty of the currency markets.

The bottom line is that regulation can only go so far, where there is trading there is risk and as with everything else in life, the onus is on the individual to be thoroughly cognizant of those risks. For our part, at FxPro we do everything we can to ensure that our traders are well-educated and that when they are ready to trade they can do so on as level a playing field as possible, one governed by fair trading practices and professional conditions.
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Old Mar 17, 2015, 8:44am   #19
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wild wets of OTC

[QUOTE=FxPro Group;2508450]Dear Moka2,

Regarding bringing FX on-exchange, there is a great deal of debate surrounding this issue; however, it’s unlikely that you’ll ever see FX being traded exclusively on exchanges.

Debate from whose point.. FX OTC industry will oppose it always no surprise there.

From a FX broker's point of view ofcourse you don;t want to see business going to a regulated exchange, but from a consumer point of view it would be better and if it comes with some SIPC coverage even better.
-Exchange take away/ reduce counter party risk
- Are more closely supervised by national authority

Current Fx brokers can still make money just like Futures or Stock brokers by just offering exchange traded FX to it's clients

It actually exists in the form of FX futures by the way on ICE / CME etc
Much more transparent.

I am not against the concept of OTC however OTC has not effectively solved the problems of
- Transparency
- Client Money safety
From a consumer point of view.

I wonder why is OTC so against tough regulations where an orderly market will entice even more participants!
Nothing is guaranteed in life is not an excuse to have the "wild west" in this financial market .
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Old Mar 20, 2015, 10:14am   #20
 
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FxPro Group started this thread [QUOTE=moka2;2508472]
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Originally Posted by FxPro Group View Post
Dear Moka2,

Regarding bringing FX on-exchange, there is a great deal of debate surrounding this issue; however, it’s unlikely that you’ll ever see FX being traded exclusively on exchanges.

Debate from whose point.. FX OTC industry will oppose it always no surprise there.

From a FX broker's point of view ofcourse you don;t want to see business going to a regulated exchange, but from a consumer point of view it would be better and if it comes with some SIPC coverage even better.
-Exchange take away/ reduce counter party risk
- Are more closely supervised by national authority

Current Fx brokers can still make money just like Futures or Stock brokers by just offering exchange traded FX to it's clients

It actually exists in the form of FX futures by the way on ICE / CME etc
Much more transparent.

I am not against the concept of OTC however OTC has not effectively solved the problems of
- Transparency
- Client Money safety
From a consumer point of view.

I wonder why is OTC so against tough regulations where an orderly market will entice even more participants!
Nothing is guaranteed in life is not an excuse to have the "wild west" in this financial market .
Dear Moka2

I’d like to point out that as far as FxPro is concerned, we have always encouraged tighter regulation across the industry as a whole. By saying that I doubt FX will ever be traded exclusively on-exchange, this shouldn’t be interpreted as being against regulation or encouraging a “wild-west” mentality. The decentralisation of FX is purely a function of how the market has organised itself since currencies were allowed to float freely against one another.

Back to our specific business, the oversight from our regulators is in fact extremely strong, especially regarding know-your-customer, anti-money-laundering, segregation and safety of client funds etc. Even the symmetry of positive and negative slippage is accounted for.

In many ways retail FX is actually more tightly regulated than its institutional counterpart due to the fact that we are client-facing businesses that have to be in compliance with all sorts of consumer protections.

As for the structure of the market itself; the sheer size and scope of the FX market leads me to believe it won’t be moving on-exchange anytime soon. At the very top of the food chain banks trade between themselves and at the very bottom one currency can be exchanged for another, face-to-face, wherever there are parties willing to exchange at a given rate.

Finally, as I have mentioned in my earlier post, “tough regulations” have not led to increased transparency in the markets you speak of. Centralised markets are in fact among the most easily manipulated markets that are currently being traded.

Kind Regards,

FxPro Team
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Old Mar 20, 2015, 1:21pm   #21
 
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UK education seminar

FxPro Group started this thread Dear Members,

We would just like to bring your attention to our free education seminar which we are holding in our UK office, heart of the City of London. This will be at 18h00 UK time on Wednesday 25th March.

If you would like to attend please click on this link to register or see further details http://www.fxpro.co.uk/trading/academy/events

Kind Regards,

FxPro Team
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Old Mar 20, 2015, 1:26pm   #22
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welcome to T2win ...enjoy the ride.....seems you are getting it easy so far ......
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Old Mar 22, 2015, 10:09am   #23
Joined Aug 2012
Lets get to the fact
You talk about segregation and safety of client funds etc.
1) Coverage in case of Broker failure
Exchange traded products ( Stocks and Option) CLient funds are completely covered by SIPC in US, FSCS in UK and by NSG in Australia
OTC FX and similar :
USA = NO coverage
Australia = No coverage
UK: FSCS coverage! but the Alpari test will prove if it realy does cover it Lets assume it does!

2) Conflict of Interest
Exchange traded Products: Normally NO unless broker has prop trading activity
OTC FX and Similar
Market maker model exists in many countries and only when consumer got more informed then only OTC started asking about this possible conflict forcing OTC brokers to start advertising DMA ECN etc
3) Counter party Risk
Exchange Traded:
THE EXCHANGE ASSURES THE COUNTER PARTY ( Because they are a true exchange not a pseudo exchange like and OTC "broker"
OTC FX and similar:
Even if it is a DMA the ultimate counter party ( Banks as you mention at top tier) could default!

4) Entry barrier:
Exchange Traded = Highe
OTC = Lower ( may be only now the US govt has made it higher)

This is a futile debate because no matter what since Centralized markets are your direct competition you will never concede a point against OTC
I have seen an OTC broker go burst with 47 M in fraud in SEG a/c
It was mix bag business only the shares held under the HEN identification were saved
If it was a Equity broker the Clients had a much better chance.
SO from that point of view atleast Exchange traded is beter for a consumer than OTC but sure you wil never agree to that!
Perhaps the only safety net is UK FSCS covered 100% UK based OTC (which you are)
(Disclaimer: I am not from the industry I am just a trader/ user consumer my interest is Consumer protection that is all)
End of story
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