Best Thread FXCM Discussion

[Jason Rogers]

see what CFTC found

Hi Moka,

While I can't discuss the details of the NFA/CFTC settlement, I can say we settled with the NFA and CFTC without admitting or denying any of their allegations or claims. Effex Capital is no longer pricing FXCM’s NDD forex price feed. Note we would not have suffered more than $200 millon dollars in losses during the SNB flash crash had we been taking the other side of client trades – unlike so many of the DD firms in the industry.

many were asking are you a TRUE NDD?

Yes, FXCM uses 16 liquidity providers to create a best bid best offer price stream for clients. LPs selected to price retail clients are forced to adhere to an extremely high standard of execution beyond just price – including consistently low rejection rates, low latency, minimum quote sizes and high fill ratios even during market events.

We discuss in our UK execution study the criteria we use to rank our liquidity providers which you can see listed in question 13 of the FAQ. FXCM's liquidity providers are ranked based on compliance to these standards which we identify as providing the best customer experience possible. Being a top ranked liquidity provider is important. Liquidity providers with the best pricing according to these rules may gain an advantage over other liquidity providers which could result in a large increase in orders captured. Poorly performing liquidity providers are ranked lower for order flow and ultimately could be removed from our platform until they return to compliance.

Also, the results of this study show FXCM UK retail client order prices to be better for FX than futures prices (74.97% of the time) and interbank prices(91.56% of the time).*

________________________________________________________________

* The study does not in away way attempt to represent that FXCM maintains a particular capacity or performance level. The figures in this study are provided for information purposes only, and are not intended for trading purposes or advice. FXCM is not liable for any information errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Past results are not indicative of future performance.

Material Assumptions
FXCM's Retail Clients are defined as individual, joint, and corporate accounts trading on our retail price stream.

The comparison to each of the Futures and Interbank data is made at the time that the FXCM client order is executed. Normal market slippage and slippage due to rejections by liquidity providers are already included by the time the FXCM client order is executed. However, there is an assumption that there is no slippage on the Futures or Interbank market data.

In order to maintain consistency, Futures Market data and Interbank data used the same acceptable ranges in market trades. The summary of findings is based on the assumption that the maximum acceptable difference between the FXCM price and the Interbank/Futures market price is 5 pips in either direction.

Fees that a participant would pay on the Futures or Interbank market, such as CME Exchange Fees, NFA Fees, FCM Fees, Clearing Fees, and other commissions, were excluded from the study. Similarly, FXCM Commissions are excluded from the study.

 

[moka2]

Hi Moka,

Effex Capital is no longer pricing FXCM’s NDD forex price feed. Note we would not have suffered more than $200 millon dollars in losses during the SNB flash crash had we been taking the other side of client trades – unlike so many of the DD firms in the industry.

How do we trust ? FXCM US said the same thing! and what did CFTC found out!

And the gain capital forex.com is going to be DD model any way !
So instead of spinning about how it is going to be better now on.. what measure are there to assure that UK and other operations are really going to be NDD! or is it ECN?

 

[Jason Rogers]

How do we trust ? FXCM US said the same thing! and what did CFTC found out!

Hi Moka,

While I can't comment on the CFTC complaint due to the nature of our settlement with them, I can say FXCM continues to stand by the quality of our NDD forex execution.

Consider the SNB event. The majority of retail forex traders were long EUR/CHF when the Swiss National Bank made their surprise announcement to abandon the 1.2000 exchange rate floor they had established for the pair. Had FXCM been on the other side of client trades, we would have made money when EUR/CHF dropped and retail traders took massive losses on their long positions.

The moved wiped out those clients' account equity as well as generated negative equity balances owed to FXCM of over $225 million. The caveat of our NDD model is that traders are offset one for one with a liquidity provider. When a client entered a EUR/CHF trade with FXCM, FXCM Inc. had an identical trade with our liquidity providers. During the historic move, liquidity became extremely scarce and shallow, which affected execution prices. This liquidity issue resulted in some clients having a negative balance.

While clients using NDD forex execution did not cover their margin call with us we still had to cover the same margin call with our liquidity providers. As a result, FXCM ended with a regulatory capital shortfall. Accordingly, FXCM needed to get a loan to cover this balance, which we did. For anyone that still thinks FXCM is running an FX dealing desk on our NDD model, the SNB event demonstrated that is not the case.

what measure are there to assure that UK and other operations are really going to be NDD! or is it ECN?

