I feel robbed by etx capital and I don't know what to do. Any advice?

No it isn't. It's an order and no one can control where it will be filled.

All the spread bet whiners have no idea that these issues are much worse in the real market.

This is quite correct. Unless it is a guaranteed stop to close an open position a normal Stop Loss order is simply an instruction to your broker to trade at the next available price once the Stop Loss level has been touched.

After everything that happened with the EUR/CHF you would have hoped that the one lesson retail clients learned that day was that liquidity is not bottomless and there are not an endless supply of bids and offers for you to close or open positions at.
 
All the above comments are perfectly true and valid, but I think that isn't really what the OP is complaining about?

See what he said, just above:-
I know but my main issue was being told that after the trade was reversed I was at a profit of £65 and then it was changed to a loss of £65 and then it was changed AGAIN to a loss of almost £900! That is taking the **** no matter what anyone says!

The issue highlighted here is about customer service and behaviour, surely? A representation was made to him in an official capacity by an ETX employee; it turned out to be completely wrong and they haven't even apologised for that (is my understanding, here)?
 
That's right Alexa. Markets are markets and that's fair enough but to be wrongly informed and messed about is really unfair especially when money is concerned. It's a fact though that if the same thing had happened and I was in profit £900 instead of at a loss I wouldn't be complaining. I think maybe it was just self pity and desperation. It was a valuable lesson though highbury and thankfully it didn't cost me thousands of pounds. I have changed broker now and they don't do requotes so hopefully everything will be ok.
 
Keep fighting this...

Hi Barry,

I've had issues like this with various firms over the years. Fight them and you will get your funds returned.

You have a very strong case because they actually executed your stop loss order and filled your position. That constitutes, in law, a legally binding contract.

Bear in mind that all the firm's arguments are retrospective in nature. In real time they obviously offered the quotation which you were filled at. They are only arguing 'after the event' that this particular price shouldn't have been offered.

Remember at all times that ETX offer 'off exchange' trading. Therefore they cannot technically use 'liquidity issues' on another exchange as an excuse to reverse a trade. I strongly suspect (and myself and others knew this long before the CHF business blew up) that on this particular occasion many of the firms out there inadvertently provided a level of liquidity in their own markets which was not there in the underlying markets. While this event is rare it is not an impossible event and it is an event which the firms must carry as risk - that's the nature of providing fixed spreads on an 'off exchange' market.

Ultimately the firm filled your order. In my opinion they have no legal right to cancel it and then refill it. Your stop loss order is, in law, an 'offer' to trade at that price. Filling your order constitutes 'acceptance' of your offer.

Offer + Acceptance = Contract.

They will struggle to overturn this if you take the matter further.

It might be worth checking the T&C's of the Client Agreement as I suspect that the T&C's may not say what the firm have suggested. This is often the way with many of the firms.


I strongly suspect that some of the firms were forced into 'back fitting' trades because they let clients out of positions for prices which were far more generous than prices which may have been available on the underlying. This may have left certain firms with hedge trades which were causing them considerable pain - the only answer may have been to pass this pain onto clients somehow.


Ultimately you will get your money back.

If you need further help then let me know.




Steve.
 
Hi Barry,

I've had issues like this with various firms over the years. Fight them and you will get your funds returned.

You have a very strong case because they actually executed your stop loss order and filled your position. That constitutes, in law, a legally binding contract.

Bear in mind that all the firm's arguments are retrospective in nature. In real time they obviously offered the quotation which you were filled at. They are only arguing 'after the event' that this particular price shouldn't have been offered.

Remember at all times that ETX offer 'off exchange' trading. Therefore they cannot technically use 'liquidity issues' on another exchange as an excuse to reverse a trade. I strongly suspect (and myself and others knew this long before the CHF business blew up) that on this particular occasion many of the firms out there inadvertently provided a level of liquidity in their own markets which was not there in the underlying markets. While this event is rare it is not an impossible event and it is an event which the firms must carry as risk - that's the nature of providing fixed spreads on an 'off exchange' market.

Ultimately the firm filled your order. In my opinion they have no legal right to cancel it and then refill it. Your stop loss order is, in law, an 'offer' to trade at that price. Filling your order constitutes 'acceptance' of your offer.

Offer + Acceptance = Contract.

They will struggle to overturn this if you take the matter further.

