Brokers chasing after their clients following the "Black Swan"

[Jack o'Clubs]

If they have a legal claim to recover money and it is worth their while, they will do so.

By it being "worth their while" I include bad publicity in the press. Making as much noise as possible is one of the few defences that the victim has.

This forum, much as I like it, is not read by the masses. You need the The Sun and Daily Mail. LBC and BBC, as well, if you can do it. Get it out on the street.

Getting picked off, separately, and as quietly as possible, is the way that they will prefer to fight you.

Banners and demonstrations outside offices are great. Laswyers are going to cost a fortune.

Quite. Especially if the banners said something like 'FSA - Asleep At the Wheel', or 'FSA - where were you' (even if the inference is, 'help, we retail punters need saving from ourselves')

 

[tjs85]

I am not sure I am following this current train of group thought. Why shouldn't the different houses be entitled to recoup the losses from their clients?

 

[SuperSnake]

I am not sure I am following this current train of group thought. Why shouldn't the different houses be entitled to recoup the losses from their clients?

It depends what is said in the Terms And Conditions of the different houses.

Some of them, like FxPro, and I think Oanda, mention that they guarantee the Negative Balance Protection. And they have done it.
Some of them, like Gain Capital (forex.com), don't have it in their Terms and Conditions, but they have "forgiven" their clients' negative balances.
Some of them, like Saxo and IG, do not guarantee the Negative Balance Protections,and they are now chasing their clients.
And some of them, like FXCM, do guarantee the Negative Balance Protection, except for a case of Force Majeur, which they try to cover up with. And thats the bad thing.

 

[Jack o'Clubs]

I am not sure I am following this current train of group thought. Why shouldn't the different houses be entitled to recoup the losses from their clients?

You're right, they are. I would suggest that appealing to the bookies' better nature (or rather their fear of tighter regulation if they are seen as driving clients into destitution) is a better strategy for success. Regulation of leverage kills the retail FX business model, they'll want to get this settled quietly without the FSA getting involved.

 

[tjs85]

You're right, they are. I would suggest that appealing to the bookies' better nature (or rather their fear of tighter regulation if they are seen as driving clients into destitution) is a better strategy for success. Regulation of leverage kills the retail FX business model, they'll want to get this settled quietly without the FSA getting involved.

I agree they will certainly want to get this resolved quietly.

To a large extent the brokers are caught between a rock and hard place, by and large increased leverage has happened as a result of the competition in the market and clients voting with their business if a particulary broker only offered 'sensible' amounts of leverage. It appears the clients want it both ways, sky high levels of leverage but then cry foul play when this leaves large negative balances due to a large move.

It appears to me the brokers are victims in this also, and I can imagine the reply they will get when they get in touch with their hedge providers when they ask if their losses can be wiped clean.

 

[spinola]

It depends what is said in the Terms And Conditions of the different houses.

Some of them, like FxPro, and I think Oanda, mention that they guarantee the Negative Balance Protection. And they have done it.
Some of them, like Gain Capital (forex.com), don't have it in their Terms and Conditions, but they have "forgiven" their clients' negative balances.
Some of them, like Saxo and IG, do not guarantee the Negative Balance Protections,and they are now chasing their clients.
And some of them, like FXCM, do guarantee the Negative Balance Protection, except for a case of Force Majeur, which they try to cover up with. And thats the bad thing.

But if a bookie claims ' Force Majeur ', then can't the client state that as the reason also to negate honouring the contract for monies owing too ?

Are not all contractual obligations void if a force majeur has been declared ?

 

[Sonicscooter]

This entire planet is filling with people not prepared to accept responsibility for their own actions, you lose, you pay, otherwise charges will increase across the board to make up the shortfall for everyone else.

Didn't read the rules of the game.......tough.

 

[SuperSnake]

But if a bookie claims ' Force Majeur ', then can't the client state that as the reason also to negate honouring the contract for monies owing too ?

Are not all contractual obligations void if a force majeur has been declared ?

Well, if it states that it is just the bookie who is out due to Force Majeur, and then all of the responsibilities are on the client, then no.

 

[Jack o'Clubs]

This entire planet is filling with people not prepared to accept responsibility for their own actions, you lose, you pay, otherwise charges will increase across the board to make up the shortfall for everyone else.

Didn't read the rules of the game.......tough.

That will happen anyway following this, and especially so if the retail FX brokers enforce the rules strictly. The FSA is acutely aware of public opinion (look at the raft of useless but headline grabbing fines and bans they've handed out since the crisis - eg that guy banned from financial markets because of fare dodging). If customer losses start to hit the tabloids, the FSA will start looking into the industry: the FT is already accusing it of too light a touch, and the US regulated FX leverage levels a while ago.

 

[Sonicscooter]

That will happen anyway following this, and especially so if the retail FX brokers enforce the rules strictly. The FSA is acutely aware of public opinion (look at the raft of useless but headline grabbing fines and bans they've handed out since the crisis - eg that guy banned from financial markets because of fare dodging). If customer losses start to hit the tabloids, the FSA will start looking into the industry: the FT is already accusing it of too light a touch, and the US regulated FX leverage levels a while ago.

I agree, all because people haven't a clue about RR and MM, and playing in a false market held up by string and sticky tape, just waiting for the trap door to open.

ERM exit anyone?.......i don't know anyone doing this for a living that was messing with the Swissy, not one trader. even a massive move on an index ie FTSE of a thousand points @ 10pp, at least people wouldn't be putting their financial existence at risk....but Forex, in this market.....mad.