FXCM's NDD price feed currently has 16 liquidity providers which we disclose on our website. Here is the complete list: Bank of America N.A. – Barclays Bank, PLC – BNP Paribas – Nomura International, PLC - Citadel Securities LLC – Citibank N.A. - Morgan Stanley & Co., LLC - UBS AG - Deutsche Bank AG – Goldman Sachs International – KCG Europe Limited – and Commerzbank AG.

Even before the recent CFTC action, I had mentioned the findings from our execution study in the UK comparing the quality of our NDD forex pricing to what's available in both the FX futures market and the interbank market: http://www.trade2win.com/boards/forex-brokers/88834-fxcm-discussion-128.html#post2869788

If you have questions the study, I'm happy to address them.

 

[moka2]

Hi Moka,
For anyone that still thinks FXCM is running an FX dealing desk on our NDD model, the SNB event demonstrated that is not the case.

The action of CFTC speaks for itself and it is VERY SERIOUS... the alleged "Last look" + having an interest in Market maker (LP)

So how do you expect people to believe that what was (allegedly) done won't be repeated in UK and other places?
You company has lost the trust! you won;t admit it.. but wait till all the class action law suits pile up.:clap:

 

[highbury fx]

Hi Moka,
For anyone that still thinks FXCM is running an FX dealing desk on our NDD model, the SNB event demonstrated that is not the case.

The action of CFTC speaks for itself and it is VERY SERIOUS... the alleged "Last look" + having an interest in Market maker (LP)

So how do you expect people to believe that what was (allegedly) done won't be repeated in UK and other places?
You company has lost the trust! you won;t admit it.. but wait till all the class action law suits pile up.:clap:

moka - why are you so upset with fxcm? is it because they 'lied' or is it because you lost money to them? i'm not being a smart ass, I want to know why people are really getting cheesed off with them.

I think they're a good firm, I think they're important to clients in terms of the volume they do and the competition they provide. I think if you're going to lose your money to someone it may as well be to anyone, what difference does it make?

 

[moka2]

moka - why are you so upset with fxcm? is it because they 'lied' or is it because you lost money to them? i'm not being a smart ass, I want to know why people are really getting cheesed off with them.

I think they're a good firm, I think they're important to clients in terms of the volume they do and the competition they provide. I think if you're going to lose your money to someone it may as well be to anyone, what difference does it make?

People have no issue loosing money in the Market that is simple "Market risk"
What people are pissed off about is the "broker" playing with your trades
A true broker's job is to broker a deal not to take other side of the trade and play all the dirty games that OTC FX is famous for.. don;t take my word do some googling.. you will see

In this case a body like CFTC findings were

" The CFTC Order finds that, between September 4, 2009 though at least 2014 (the Relevant Period), FXCM engaged in false and misleading solicitations of FXCM’s retail foreign exchange (forex) customers by concealing its relationship with its most important market maker and by misrepresenting that its “No Dealing Desk” platform had no conflicts of interest with its customers. The Order finds FXCM, FXCM Holdings, and Niv responsible for FXCM making false statements to the National Futures Association (NFA) about its relationship with the market maker."

And here you will find a rep from the company claiming it is true NDD in 2011 on a public forum ( forth post from top) LOL

http://forums.babypips.com/newbie-island/40288-fxcm-really-no-dealing-desk.html
By the way in the CFTC PDF they mention a Forum post on Forex factory and how that helped the investigation
"good firm" does not do such things! simple logic
Interesting reading on a "good Firm"
http://www.cftc.gov/idc/groups/publ.../legalpleading/enfforexcapitalorder020617.pdf

Here see post 47 other's describing why they are pissed off
https://www.forexfactory.com/news.php?do=news&id=638202


By the way for the record I have not lost money becasue of this firm , all I am pointing out is the credit ability issue
It is about the lies and taking unsuspecting retail traders in USA on a ride. and in this case probably now share holders are also pissed off! No fault of theirs but the price has gone down from around $6:80 to $2.95 in one day! between 6-8 Feb, Check it
Worst is irrespective of all this we are fed with all the spin and song and dance about how good the NDD execution is! How the business outside USA is strong blah blah ...if it was honest and good why did CFTC took such an action?