It might be worth checking the T&C's of the Client Agreement as I suspect that the T&C's may not say what the firm have suggested. This is often the way with many of the firms.


I strongly suspect that some of the firms were forced into 'back fitting' trades because they let clients out of positions for prices which were far more generous than prices which may have been available on the underlying. This may have left certain firms with hedge trades which were causing them considerable pain - the only answer may have been to pass this pain onto clients somehow.


Ultimately you will get your money back.

If you need further help then let me know.




Steve.
Hi Steve, aren't you promising this trader too much? Anyway, if there is a lot of money at stake I would also go for it, regardless if I am right or wrong. The broker give you a price based on the underlaying asset. If there is no price available, the system might be closing down your trade anyway based on margin requirements.

The MiFID best execution directive clearly states that the price must be based and reflect the underlaying asset, so I think your argument falls short that the broker is not legally bound by the underlaying asset price.
 
My advice Harry is to read the ETX Capital T&C. I'm almost certain they will have clauses relating to market disruption, Force Majeure, etc which will be worded more than loosely enough to cover the shenanigans on the Swissy floor being removed. Availability of liquidity is an obvious necessity for any provider of prices regardless of how closely their prices follow the underlying or not. It was a one off event and yes they could have, based upon your account of the communications, been a little more forthright, polite and professional.

You could try addressing your concerns directly to Monecor on the customer service side of things and they might offer a sorry of some kind for the lack of courtesy, but you're not going to get your account reset. There's no legal basis for it. And from ETX Capital's point of view, there's certainly no commercial basis for it.
 
My advice Harry is to read the ETX Capital T&C. I'm almost certain they will have clauses relating to market disruption, Force Majeure, etc which will be worded more than loosely enough to cover the shenanigans on the Swissy floor being removed. Availability of liquidity is an obvious necessity for any provider of prices regardless of how closely their prices follow the underlying or not. It was a one off event and yes they could have, based upon your account of the communications, been a little more forthright, polite and professional.

You could try addressing your concerns directly to Monecor on the customer service side of things and they might offer a sorry of some kind for the lack of courtesy, but you're not going to get your account reset. There's no legal basis for it. And from ETX Capital's point of view, there's certainly no commercial basis for it.
I am quite sure Harry has done this already, I am also quite convinced the he have gone out of his way in trying to get the trade reversed. The T&C is not actually the whole answer, as clauses in it cannot override the MiFID financial directives. I have said this earlier, there might be some information in the MiFID Financial directives that might give strenght to this case.
 
MiFID Directives only cover firms involved in investment services and activities, not those involved in ancillary services. In the UK MiFID has been incorporated into FCA which means any FCA regulated body is automatically subject to these directives. However, spot FX contracts are not considered to be financial instruments for the purposes of MiFID and that part of a firm's business that is not covered by MiFID is not subject to MiFID.
 
My advice Harry is to read the ETX Capital T&C. I'm almost certain they will have clauses relating to market disruption, Force Majeure, etc which will be worded more than loosely enough to cover the shenanigans on the Swissy floor being removed. Availability of liquidity is an obvious necessity for any provider of prices regardless of how closely their prices follow the underlying or not. It was a one off event and yes they could have, based upon your account of the communications, been a little more forthright, polite and professional.

You could try addressing your concerns directly to Monecor on the customer service side of things and they might offer a sorry of some kind for the lack of courtesy, but you're not going to get your account reset. There's no legal basis for it. And from ETX Capital's point of view, there's certainly no commercial basis for it.


I disagree - there is clearly 'a basis in law' since Barry had his stop loss filled (after a certain amount of slippage) before the fill was reversed some time later.

The T&Cs make it clear that orders are not valid and binding until acceptance has occurred - in this case the stop loss WAS filled and thus acceptance occurred. The client is therefore justified in enforcing that particular term against the firm in question.

The T&C also specify that their systems add to the liquidity which may not be present in an underlying market so again it is not unreasonable for a client to use such a term to their advantage. Firm's often ignore such terms when the situation suits them.

In my opinion the T&Cs don't entirely support their actions. It seems to me that the some of the SB / CFD firms have sought to protect themselves by 'back fitting' the trading fills to ensure that they do not lose out financially.

Barry's case is so strong because his fill occurred in 'real time' - before the extent or the reason of the massive move was widely known.

