Before the Bust FXCM lobbied for HIGHER Leverage

[BSD]

http://www.bloomberg.com/news/2015-...erage-limit-before-franc-trades-went-bad.html

Can only say what goes round comes round !

Not to forget the fact how they mistreated their clients:

http://www.fca.org.uk/news/fca-fine...nfair-profits-and-not-being-open-with-the-fca

How Swiss Shock Humbled the King of Leveraged Currency Trading
http://www.bloomberg.com/news/2015-...d-the-king-of-leveraged-currency-trading.html

Force Majeur ???

Not in this Universe, NEVER gonna stick.



If you wanna trade and hope to make more than you lose then go trade on a regulated, transparent exchange where everyone gets the exact same price, period.

 

[BSD]

Morning F, and a good week to ya.

 

[Forexmospherian]

Morning F, and a good week to ya.

Morning BSD

Thank you - and a good one to you as well

You are welcome to join me anyday you like in the Live FX intraday thread - no problem etcetc

I agree FXCM cannot say its Force Majeur - when other brokers are still staying with their agreements etc etc.

Also its important to point out how heavily they were fined in the past for some of their past tricks etc etc

Regards


F

 

[BSD]

Yup F.

How FXCM Scams its Clients

FXCM slapped with a class action suit over claims of fraud and racketeering - See more at: http://forexmagnates.com/fxcm-slapp...-fraud-and-racketeering/#sthash.UfCUWq36.dpuf

Force majeur, eh ?

 

[BSD]

"A few days ago I reported that FXCM was slapped with a class action suit over alleged fraud and racketeering. Today I bring you the full lawsuit document. Here are some of the more interesting details and you can read it in full yourself in the below embedded document.

The Plaintiff, William H. Sanders, claims to have lost over $150,000 to FXCM over the years due. Two main topics the lawsuit deals with is the Demo accounts which serve to attract clients while not simulating real market conditions and when clients do switch to live they receive completely different execution and the execution itself where it is claimed that FXCM is in fact a market maker which actively goes after profitable clients. The main excerpts are below:

Plaintiff, William H. Sanders, just like thousands of other customers, was lured into transacting business with Defendant, FXCM, buying and selling foreign currencies in what is known as the foreign exchange (“Forex”) market, but little did Sanders, or any of the others, know that FXCM intended to, and did, systematically bilk them out of their account money through an elaborate scheme of fraudulent tricks, devices, and artifices. What was represented to Sanders and others as a foreign currency trading platform developed upon professed principles of “fairness, honesty, and integrity,” which was supposedly rooted in providing customers with a true market trading experience, totally devoid of dealer intervention and market manipulation, was in truth a platform predicated upon deceit and trickery that systematically looted the accounts of customers who, like Sanders, placed their trust in FXCM.

The scheme deployed by FXCM was complex and varied, utilizing aggressive and pervasive marketing and advertising campaigns, including television, internet, seminars, webinars, and other media, portraying FXCM as a foreign currency trading platform where investors could trade foreign currencies in a true market environment. The advertisements were specifically targeted to convey a sense of trust and transparency to potential FXCM customers and to gain the customers’ confidence in FXCM’s trading platform. To further bolster customers’ confidence in its platform, FXCM enticed customers to use FXCM’s practice or demo account (hereinafter, the “Demo Account”) to simulate an FXCM trading experience. But the Demo Account, just like the myriad advertisements, misled customers about the true nature, functionality, and performance of the platform. Once lured into opening an account, customers were subjected to a staggering array of stratagems and ploys, some using extremely sophisticated computer software based upon complex algorithms and high-speed computers, to deceive the customers into believing that their trading was being affected by normal market forces, while in reality FXCM traded against its own customers."

Continued:
http://forexmagnates.com/full-details-of-fxcms-class-action-suit/#sthash.12EskuuG.dpuf

You really need to know who you're getting in bed with. Don't trade against bookies or bucket shops.

 

[BSD]

Even though co-founder Michael Stumm is no longer there seems like common sense still prevails at Oanda:

"The SNB event was not the exception but the norm despite the cost to OANDA ... "

https://fxtrade.oanda.com/community/...opic/54010695/

Central Banks spring surpise decisions, always have, always will.