All I am pointing out is the fallacy of OTC products and its providers
This action is another example.
oh by the way I have no vested interest in any exchange related business either
all my concern is just as a consumer that is all
In fact I wish big players like these do become an true exchange and purely provide a venue to trade with no conflict of interest with trader. May be one day Spot FX will be exchange traded !

 

[Jason Rogers]

In fact I wish big players like these do become an true exchange and purely provide a venue to trade with no conflict of interest with trader.

Hi Moka,

We innovated transparency in the forex market with the competitive and market-driven No Dealing Desk (NDD) execution specifically to address the kind of conflict of interest you describe. With the NDD model, FXCM acts as a price aggregator. We take the best available bid and best ask prices from our liquidity providers and stream those prices to your platform.

This large, diverse group of liquidity providers makes this model special: The more advantageous the prices, the more order flow the provider receives. Through competition, NDD ensures prices are market-driven and fair.

 

[moka2]

Hi Moka,

We innovated transparency in the forex market with the competitive and market-driven No Dealing Desk (NDD) execution specifically to address the kind of conflict of interest you describe.

That is what was claimed all along and look what CFTC found out!
so please don't put a spin on it as if nothing has happened!
http://www.nfa.futures.org/BasicNet/Case.aspx?entityid=0308179&case=17-09&contrib=CFTC
The period in which CFTC found it out during the same period the company was making same NDD claims!
There were only 3 FX brokers left in a huge market like USA and the fact that you guys had to shut your operations in such a large market speaks for itself !
Which business would let go such market share! have ever heard of the saying where there is smoke.. any way if gullible people want to believe in such gobbledygook then so be it ...:|

 

[Wicked_Daddy]

I'm not taking sides with FXCM here, but I see this as the CFTC kicking them out of the country on a marketing technicality. I was an FXCM client in the U.S. for a few years and I made a lot of money trading Forex with their superb platform. Now I have been forced to move over to another U.S. broker that has antiquated tools and bogus data. If I'm pissed at FXCM, it's for screwing up my rhythm by getting caught in a marketing spin.

You see, FXCM may have referred to themselves as NDD, which is a made up term anyway, but they clearly spelled out their counter-party position in their lengthy customer agreements - which it seems no one reads in their quest for Forex riches. I do read these and I always knew they were the counter party. I always thought it odd that FXCM could market themselves as "NDD" when in fact, they take the counter position a large percentage of the time.

So for those that took the responsibility to inform themselves, this punishment appears to be nothing more than an over zealous penalty for using "marketing speak" to define a practice that is actually common place.

It's no different than all those "reduced fat" foods that claim to be good for you when actually, the incredibly high fat, salt and chemical content is simply a little less than their regular, artery clogging, cancer causing selection.

 

[Jason Rogers]

That is what was claimed all along and look what CFTC found out!
so please don't put a spin on it as if nothing has happened!

I'm not taking sides with FXCM here, but I see this as the CFTC kicking them out of the country on a marketing technicality. I was an FXCM client in the U.S. for a few years and I made a lot of money trading Forex with their superb platform. Now I have been forced to move over to another U.S. broker that has antiquated tools and bogus data. If I'm pissed at FXCM, it's for screwing up my rhythm by getting caught in a marketing spin.

FXCM settled with the NFA and CFTC without admitting or denying any of their allegations or claims. While the nature of our settlement with the US regulators prohibits me from commenting on the specifics, I want you to know we continue to stand by the quality of our trade execution in general and our No Dealing Desk (NDD) forex pricing in particular: http://bit.ly/2egIus1

There were only 3 FX brokers left in a huge market like USA and the fact that you guys had to shut your operations in such a large market speaks for itself !
Which business would let go such market share!

Part of our settlement with the CFTC was to close our US subsidiary. Since FXCM US has not been a contributor to overall profits for the firm over the past few years, FXCM will target significant cost cutting by closing the US entity. Specifically, withdrawing from this business will free approximately $52 million in capital.

We will use any proceeds from the sale of the US accounts, as well as the large amount of regulatory capital currently tied up, to reduce the balance of our loan from Leucadia. With the reduction of this loan balance, along with sales of non-core assets that were previously announced, FXCM could be in a position to fully pay off the Leucadia loan before the end of this year.