Firm's may well use charts which show where fills were made in the underlying market (as an excuse) but this chart will not reflect the bids and offers which were available in real time on the firms actual market which is the market which the clients were really trading - again the T&Cs specify that the client is speculating against the firms price and NOT the price of the underlying asset.

In this case it appears that Barry's stop order was simply filled, after a degree of slippage, as the price dropped sharply through his stop loss level. As I've said before, the firm may have provided a degree of liquidity which was NOT present in the underlying market but the firm cannot use this as an excuse since it can be shown that 'providing liquidity' is clearly a 'danger' when the firm act as a counterparty and offer a market which is 'off exchange'.



Steve.
 
Hi Steve, aren't you promising this trader too much? Anyway, if there is a lot of money at stake I would also go for it, regardless if I am right or wrong. The broker give you a price based on the underlaying asset. If there is no price available, the system might be closing down your trade anyway based on margin requirements.

The MiFID best execution directive clearly states that the price must be based and reflect the underlaying asset, so I think your argument falls short that the broker is not legally bound by the underlaying asset price.


I don't feel that my argument falls short. Barry's stop loss was filled as price broke through his stop level - nothing wrong in that respect. In my opinion the price which the client was filled at did correctly reflect the price of the underlying in the few seconds which it took price to pass through the stop loss level. Some slippage was applied given the nature of the move and again this is fair enough.

What you have to remember is that some brokers provide either 'fixed' or 'maximum' spreads on many markets. When you fix your spread then, from time to time, there will be occasions when you provide liquidity which isn't really there. I strongly suspect that this is what occurred in real time and this is why Barry was given a price which allowed him out of his trade for only minor slippage.

The T&Cs appear to allow the firms to alter their fixed spreads without notifying the clients. However, in this case, it appears that they did not do that - not in real time at least. If I was a client then I would be watchful for any firm which attempted to retrospectively alter the spreads or quotations AFTER the event.
 
MiFID Directives only cover firms involved in investment services and activities, not those involved in ancillary services. In the UK MiFID has been incorporated into FCA which means any FCA regulated body is automatically subject to these directives. However, spot FX contracts are not considered to be financial instruments for the purposes of MiFID and that part of a firm's business that is not covered by MiFID is not subject to MiFID.

ETX don't offer Spot FX. ETX offers a synthetic FX product based on prices in the underlying market. Spot FX is a deliverable product, ie, there is an actual foreign exchange 2 days post trade date.

Spot FX should not be confused with a spread bet or CFD product. They are quite different.
 
ETX don't offer Spot FX. ETX offers a synthetic FX product based on prices in the underlying market. Spot FX is a deliverable product, ie, there is an actual foreign exchange 2 days post trade date.

Spot FX should not be confused with a spread bet or CFD product. They are quite different.

I agree with that. In this case spreadbet firms offer 'over the counter' derivatives which can only be traded at the individual firm's venue.

I don't think that MiFID comes into this discussion directly.

The issue at hand appears to be an issue of 'off exchange pricing' when prices on an underlying market move quickly. In this case several firms probably got caught out on many of the CHF pairs because they offer fixed spreads of 3 or 4 pips. This creates a major issue when the spread in the underlying suddenly increases to >100 pips; the firms have to pitch their 4 pip spread somewhere inside the spread of the underlying and thus the firms start to provide liquidity which isn't in the underlying. This is clearly the firms risk and not the clients.


Steve.
 
I agree with that. In this case spreadbet firms offer 'over the counter' derivatives which can only be traded at the individual firm's venue.

I don't think that MiFID comes into this discussion directly.

The issue at hand appears to be an issue of 'off exchange pricing' when prices on an underlying market move quickly. In this case several firms probably got caught out on many of the CHF pairs because they offer fixed spreads of 3 or 4 pips. This creates a major issue when the spread in the underlying suddenly increases to >100 pips; the firms have to pitch their 4 pip spread somewhere inside the spread of the underlying and thus the firms start to provide liquidity which isn't in the underlying. This is clearly the firms risk and not the clients.


