Brokers chasing after their clients following the "Black Swan"

[tar]

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 ?

+1

 

[Jack o'Clubs]

They might have declared Force Majeure but I'm pretty certain it wouldn't stick if legally challenged. It's a well defined contract term that specifically covers Acts of God (weather events, lightning strikes, etc), war, terrorism, riots, radiation (yes it's that specific), as reasons why contract terms can't be met. There's no way central bank action and ensuing market chaos qualifies as FM. I checked my broker contract this morning and in its FM clause, it gives examples of what might be considered an FM event as effects a brokerage: eg power cuts that prevent it from maintaining an IT link with the exchange, and even then the power cut must be related to the type of event described above. I'm not a lawyer, but FXCM's use of FM in this instance is no more than kite flying.

 

[counter_violent]

They might have declared Force Majeure but I'm pretty certain it wouldn't stick if legally challenged. It's a well defined contract term that specifically covers Acts of God (weather events, lightning strikes, etc), war, terrorism, riots, radiation (yes it's that specific), as reasons why contract terms can't be met. There's no way central bank action and ensuing market chaos qualifies as FM. I checked my broker contract this morning and in its FM clause, it gives examples of what might be considered an FM event as effects a brokerage: eg power cuts that prevent it from maintaining an IT link with the exchange, and even then the power cut must be related to the type of event described above. I'm not a lawyer, but FXCM's use of FM in this instance is no more than kite flying.

Perhaps you should put this to Jason on the FXCM thread
http://www.trade2win.com/boards/forex-brokers/88834-fxcm-discussion-20.html

 

[tar]

From Fxcm's agreements

Force majeure: Since we do not control signal power, its reception or routing via Internet, configuration of your equipment or reliability of its connections, we shall not be liable for any claims, losses, damages, costs or expenses, including attorney’s fees, caused directly or indirectly, by any breakdown or failure of any transmission or communication system or equipment or computer facility or trading software, whether belonging to us, our Affiliates, you, any market, or any settlement or clearing system when you trade online (via Internet) or for any cause preventing us from performing any or all our obligations, any act of God, war, terrorism, malicious damage, civil commotion, industrial acts, any Exceptional Market Event, or acts and regulations of any governmental or supra national bodies or authorities which in our opinion prevent an orderly market in relation to your Orders (a “Force Majeure Event”). Upon the occurrence of a Force Majeure Event, we shall use commercially reasonable efforts to resume performance and we may give you written notice. Upon occurrence of a Force Majeure Event, all of our obligations under these Terms of Business shall be immediately suspended for the duration of such Force Majeure Event. Additionally, we may take any one or more of the following steps:
(a)
alter normal trading times;
(b)
alter the Margin requirements;
(c)
amend or vary these Terms of Business and any Transaction contemplated by these Terms of Business,
insofar as it is impractical or impossible for us to comply with our obligations;
(d)
close any or all open Transactions, cancel instructions and orders as we deem to be appropriate in the circumstances; and/or
(e)
take or omit to take all such other actions as we deem to be reasonably appropriate in the circumstances having regard to the positions of yours, ours, and other customers.

 

[Fugazsy]

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.

this post has cleared for me ...thank you.

 

[gftrader32]

this post has cleared for me ...thank you.

who is your broker Fugazsy if i may ask?

 

[Fugazsy]

who is your broker Fugazsy if i may ask?

Of course.

I trade only EU.

I had two accounts for a while now: CMC which I trade at the moment, spread is around 0.9-1.1, no commission, has a bid and ask charts, convenient to me.

They are not listed into the list of the covered negative balancing (not good), I had a few issues with them, at time the platform freezes for a few seconds, sometime for a 1m or two, I trade the 1m, that is a luxury I cannot afford, but the spread is good.

Oanda, had them since the beginning, they are good, but I occurred once a slipping of 40 pips, their spread is not good, goes from 1.2 to 1.6 (at least lately) not for my type of trading. They are listed in the covered negative balancing. (good)

But lately I have open an account with DMM FX, spread 0.7 (very good), only during news realise the spreads goes wider but not as much as the other two. They are listed in the covered negative balancing. (good) Platform mt4 ( it is ok but not that great)

 

[tar]

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.

http://www.forex.com/uk/forex_understanding_margin.html

"FOREX.com: No debit balances, no margin calls

At FOREX.com, your risk is limited to funds on deposit. There are no margin calls at FOREX.com. You need to maintain sufficient funds on your account to keep your positions open, and you will not be able to open larger positions than can be supported by your account balance. If your account falls below the required level to maintain your position(s), we will automatically close out all positions to help ensure that you can't lose more money than you have in your account. FOREX.com’s Negative Balance Protection protects you up to 50,000 of the base currency of your account."

 

[Fugazsy]

Forex.com/Gain have it in their T&Cs they do have a no debit balance guarantee - up to 50K - , however i am not sure if Oanda clearly states that .