 

[moka2]

I'm not taking sides with FXCM here, but I see this as the CFTC kicking them out of the country on a marketing technicality.

I dont think it is mere "Marketing technicality" it is serious misconduct! ("Last look" etc) + hiding interest in LP ) Serious enough to SHUT SHOP! and that too in a such a large market. does that not ring alarm bells! at all???
It is a easy way to blame regulators on an ideological background!

Anybody interested please read the CFTC findings in detail. and what others are saying on forums like https://www.forexfactory.com/showthread.php?p=9533668

Time and again OTC gets bad press .. why there must be some good reason!

You made money with FXCM great meaning you are a good trader, but have you ever thought that you would have made even more money if this kind of activity was not carried out by the dodgy broker. and on the flip side a bad trader would have lost less!

Here is the news story from FCA UK ..."The Financial Conduct Authority (FCA) has fined Forex Capital Markets Ltd and FXCM Securities Ltd (“FXCM UK”) £4,000,000 for allowing the US based FXCM Group to withhold profits worth approximately £6 million ($9,941,970) that should have been passed on to FXCM UK’s clients. "

A broker is supposed to do just that broker a sale not take sides...

Worst part is the spin put on by some people! "...How great it is going to be out side USA etc .. if it is why did you screw existing clients with your US arm in the first place ? how can one trust a company who did all these bad things with existing clients over years!
Any way it is your money and your luck..

 

[moka2]

https://www.fca.org.uk/news/press-releases/financial-conduct-authority-fines-fxcm-uk-%C2%A34-million-making-%E2%80%98unfair-profits%E2%80%99-and[/url]

 

[moka2]

I I do read these and I always knew they were the counter party.

So DO true exchanges! they are the counter party for each trade however big diff is the exchange themselves don;t make market! they are just facilitators ! so no conflict of interest !
Where as in this case the so called "Broker" was indirectly making a market and hide that from everybody.. not my words that is what authorities are saying
Funny part is if FXCM would have continued to be a Market Maker model FX broker then there would have been no issues ! the claimed to be a NDD! and that lie was found out
http://financefeeds.com/fxcm-and-ce...s-several-years-of-trading-against-customers/

 

[Wicked_Daddy]

Moka,

The point is, and I believe you are saying the same thing, is that this broker engaged in dishonest practices. We'll both agree on that.

But the fact is; all brokers are dishonest. Show me a broker that you believe is honest and I will show you examples of how they are not. The whole market, whether it's stocks, commodities, forex or etc, is a criminal enterprise in which the criminals with the most money, and therefore power, make all the rules. Who has the most money? The government. And thus, they are the most powerful criminal of them all. The other criminals have to play by their rules or they get punished.

It's not a conspiracy theorist opinion. It's just a fact. I've worked in it. I know.

If we are to be successful at skimming money out of this criminal enterprise, we need to think like criminals... like them. I'm sure you have heard the saying that to be successful in the market you need to trade like the institutions. It's true. And make no mistake; when you make money on a trade, you are taking it from someone who lost it. No product or service was rendered.

So it doesn't advance your trading or make you more money getting pissed off at criminals for behaving like criminals. Take it from someone that has learned how to consistently profit in this profession - if you are going to do business with criminals, you need to think like one.

 

[Signalcalc]

Moka,

The point is, and I believe you are saying the same thing, is that this broker engaged in dishonest practices. We'll both agree on that.

But the fact is; all brokers are dishonest. Show me a broker that you believe is honest and I will show you examples of how they are not. The whole market, whether it's stocks, commodities, forex or etc, is a criminal enterprise in which the criminals with the most money, and therefore power, make all the rules. Who has the most money? The government. And thus, they are the most powerful criminal of them all. The other criminals have to play by their rules or they get punished.

It's not a conspiracy theorist opinion. It's just a fact. I've worked in it. I know.

If we are to be successful at skimming money out of this criminal enterprise, we need to think like criminals... like them. I'm sure you have heard the saying that to be successful in the market you need to trade like the institutions. It's true. And make no mistake; when you make money on a trade, you are taking it from someone who lost it. No product or service was rendered.