Steve.

there are set tolerances and a clients deal attempt will only be successful if the side the client is trading on is within a certain tolerance from the underlying market. for example, if the tolerance on eur/chf is 2 pips and the client is trying to hit a 40 bid, as long as the eur/chf bid from their liquidity provider is 38 or higher the clients deal will be done. it doesn't matter if the bid is 2.1 points lower or 100 points lower as it will be rejected due to tolerance. if the deal attempt is a stop loss order being triggered the fill is where ever the market is, so again it doesn't really matter how far its fallen in that instance or how wide the spread is.

the problem that's arisen here is the broker has given a fill and then has gone back a day or so later and changed the price of the fill. Although there is plenty of scope in the t&c's for them to do this, it doesn't sit very well with clients who think that spread bet firms should do the honourable thing and honour the price.

some spread bet firms have (good for them) and some haven't, but those who haven't stuck to their original fills are being asked by their clients to provide evidence that their fills are correct on the basis of the underlying market movement and they're struggling to provide that evidence.

the spread bet firms are going to be hard to beat on this and it will come down to who do you feel comfortable trading with.
 
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there are set tolerances and a clients deal attempt will only be successful if the side the client is trading on is within a certain tolerance from the underlying market. for example, if the tolerance on eur/chf is 2 pips and the client is trying to hit a 40 bid, as long as the eur/chf bid from their liquidity provider is 38 or higher the clients deal will be done. it doesn't matter if the bid is 2.1 points lower or 100 points lower as it will be rejected due to tolerance. if the deal attempt is a stop loss order being triggered the fill is where ever the market is, so again it doesn't really matter how far its fallen in that instance or how wide the spread is.

the problem that's arisen here is the broker has given a fill and then has gone back a day or so later and changed the price of the fill. Although there is plenty of scope in the t&c's for them to do this, it doesn't sit very well with clients who think that spread bet firms should do the honourable thing and honour the price.

some spread bet firms have (good for them) and some haven't, but those who haven't stuck to their original fills are being asked by their clients to provide evidence that their fills are correct on the basis of the underlying market movement and they're struggling to provide that evidence.

the spread bet firms are going to be hard to beat on this and it will come down to who do you feel comfortable trading with.

Are you from a spread bet Co?

In my opinion the issue is not one relating to a 'bad price' as such; the price clearly dropped through the level of the stop loss and was filled after slippage.

In order for the trade to be reversed the firm would have to show that the trade was either 'palpably wrong' or 'manifestly incorrect'. In my opinion the firm does not appear to be able to show either as the price clearly moved, albeit quickly, through the level of the stop loss and thus the execution was clearly in keeping with market prices in those critical split seconds.

You mentioned the various tolerances - these were obviously met by the clients stop loss order in real time and the stop was filled with some slippage. It is only in hindsight that the firm has sought to challenge the validity of the fill level. In other words the firm has perhaps 'changed' the various tolerances and then retrospectively 'retested' the clients order using a different mathematical test than the test which had previously occurred in 'real time'?

The problem which the various firms have is that the client is deemed to be betting on the level of the firm's own market, not that of the underlying market. This makes it very difficult for the firms. In this case, during the rapid move, it appears that the firm offered the clients a price which triggered this particular client's stop loss order. That order was subsequently filled and thus became binding.

I notice that a number of the firms attempted to 'bundle' clients together in order to get them out of the market. Some firms were careful to first remove their own hedges before allowing clients to exit trades. It appears that other firms may have been less careful and allowed clients to be stopped out before the firm themselves removed their hedge - I strongly suspect that Alpari UK might be in that group?

What the clients of these firms need to be sure of, and indeed protect themselves against, is situations where a firm might reverse trades, not because of mis-pricing, but due to economic pressure not to lose money on their hedge trade. There were clearly hundreds if not thousands of people with positions on CHF across a good many firms - there have been stories in the papers.

I cannot see anything in the T&C's which would allow the firm to reverse a stop loss order in the apparent situation as set out by the original poster.


Steve.
 
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Are you from a spread bet Co?

In my opinion the issue is not one relating to a 'bad price' as such; the price clearly dropped through the level of the stop loss and was filled after slippage.

In order for the trade to be reversed the firm would have to show that the trade was either 'palpably wrong' or 'manifestly incorrect'. In my opinion the firm does not appear to be able to show either as the price clearly moved, albeit quickly, through the level of the stop loss and thus the execution was clearly in keeping with market prices in those critical split seconds.

You mentioned the various tolerances - these were obviously met by the clients stop loss order in real time and the stop was filled with some slippage. It is only in hindsight that the firm has sought to challenge the validity of the fill level. In other words the firm has perhaps 'changed' the various tolerances and then retrospectively 'retested' the clients order using a different mathematical test than the test which had previously occurred in 'real time'?