How else are they supposed to do their job without getting raped ?

 

[tar]

They have now increased the margin on fx to 2% and on Gold from $4 /1 oz to $26 :cheesy:

 

[BSD]

Lol tar, interesting info that !

Not exactly a secret that Bloombergs Billionaire founder is absolutely no fan of bookies masquerading as brokers and believes they should be made illegal just like CFD "Brokers" in the US today, and the sameself bucket shops of Livermores day and age who operated on the same principles.

That explains the tone and number of Bloomberg articles on this sorry fiasco.

FXCM Owners Are Almost Wiped in Swiss Franc Turmoil
http://www.bloomberg.com/news/2015-...ut-lets-leucadia-force-sale-of-brokerage.html

 

[BSD]

What am I missing here...

FXCM made the claim that every trade is hedged.

How can that be reconcilable with the truth if a normal event like a surprise Central Bank decision put them in the red to the tune of 250 mill if they were indeed hedged, as per their public sales / marketing promises to unassuming clients and prospects ???

"...let’s say you want to buy GBP/USD and decide to click on the price 1.5627. When you submit the order, the order is sent to FXCM for the price 1.5627 and FXCM routes the order to Bank A offering to sell at the price 1.5626. If the order is accepted, Bank A has a short position at the price 1.5626, you have a long position at the price 1.5627, and FXCM has gained 1 pip in revenue. Each order is offset individually in this fashion. The trades are not aggregated like you would have with a market maker so at no point is FXCM taking on the risk of trading against clients as a market maker or dealing desk would."
http://www.trade2win.com/boards/spread-betting-cfds/65334-spread-betting-fxcm-59.html#post1789922


Question from Tar:"does the Nfa/Cftc check the records for these hedging transactions ?"

FXCM's answer:

"I can't speak for them, but I am almost certain they do check the records. Saying one thing through our advertising, website, etc and doing another would be a big no no. Every NFA/CFTC regulated broker is also required to disclose in the trading agreement how trades are offset."
http://www.trade2win.com/boards/spread-betting-cfds/65334-spread-betting-fxcm-59.html#post1790692

What gives ?

Don't tell me there is a misrepresentation of the truth there somewhere.

 

[tar]

CHF shorts got busted and their accounts went deeply into the red - negative - , and fxcm is short as well with the liquidity providers/banks and have to pay the losses , that's why they are trying to collect from their clients now ...

 

[BSD]

Lemme try and rephrase that then.

How can FXCM lose money if they are hedged, ie have offset client trades as FXCM have stated.

Each order is offset individually in this fashion. The trades are not aggregated like you would have with a market maker so at no point is FXCM taking on the risk of trading against clients as a market maker or dealing desk would."

If as they claim trades are offset then they have no exposure to market risk, instead, like real brokers, just earn a commission on client transactions, and could not be 250 mill in the red.

 

[tar]

Lemme try and rephrase that then.

How can FXCM lose money if they are hedged, ie have offset client trades as FXCM have stated.

Each order is offset individually in this fashion. The trades are not aggregated like you would have with a market maker so at no point is FXCM taking on the risk of trading against clients as a market maker or dealing desk would."

Think about it , clients accounts are now negative , how fxcm will pay the banks ?

 

[tar]

We're talking about credit risk here not market risk ...

 

[BSD]

But why didn't all other bucket shops go bust then as well is what I'm wondering, Alpari apart.

 

[tar]

But why didn't all other bucket shops go bust then as well is what I'm wondering, Alpari apart.

Smaller size , lower leverage , market making model... etc . Many of them still lost money BTW .


Check this :

75% of InteractiveBrokers’ Franc Losses from FX Futures, Not Spot FX
- See more at: http://forexmagnates.com/75-interactivebrokers-franc-losses-fx-futures-spot-fx/#sthash.qcbwZb0k.dpuf

 

[spinola]

Fraud Act 2006

If there is any suspicion that fxcm have been advertising one thing, but doing another as normal practice , then, clients could counter claim if they are pursued using the Fraud act 2006.http://www.legislation.gov.uk/ukpga/2006/35/contents

several handy , concise sections to protect people from Criminal Fraud.