Forex.com/Gain :

http://www.forex.com/uk/forex_understanding_margin.html

"FOREX.com: No debit balances, no margin calls

At FOREX.com, your risk is limited to funds on deposit. There are no margin calls at FOREX.com. You need to maintain sufficient funds on your account to keep your positions open, and you will not be able to open larger positions than can be supported by your account balance. If your account falls below the required level to maintain your position(s), we will automatically close out all positions to help ensure that you can't lose more money than you have in your account. FOREX.com’s Negative Balance Protection protects you up to 50,000 of the base currency of your account."

Oanda - old chat - :

Grace: Thank you for choosing OANDA. How may I help you?
marian: hi
marian: can you guarantee that a trading account with oanda will never have a negative balance, take flash crash for exmple or ny other huge gap
marian: ?
Grace: We do have a margin closeout policy which prevent the trader from losing more than you have deposited.
marian: that was not my question
marian: can you guarante i never have a negative balance when trading with oanda in any case
marian: ?
marian: yes or no
marian: would you set the account to zero? yes or no?
Grace: You won't have a negative balance by our margin policy
marian: please answer my question correctly or provide me a link
marian: its a difference to have a margin policy or uarantee that account will never have a negative balance
Grace: http://fxtrade.oanda.com/help/policies/margin-rules
marian: my question is not answered, take this link for example, forex.com offers a guarantee up to 50k
marian: http://www.forex.com/uk/trading-handbook-trading.html#x10
marian: we offer Negative Balance protection and will credit your account to a zero balance if your account goes into negative equity as a result of a liquidation event. This policy protects you up to 50,000 of the base currency of your account.
Grace: Just one moment please
marian: no problem
Grace: unfortunately we don't guarantee that an account will never have a negative balance
marian: ok thank you

very helpful post, forex com makes sense to me, it should be that way......close all position.... that is what they do in normal conditions and should be that way always.....

 

[karmit]

Looks like FXPro/ Gain are few remaining good ones out there...

 

[NVP]

well then to the victors the spoils...........as in any market/industry/business ......showing loyalty to customers in tough times is what differentiates great companies from the rest and rewards them with priceless Customer lifetime value in the long term

 

[tar]

Looks like FXPro/ Gain are few remaining good ones out there...

Oanda looks good ...

 

[tar]

"As a policy, OANDA forgives negative balances (where permitted by regulations). The SNB event was not the exception but the norm despite the cost to OANDA ... "

https://fxtrade.oanda.com/community/forex-forum/topic/54010695/

 

[pennye]

What are the odds of FXCM going out of business?

I didn't have any trades open on the Swiss franc, but I still have money in my margin account with FXCM. How safe is that?

 

[hatemypips]

well then to the victors the spoils...........as in any market/industry/business ......showing loyalty to customers in tough times is what differentiates great companies from the rest and rewards them with priceless Customer lifetime value in the long term

with all due respect, traders been respectful customer to their brokerage service, spend time before decide to joining, with all good expectation, hoping for excelent service. no one ever want to get their account flushed in single market movement. maintain client's faith is the key I think, brokers should put more attention upon it.
http://www.forexcrunch.com/snbomb-reactions-from-10-forex-brokers/
it's a full 72 brokerage list, of how their reaction due CHF volatility movement. it may not all brokerage listed, but interesting how they react upon such event, some company even give 'special' condition apply.

 

[Fugazsy]

ForexMagnates posted a list of brokers that have Negative Balance Protection.

http://forexmagnates.com/covered-brokers-forgive-negative-balance-following-chf-crisis/

Basically, the brokers that are not there will be chasing for their money back, I guess..

DMM FX is on the list, I called them but they said they do not guarantee to cover negative balances.

 

[Fugazsy]

DMM FX is on the list, I called them but they said they do not guarantee to cover negative balances.

also dukoscopy:


THEM:Management of Dukascopy Group has decided to take an exceptional decision to cover negative balances on client accounts related to CHF move on SNB decision on 15.01.2015.In spite of the fact that agreements and regulation allow Dukascopy to claim negative balances compensated by clients, it was decided to release customers from obligation to cover negative balance.Dukascopy Bank has not cancelled or negatively adjusted any trade concluded on 15.01.2015 with clients during the CHF move.Dukascopy Bank and Dukascopy Europe invite all the industry to follow the same approach to build up customers trust in the industry.

ME: yes but you have not them in the agreement, is that right?

THEM: correct, "exceptional decision".

 

[Fugazsy]

I did my home work today, only FX pro says that they will guarantee to cover negative balances, but I have not read their small print yet, beside their spread is averaging 1.8 which is huge.....

I suggest you do your own homework, but I doubt anyone will cover......

 

[tar]

What are the odds of FXCM going out of business?

I didn't have any trades open on the Swiss franc, but I still have money in my margin account with FXCM. How safe is that?

UK or AU account ?

 

[wzero]

If this is "force majeure", how other brokers can forgive negative balance, or even profit from the event...?

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.

.......