So it doesn't advance your trading or make you more money getting pissed off at criminals for behaving like criminals. Take it from someone that has learned how to consistently profit in this profession - if you are going to do business with criminals, you need to think like one.

What's the name of the book?

 

[wackypete2]

sounds like moka is about to blow his top. lol
Must have lost money with FXCM or other brokers.
Anyhow, it's the trader's responsibility for any trading losses regardless of broker.

Peter

 

[wackypete2]

It's not a conspiracy theorist opinion. It's just a fact. I've worked in it. I know.

Moka believes that traders don't get cheated or skimmed on regulated exchanges. Small thinking.

Peter

 

[Wicked_Daddy]

What's the name of the book?

Name of the book?

I don't understand. Are you suggesting I write one? If so, I have given it some thought.

 

[moka2]

sounds like moka is about to blow his top. lol
Must have lost money with FXCM or other brokers.
Anyhow, it's the trader's responsibility for any trading losses regardless of broker.

Peter

Peter
For you kind info, No I am not about to blow my top as I have not lost any money with this so called "broker"
All I am point out is in OTC market specially these things are more prevalent...
Rather than accepting that you seems to gloss over the fact that a big fraud was cought red handed

Why don't you read in detail what CFTC found out what NFA found out and also read what others are saying on other forums like Forex factory

Worst the spin the rep is putting on public forums

Any money I have lost in life is by taking normal "Market risk" So NO I don't blame the so called "broker" for any natural "market risk" losses
It seems anytime anybody criticizes OTC, fans like you jump to conclusion that the person must have lost money and just want to make the broker as scapegoat!
NO that is not the case

In a market the regulators should make sure that the only risk people are exposed to is "market risk" not Client money risk and Broker playing games about execution. Don't you get it!
In FXCMs case that "playing games" was found out!
OTC means you have no chance of knowing where the true market is! Each OTC is a exchange itself ...but with a possible conflict of interest.
Now compare this to CME/ NYSE ,, yes true you compete with big and small traders but you can see market depth etc

The only way in western word Client money protection is in UK for both equity/ options/ Futures and FX (Alpari) but in US only Equity (SIPC) ( DOnt know about other EU and Canada)
Forget about ASIC and NZ they are as pisspot as other tin pot countries
If your broker runs away with your money THERE IS NO Protection

Any way it seems for people like you these are irrelevant things..

 

[Jason Rogers]

Moka believes that traders don't get cheated or skimmed on regulated exchanges. Small thinking.

Peter

Hi Peter,

To their credit, institutional venues such as the CME (futures market), Reuters, EBS provide a valued service in the FX industry and are excellent trading venues. Our liquidity providers require this to trade otherwise they would not be able to make markets for FXCM’s retail clients or their own clients. The transparency of pricing and market data on the CME sets a standard for global trading which many FX market participants look to as a benchmark.

That said, our recent execution study points out how different customer segments are better suited for different venues. While institutional clients are best suited to compete with each other at the large venues like the futures market, we believe that retail clients are better suited for our trading environment as detailed in the study.*

FXCM was equal to or better than the Futures price 81.34% of the time

• Estimated savings to FXCM clients: $42,529,156
• Average savings per Order: $1.02
• Number of orders included in the study: 41,559,576

__________________________________________

* The study does not in away way attempt to represent that FXCM maintains a particular capacity or performance level. The figures in this study are provided for information purposes only, and are not intended for trading purposes or advice. FXCM is not liable for any information errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Past results are not indicative of future performance.

Material Assumptions

FXCM’s Retail Clients are defined as individual, joint, and corporate accounts trading on our retail price stream.

The comparison to each of the Futures and Interbank data is made at the time that the FXCM client order is executed. Normal market slippage and slippage due to rejections by liquidity providers are already included by the time the FXCM client order is executed. However, there is an assumption that there is no slippage on the Futures or Interbank market data.

In order to maintain consistency, Futures Market data and Interbank data used the same acceptable ranges in market trades. The summary of findings is based on the assumption that the maximum acceptable difference between the FXCM price and the Interbank/Futures market price is 5 pips in either direction.

Fees that a participant would pay on the Futures or Interbank market, such as CME Exchange Fees, NFA Fees, FCM Fees, Clearing Fees, and other commissions, were excluded from the study. Similarly, FXCM Commissions are excluded from the study.