The problem which the various firms have is that the client is deemed to be betting on the level of the firm's own market, not that of the underlying market. This makes it very difficult for the firms. In this case, during the rapid move, it appears that the firm offered the clients a price which triggered this particular client's stop loss order. That order was subsequently filled and thus became binding.

I notice that a number of the firms attempted to 'bundle' clients together in order to get them out of the market. Some firms were careful to first remove their own hedges before allowing clients to exit trades. It appears that other firms may have been less careful and allowed clients to be stopped out before the firm themselves removed their hedge - I strongly suspect that Alpari UK might be in that group?

What the clients of these firms need to be sure of, and indeed protect themselves against, is situations where a firm might reverse trades, not because of mis-pricing, but due to economic pressure not to lose money on their hedge trade. There were clearly hundreds if not thousands of people with positions on CHF across a good many firms - there have been stories in the papers.

I cannot see anything in the T&C's which would allow the firm to reverse a stop loss order in the apparent situation as set out by the original poster.


Steve.

Hi Steve

Yes, I'm C level in a Spread bet and CFD firm. I've posted on here fairly regularly and have always said i'm not here to drum up business for my firm or to recommend any of our services. in fact you wont find any reference at all to me mentioning who I work for and I wont. I want to tell you what its like from our side of the fence without being accused of being biased or talking my own book. I'm happy for you to believe all, some or nothing of what I say but I can assure you that even though you may disagree with me, the points I make are fact as far as spreadbet and cfd firms are concerned.

those fills that you thought were binding aren't binding. That's crazy right? of course it is but there is enough wiggle room to let some firms off the hook and that is what is happening in this scenario.

Palpably wrong - who determines what is 'palpably wrong' I think if you look in to the t+c's you may see that a price is palpably wrong if it is more than three times outside of the normal spread.. for example a 1 pip eur/usd could be palpably wrong if theu're quoting 11/12 when the right price could be 15/16.

The T+C's are set up to protect the firm writing them and whilst that doesn't make it morally fair it is the road map for the way you are allowed to do business with them.

you say that 'some firms were careful first to remove their own hedge' - when the eur/chf move happened no one new what was going on, there wasn't time to remove any thing. Most brokerages will have systems that automatically fill orders at the next price and most of the time this saves a lot of dealers having to fill tiny orders but the trouble this time meant that one price may have been 1.2001/1.2003 and the system may have thought the next price was 1.1987/1.1989 once the cap was removed when we all know it actually wasn't there and it was thousands of points lower. this is what happened at IG, the first wave of orders were automatically filled on the basis the price action triggered them, but the second and subsequent waves were filled at levels the dealers determined.

spreadbet firms were designed to offer wider prices than the interbank market to a retail audience but as this market has matured more and more people are finding a way to try and take advantage of slow prices or large autofill sizes in illiquid markets and spread bet firms have had to react to protect themselves and unfortunately thousands of honourable and decent people get caught up in a net that has been built to ensure scammers don't/cant profit.
 
Hi Steve

Yes, I'm C level in a Spread bet and CFD firm. I've posted on here fairly regularly and have always said i'm not here to drum up business for my firm or to recommend any of our services. in fact you wont find any reference at all to me mentioning who I work for and I wont. I want to tell you what its like from our side of the fence without being accused of being biased or talking my own book. I'm happy for you to believe all, some or nothing of what I say but I can assure you that even though you may disagree with me, the points I make are fact as far as spreadbet and cfd firms are concerned.

those fills that you thought were binding aren't binding. That's crazy right? of course it is but there is enough wiggle room to let some firms off the hook and that is what is happening in this scenario.

Palpably wrong - who determines what is 'palpably wrong' I think if you look in to the t+c's you may see that a price is palpably wrong if it is more than three times outside of the normal spread.. for example a 1 pip eur/usd could be palpably wrong if theu're quoting 11/12 when the right price could be 15/16.