2 Fraud by false representation

(1)A person is in breach of this section if he—
(a)dishonestly makes a false representation, and
(b)intends, by making the representation—
(i)to make a gain for himself or another, or
(ii)to cause loss to another or to expose another to a risk of loss.
(2)A representation is false if—
(a)it is untrue or misleading, and
(b)the person making it knows that it is, or might be, untrue or misleading.
(3)“Representation” means any representation as to fact or law, including a representation as to the state of mind of—
(a)the person making the representation, or
(b)any other person.
(4)A representation may be express or implied.
(5)For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).

http://www.legislation.gov.uk/ukpga/2006/35/section/2

Section 3.

Fraud by failing to disclose information

A person is in breach of this section if he—

(a)dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and

(b)intends, by failing to disclose the information—
(i)to make a gain for himself or another, or
(ii)to cause loss to another or to expose another to a risk of loss.

http://www.legislation.gov.uk/ukpga/2006/35/section/3


So, the legal technique, (as far as I understand) would be to ' counter claim ' against and if they arise a claim etc. Obviously you'd need to prove your case, or use it to see if the other party backs down etc.

But these legal games, are all adversarial , a bit like trading.

It's a nice simple statute, for a change.


Just sharing awareness of this statute .which helps deal with fraud.

 

[BSD]

There were certainly a lot of marketing claims made that didn't hold up.

"Disaster Warning

The 157-page prospectus for FXCM’s 2010 initial public offering warns of the disaster that could follow extreme market volatility, as happened last week.

“We may be unable to close out customer positions at a level where margin posted by the customer is sufficient to cover the customer’s losses,” the prospectus says.

Many businesses might sue customers who refuse to pay up. Not FXCM.

The prospectus goes on to describe what, in hindsight, might seem like a weakness in FXCM’s business plans: “Our policy is generally not to seek to pursue claims for negative equity against our customers.”

In other words, if customers run up big losses, FXCM will be on the hook."


And the CFTC warning is also in stark contrast to FXCM claiming that they offset client positions:


"Higher Leverage

Still, until now, FXCM tended to win even when its customers lost. In disclosure statements mandated by the U.S. Commodity Futures Trading Commission, customers are told upfront that such currency trading isn’t carried out on regulated exchanges.

“WHEN YOU SELL, THE DEALER IS THE BUYER. WHEN YOU BUY, THE DEALER IS THE SELLER,” the CFTC warning reads in capital letters. “As a result, when you lose money trading, your dealer is making money on such trades.”
http://www.bloomberg.com/news/2015-...d-the-king-of-leveraged-currency-trading.html

That's not some conspiracy loonie stating that, that's the CFTC.

 

[BSD]

Fast forward to 1.30 where FXCM guarantee that their clients risk is limited to the equity in their account, that clients of theirs can never lose more than their deposit, that clients will never owe a deficit as a result of trading even with higher leverage, and, as a sales tactic / jab against the competition, that their account guarantee offers "an important safeguard most forex brokers don't provide":

Indeed.

Another forex broker to whom that applies springs to mind under the harsh scrutiny of daylight.



https://www.youtube.com/watch?v=Vr2vnM9O0oA&feature=youtu.be

 

[MajorMagnuM]

Has FXCM 's representative on these boards chimed in yet?

 

[BSD]

On the one hand I kinda feel sorry for the guys working there and unsure about what their future brings.

That said, on the other hand they musta known that they worked for what at the end of the day is a bucket shop.

Some interesting tidbits here:

http://www.trade2win.com/boards/forex-brokers/88834-fxcm-discussion.html#post1072126

FXCM manipulating it's core price, and guess to
whose detriment these things tend to pan out:

http://www.trade2win.com/boards/for...anipulating-its-core-pricing.html#post1929366

There was a thread on here about all the software brokers have to manipulate price, slippage, execution speed, etc.

Bucket Shops were banned in Livermores day, and they need to be banned again.