 

[Jack o'Clubs]

One obvious change would be to require the trade ticket to show what the underlying exposure is, it might make people think if they realise $10 a point is $1,000,000 or whatever.

 

[Splitlink]

I am not sure I am following this current train of group thought. Why shouldn't the different houses be entitled to recoup the losses from their clients?

They have every right, IMO. So have the indebted clients. What is right, is right. We don't, really, know all the facts of the case. only what we have been told by one side, but it seems to me that questions need to be answered as to how clients were allowed to trade when their accounts go negative to the extent of 280.000 GBP

This is what an omsbudsman is for, if there is one.

This makes a good case for fixed odds betting!

 

[itspossible]

I agree, all because people haven't a clue about RR and MM, and playing in a false market held up by string and sticky tape, just waiting for the trap door to open.

ERM exit anyone?.......i don't know anyone doing this for a living that was messing with the Swissy, not one trader. even a massive move on an index ie FTSE of a thousand points @ 10pp, at least people wouldn't be putting their financial existence at risk....but Forex, in this market.....mad.

Excellent point Sonic.Forex seems very risky to me.
Trading indices is pretty safe as long you have stops and can account for massive gaps
All traders should study stated cases where the marked has moved massively and gapped through stops etc so they get a feeling of the dangers.if i was going to trade forex i would go for a broker that just resets your negative balance to zero and forgets about it(doesnt come to you for the loss).It also seems a good idea to have only a small balance in your account in case the worst happens and you go negative or your broker goes bust.

 

[Sonicscooter]

One obvious change would be to require the trade ticket to show what the underlying exposure is, it might make people think if they realise $10 a point is $1,000,000 or whatever.

Yes, that would make punters cr@p themselves.......

 

[forker]

It depends what is said in the Terms And Conditions of the different houses.

Some of them, like FxPro, and I think Oanda, mention that they guarantee the Negative Balance Protection. And they have done it.
Some of them, like Gain Capital (forex.com), don't have it in their Terms and Conditions, but they have "forgiven" their clients' negative balances.
Some of them, like Saxo and IG, do not guarantee the Negative Balance Protections,and they are now chasing their clients.
And some of them, like FXCM, do guarantee the Negative Balance Protection, except for a case of Force Majeur, which they try to cover up with. And thats the bad thing.

that only makes sense if they are hiding something because you don' just write off debt without a very good reason. That reason could be reputation but is more likely done to prevent a detailed FSA investigation. Regulators do check for compliance but never look any deeper. Having spades of traders owing money with some cases in the range of hundreds of thousands, warrants a deeper look. Just because an entity meets regulatory requirements doesn't mean they are not doing anything that could be deemed as an unfair circumstance of an intentional design.

just look at these examples of fxcm over the last 10 years

http://www.businessinsider.com/fxcm...sues--clients-will-be-compensated-2011-8?IR=T

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

http://forexmagnates.com/breaking-news-fxcm-faces-200000-fine-for-nfa-breaches/

http://www.marketwatch.com/story/currency-firm-fxcm-fined-for-alleged-sales-deception


i wont even go into the fines against other entities including banks. Do you think FXCM broke their policy in any of these cases? There is no doubt in my mind that none of these events would have surfaced if it were not for someone spilling the beans on them. So you take spades full of traders who now apparently owe you money. Do you think the FSA is going to pretend nothing happened or would it be in their interest to investigate? At the end of the day the heat comes back to the FSA for this as well and they will need to answer. It is in their interest to find irregularities to take the heat off somewhat and give them scope to slam fines or additional regulation.

 

[spinola]

This entire planet is filling with people not prepared to accept responsibility for their own actions, you lose, you pay, otherwise charges will increase across the board to make up the shortfall for everyone else.

Didn't read the rules of the game.......tough.

Well, (just for clarity ) I din't lose any, in fact I'm owed from an open trade liquidated in profit. My argument is out of legal interest , surrounding both parties exposed to a force majeure event.

And in law, every word must be determined legally speaking. Thats the whole point of it. It's all up for grabs, until the gabble falls.

 

[Jack o'Clubs]

Well, (just for clarity ) It's all up for grabs, until the gabble falls.

Gavel, surely?

 

[spinola]

Gavel, surely?

lol, yes, probably. mmm maybe an Americanism, as lots of images come up for the gavel . Anyhow the legal hammer.

 

[Jack o'Clubs]

I wasn't entirely sure, there's a hell of a lot of gabble on this forum!

 

[spinola]

Focre Majeure My **** !

Yes.

Now, I just had a thought on FXCM trying the force majeure claim, and it being an unforeseeable event, as is the definition of a force majeure etc.

The thing is, a good lawyer ? might argue ' yes, indeed it is an unforeseeable event in the normal world , but unforeseeable for a central bank to make a policy change without giving prior notice in the world of international finance? '


' Your honour, my lud, your worship, central banks making announcement without giving prior notice, is a normal business risk , in the realm of international finance. (lawyer presents all previous shock announcements to court )

And , to wit, which is why FXCM must not, and cannot claim force majeure in this particular instance as it is a NORMAL BUSINESS RISK TO THEM , and the court must therefore , I respectfully submit, order they, FXCM, to uphold and see they honour their ' negative balance ' client protection clause, as laid out in their contract.

I rest my case ! See a win for clients, by over turning the claimed legitimacy of any FORCE MAJEURE !! ?




Well, any legal heads in ?