The T+C's are set up to protect the firm writing them and whilst that doesn't make it morally fair it is the road map for the way you are allowed to do business with them.

you say that 'some firms were careful first to remove their own hedge' - when the eur/chf move happened no one new what was going on, there wasn't time to remove any thing. Most brokerages will have systems that automatically fill orders at the next price and most of the time this saves a lot of dealers having to fill tiny orders but the trouble this time meant that one price may have been 1.2001/1.2003 and the system may have thought the next price was 1.1987/1.1989 once the cap was removed when we all know it actually wasn't there and it was thousands of points lower. this is what happened at IG, the first wave of orders were automatically filled on the basis the price action triggered them, but the second and subsequent waves were filled at levels the dealers determined.

spreadbet firms were designed to offer wider prices than the interbank market to a retail audience but as this market has matured more and more people are finding a way to try and take advantage of slow prices or large autofill sizes in illiquid markets and spread bet firms have had to react to protect themselves and unfortunately thousands of honourable and decent people get caught up in a net that has been built to ensure scammers don't/cant profit.



Some great points in there.

I do try to see things from both sides of the fence.


In terms of the 'binding contracts'... If such a matter ever reached court then they would be binding in nature. That is to say that the client would generally be very successful in enforcing such a contract against a firm.

There is a very simple reason why; it's deemed to be a contract in law.

There's a very good reason why all of the online retailers make it clear that orders placed online are not binding until acceptance and this is to prevent breach of contract (on their part) in the event of mis-priced items on a website. What the online retailers now do is manually check each order before accepting it. In other words they have moved the 'point of contract'. It used to be a contract when the customer clicked 'buy' and made their payment.

As I mentioned in a previous post, what this comes down to is;

offer + acceptance = contract.

Put simply, a firm should not accept an order unless it is prepared to be bound by it's terms.

This appears to be backed up by The Financial Services & Markets Act (2000) which makes spread bet contracts enforceable in law.

I realise that this conversation is mainly theoretical in nature but it is also worth noting that the T&Cs of any SB / CFD firm fall under the remit of The Markets Act which I mention above. What that means is that the T&Cs cannot seek to circumvent the terms of the Act itself - Your "wiggle room" appears to try and do that (by not making trades 'binding') and thus wouldn't be acceptable. In such a dispute the Markets Act would prevail over the T&Cs. There's probably something in the T&Cs which covers this.



Getting technical now but you mention that the T&Cs are written to protect the firms. Of course this is widely regarded as being true and I certainly wont argue with your point in that respect.

There are however a number of points which massively favour the clients if only the clients know the true legal position.

In law the T&C's make up the 'client agreement'. This is technically called a 'standard form contract' meaning a contract where the terms and conditions are not individually negotiated by each client. The 'client agreement' is simply sent to each client to be signed and then sent back.

What a lot of firms don't realise is that such a contract makes them subject to 'contra proferentem'. This is actually covered in FCA Conduct of Business document but you'd be surprised how many compliance officers ignore its existence!

You're not allowed terms which, when interpreted, cause 'significant imbalance' either.

What contra proferntem allows is for clients to turn the tables on the firm themselves providing that the client can show that he / she has a reasonable interpretation of the term which he / she feels is relevant. In theory the firm have no choice but to accept the clients interpretation over their interpretation.

I had to point all of this out to a head of compliance once and even he admitted that it was "a real eye opener".



So I don't think there is the wiggle room which you suggest. Firms might present it as such but when pressed they give in. The BIG risk for any firm is when a group get together and really push hard. Apparently there is a group pressing IG Index at the moment - 340 clients seeking around £18m... ouch. It will be interesting to see what happens there.


In terms of the case of Barry (the original poster), I think he will get his money back as he can clearly show that his original stop loss trade was filled.


Steve.
 
Some great points in there.

I do try to see things from both sides of the fence.


In terms of the 'binding contracts'... If such a matter ever reached court then they would be binding in nature. That is to say that the client would generally be very successful in enforcing such a contract against a firm.

There is a very simple reason why; it's deemed to be a contract in law.

There's a very good reason why all of the online retailers make it clear that orders placed online are not binding until acceptance and this is to prevent breach of contract (on their part) in the event of mis-priced items on a website. What the online retailers now do is manually check each order before accepting it. In other words they have moved the 'point of contract'. It used to be a contract when the customer clicked 'buy' and made their payment.

As I mentioned in a previous post, what this comes down to is;

offer + acceptance = contract.

Put simply, a firm should not accept an order unless it is prepared to be bound by it's terms.

This appears to be backed up by The Financial Services & Markets Act (2000) which makes spread bet contracts enforceable in law.

I realise that this conversation is mainly theoretical in nature but it is also worth noting that the T&Cs of any SB / CFD firm fall under the remit of The Markets Act which I mention above. What that means is that the T&Cs cannot seek to circumvent the terms of the Act itself - Your "wiggle room" appears to try and do that (by not making trades 'binding') and thus wouldn't be acceptable. In such a dispute the Markets Act would prevail over the T&Cs. There's probably something in the T&Cs which covers this.



Getting technical now but you mention that the T&Cs are written to protect the firms. Of course this is widely regarded as being true and I certainly wont argue with your point in that respect.

There are however a number of points which massively favour the clients if only the clients know the true legal position.

In law the T&C's make up the 'client agreement'. This is technically called a 'standard form contract' meaning a contract where the terms and conditions are not individually negotiated by each client. The 'client agreement' is simply sent to each client to be signed and then sent back.

What a lot of firms don't realise is that such a contract makes them subject to 'contra proferentem'. This is actually covered in FCA Conduct of Business document but you'd be surprised how many compliance officers ignore its existence!

You're not allowed terms which, when interpreted, cause 'significant imbalance' either.

What contra proferntem allows is for clients to turn the tables on the firm themselves providing that the client can show that he / she has a reasonable interpretation of the term which he / she feels is relevant. In theory the firm have no choice but to accept the clients interpretation over their interpretation.

I had to point all of this out to a head of compliance once and even he admitted that it was "a real eye opener".



So I don't think there is the wiggle room which you suggest. Firms might present it as such but when pressed they give in. The BIG risk for any firm is when a group get together and really push hard. Apparently there is a group pressing IG Index at the moment - 340 clients seeking around £18m... ouch. It will be interesting to see what happens there.


In terms of the case of Barry (the original poster), I think he will get his money back as he can clearly show that his original stop loss trade was filled.


Steve.

Hi Steve

I tend not to post my opinion on matters here or speculate on what may happen. Instead I stick to what has happened in the past in similar situations and talk about how they may affect what is happening currently.

I don't think its particularly fair on ETX either that we digress too much from the threads topic. I'm talking very generally here about all spreadbet companies not just ETX.

Many Spreadbet clients over the years have taken their brokers to the FOS for a final decision on a conflict that has been unable to be resolved between the 2 parties and more often than not the FOS has sided with the Spread bet firm.

The spreadbets firms risk disclaimers and T+C's are so specific and so general at the same time that there is almost certainly a clause that will be relevant to most conflicts and a clear definition of how that conflict is resolved. Normally it is resolved in the s/b firms favour and the FOS tends to accept the terms that the clients do business under as fair and reasonable.

150+ IG clients bringing class action for £18m doesn't mean 150 clients are right and will get their money back. It means 150 people have joined forces to get a cheap lawyer and assume the size of their group will cause IG to go weak at the knees. IG are not LCG and a class action of £18m against IG will not affect them in the same way LCG had a similar class action case against them a few years ago regarding the commissions on their managed accounts. If IG have convinced themselves they are right they will defend themselves and if I was a betting man I wouldn't fancy the 150 clients chances of getting anything other than an ulcer.

in terms of Barry, I wish him well but I don't think he'll get anything. He was long EUR/CHF, it went down, his position was closed at the first available price and left his account in negative equity that IG are now attempting to retrieve. That's the facts of it, the size of the debt doesn't matter (other than to Barry)
 
Hi Steve

I tend not to post my opinion on matters here or speculate on what may happen. Instead I stick to what has happened in the past in similar situations and talk about how they may affect what is happening currently.

I don't think its particularly fair on ETX either that we digress too much from the threads topic. I'm talking very generally here about all spreadbet companies not just ETX.

Many Spreadbet clients over the years have taken their brokers to the FOS for a final decision on a conflict that has been unable to be resolved between the 2 parties and more often than not the FOS has sided with the Spread bet firm.

The spreadbets firms risk disclaimers and T+C's are so specific and so general at the same time that there is almost certainly a clause that will be relevant to most conflicts and a clear definition of how that conflict is resolved. Normally it is resolved in the s/b firms favour and the FOS tends to accept the terms that the clients do business under as fair and reasonable.

150+ IG clients bringing class action for £18m doesn't mean 150 clients are right and will get their money back. It means 150 people have joined forces to get a cheap lawyer and assume the size of their group will cause IG to go weak at the knees. IG are not LCG and a class action of £18m against IG will not affect them in the same way LCG had a similar class action case against them a few years ago regarding the commissions on their managed accounts. If IG have convinced themselves they are right they will defend themselves and if I was a betting man I wouldn't fancy the 150 clients chances of getting anything other than an ulcer.

in terms of Barry, I wish him well but I don't think he'll get anything. He was long EUR/CHF, it went down, his position was closed at the first available price and left his account in negative equity that IG are now attempting to retrieve. That's the facts of it, the size of the debt doesn't matter (other than to Barry)


I've had dealings with the FOS and they aren't particularly strong because they have a weak understanding of how markets work. There have been successful cases but there is a requirement to 'puppy walk' the FOS staff through all the aspects of a particular case - this takes time but pays huge dividends in the final outcome.

Most of my comments have been about SB'ing / CFD'ing in general and not specifically about ETX or any other particular firm.

Obviously comments regarding Barry's trade are ETX specific - in terms of them filling the stop loss etc.

What I find interesting about Barry's case (and this makes it stronger in my opinion) is that ETX appear to have calculated the slippage in his original triggered stop loss order meaning that some calculation of slippage did take place in real time. It's only retrospectively that they wanted to somehow recalculate the slippage and make it considerably larger.


This is an interesting read...

http://www.financemagnates.com/fore...30-million-after-excessive-volatility-in-chf/

There's an indication in there that IG's losses over this matter occurred when they executed orders for clients at better prices that they could get for themselves. Obviously IG are a huge business and they can absorb such a hit.

But not all the SB / CFD houses are so robust in nature. As I mentioned yesterday, I kind of get the impression that Alpari UK may have had a similar issue - I'm pleased with myself that I mentioned this in the Alpari UK discussion thread at the time! Alpari UK obviously concluded that they had little chance of retrospectively recalculating client slippage - maybe they looked at it and decided that the T&Cs didn't allow it?? Who knows. The fact is that they didn't start altering fills even though clients reported being filled at many different levels.


I'm not sure Barry's account has gone negative? I think it was in CAD/CHF?
 
I take it Highbury that you run things at IG and whatever you say here is.most likely what IG are planning to do with clients I assume?

Whatever happened to IG's Corporate Social Responsibility? Would social responsibility not encompass bleeding clients with negative balances for everything they have and more?

Ethics should play a part in spreadbetting firms approach to chasing balances. Spreadbetting with firms as principal/bookie effectively gives all the power to the firm and clients deserve undivided attention. Clients expect the best possible result as there should be duty of care at least. Am I completely missing something?


Hi Steve

I tend not to post my opinion on matters here or speculate on what may happen. Instead I stick to what has happened in the past in similar situations and talk about how they may affect what is happening currently.

I don't think its particularly fair on ETX either that we digress too much from the threads topic. I'm talking very generally here about all spreadbet companies not just ETX.

Many Spreadbet clients over the years have taken their brokers to the FOS for a final decision on a conflict that has been unable to be resolved between the 2 parties and more often than not the FOS has sided with the Spread bet firm.

The spreadbets firms risk disclaimers and T+C's are so specific and so general at the same time that there is almost certainly a clause that will be relevant to most conflicts and a clear definition of how that conflict is resolved. Normally it is resolved in the s/b firms favour and the FOS tends to accept the terms that the clients do business under as fair and reasonable.

150+ IG clients bringing class action for £18m doesn't mean 150 clients are right and will get their money back. It means 150 people have joined forces to get a cheap lawyer and assume the size of their group will cause IG to go weak at the knees. IG are not LCG and a class action of £18m against IG will not affect them in the same way LCG had a similar class action case against them a few years ago regarding the commissions on their managed accounts. If IG have convinced themselves they are right they will defend themselves and if I was a betting man I wouldn't fancy the 150 clients chances of getting anything other than an ulcer.

in terms of Barry, I wish him well but I don't think he'll get anything. He was long EUR/CHF, it went down, his position was closed at the first available price and left his account in negative equity that IG are now attempting to retrieve. That's the facts of it, the size of the debt doesn't matter (other than to Barry)
 
I
Ethics should play a part in spreadbetting firms approach to chasing balances.
Never thought I'd see those words in that order all in one sentence.

Guys I'm sorry , but for all sorts of reasons, ETX are never goin ta straighten you out. It's a loss. An unusual one, but a loss all the same. When subprime pulled the markets down on 2007 GS took $9bn up the botty. It hurts at times, even for the big boys.
 
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