de | cn | ru

Brokers News

FXCM gets $7 mln fine from CFTC, sells US business to Gain Capital

In a surprising twist of regulatory fate, FXCM – the largest US retail forex broker – got banned from doing business there and was fined $7 million by the CFTC, all in the fateful afternoon of February 6, 2017. The reason: misleading customers and regulators.

 
According to a statement from FXCM's main competitor – Gain Capital – it is in talks to acquire FXCM's retail clients and transfer them to its retail platform Forex.com by the end of February. 
 
Additionally, the National Futures Association (NFA) has barred FXCM and its founders and principals Dror Niv, William Ahdout, and Ornit Niv from membership and from acting as a principal of an NFA Member. This, in essence means that FXCM cannot do business in the US any longer. 
 
According to NFA's statement, the decision of its Business Conduct Committee (BCC), is based on a Complaint issued by the BCC and a settlement offer submitted by FXCM, Dror Niv, Ahdout and Ornit Niv. 
 
The NFA and CFTC found that between September 2009 through at least 2014 FXCM has been misleading its retail forex clients 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. FXCM has also been telling its customers that their profits or losses would have no impact on FXCM’s bottom line, because FXCM’s role in the customers’ trades was merely that of a credit intermediary. The broker was also saying the risk would be borne by banks and other independent “market makers” that provided liquidity to the platform. 
 
The two regulators, however, found that FXCM and its principals had an undisclosed interest in the market maker that consistently “won” the largest share of FXCM’s trading volume – and thus was taking positions opposite FXCM’s retail customers.  The broker has also devised a trading algorithm system that was replacing and competing with the independent market makers on FXCM’s “No Dealing Desk” platform. Eventually the system was spun off as a separate company that rebated to FXCM $77 million between 2010 and 2014.
 
Worse still, Dror Niv and Ahdout didn't inform NFA about all this. The company principals also failed to supervise properly the other FXCM employees. 
 
The NFA ban comes into effect on February 21, 2017, and FXCM will withdraw from NFA membership within 15 days of February 21, unless this 15 day period is extended by the BCC.
 
On top of this ban and the $7 million fine, FXCM, Niv, and Ahdout are also prohibited from registering with the CFTC, acting in exempt capacities or acting as principals, agents, officers or employees of registrants, the CFTC said.
 
This is not the first offense of FXCM and definitely not the first time it got a slap on the wrist, but this time it will be the last one. In 2011, FXCM was charged by NFA with engaging in asymmetrical price slippage practices and ordered to pay a $2 million monetary sanction. The broker was also warned not engage in the types of deceptive and abusive practices for which it got punished in 2017. 
 
Following the surprising development, Gain Capital said it has signed a non-binding letter of intent to acquire the client base of FXCM's US operations. Under the agreement, FXCM's clients will be transferred to Gain Capital's retail brand Forex.com. It is expected that this will happen till the end of February. Additional information about the timing of the transfer will be provided by Gain Caiptal when the final agreement is reached.
 
Gain Capital is one of the major retail forex and CFD brokers in the world. It is currently regulated in eight jurisdictions, with approximately 140,000 customers and over $1.5 billion in assets.  In addition to its US regulated retail forex business, Gain operates regulated retail trading operations under the brands Forex.com and City Index in the United Kingdom, Japan, Hong Kong, Australia, Singapore, Grand Cayman and Canada. Gain Capital also has a US-based retail futures business and the institutional trading platform GTX. 
 
With this latest development, it is yet to be seen what will happen to FXCM and whether it will continue its existence, as it still has to pay off a significant debt to Leucadia Corporation. FXCM still has its regulated forex businesses in the UK and across the major EU markets Germany, Italy and France, Australia, Israel and South Africa, as well as in Hong Kong, New Zealand, Japan. It could safely assumed, however, that the latest developments in the US will deal a significant blow to FXCM. 
 
TAGS: fxcm  ban  us  nfa  cftc  fine  forex  retail  gain capital  forex.com 

More news about FXCM

Broker Country Regulation Platform Min Deposit Review
Cyprus, UK, Belize CySec, FCA, IFSC MT4, MT5, Web $5 Review Website
Cyprus, Australia CySec, ASIC MT4, Web,
Mobile app
$100 Review Website
Australia ASIC MT4, MT5,
IRESSTrader
$100 Review Website
UK, Cyprus, Australia FCA, CySec, ASIC MT4, MT5 $5 Review Website
UK, Australia FCA, ASIC MT4, Trading
Station,
NinjaTrader
$50 Review Website
UK, Cyprus, UAE, South Africa FCA, CySEC, DFSA, FSB MT4, MT5, FxPro
Markets,
cTrader
$100 Review Website
Cyprus CySEC MT4, MT5, Web $1 Review Website
Belize IFSC MT4, MT5 $100 Review Website
Cyprus, UK, South Africa, UAE CySec, FCA, FSCA, DFSA MT4, MT5, Web $5 Review Website
Cyprus, UK CySEC, FCA MT4, MT5 $1 Review Website

More Forex Brokers News

Major broker IG launched its US website

Jan 31 2019 13:15:37

  Global brokerage IG launched its website intended for US retail clients (www.ig.com/us). Residents of the US (with the exception of those in Arizona or Ohio) can now register on the broker’s website in less than 5 minutes and start trading. Read more

FOREX.com announced important updates to its Web Trading platform

Jan 25 2019 15:13:43

  Major forex brokerage  Forex.com  proudly announced important updates of its in-house Web Trading platform, which will take your trading experience to the next level.   Accessible from all browsers and operating systems, Web Trading was launched in 2017. Read more

HotForex parent gets licensed by UK’s FCA

Jan 21 2019 12:31:59

  Less than a month after HotForex acquired license to operate in the UAE, the trading services provider gets an authorization by the Financial Conduct Authority of the UK. The UK subsidiary of the HF Markets Group, HF Markets (UK) Ltd. Read more

Rakuten Securities offers HK$700 prepaid cards as a welcome gift

Jan 18 2019 10:26:57

  Hong Kong forex broker Rakuten Securities offers up to HK$700 Spending Limit Prepaid Card as a welcome gift to new account registrants. Here are all the details you need to know about the company’s promotional offer, which is valid from now until the end of March 2019. Read more

XM applies for a forex dealer license in the US

Jan 11 2019 13:39:14

  The US subsidiary of major forex brokerage XM has applied for a membership with the National Futures Association (NFA). This became clear from a filing by the broker’s US entity Trading.com Markets Inc. (previously Trading Point US Inc.) with the NFA dated January 3, 2019. Read more

HotForex acquired DFSA license, commences operations in the UAE

Jan 08 2019 10:45:37

  HotForex is now licensed by the Dubai Financial Services Authority (DFSA) and announced it commences operations in the United Arab Emirates (UAE). The Dubai arm of the HF Markets Group, HF Markets (DIFC) Ltd., acquired the DFSA license in December last year. Read more

CySEC warns Efexa1000 is not licensed

Oct 22 2018 12:55:06

  The Cyprus Securities and Exchange Commission (‘CySEC’) officially warned investors that Efexa1000 is not authorized to provide investment services in the country. Read more

IG Group gets licensed in the USA

Oct 16 2018 13:48:15

  Major forex broker IG Group (IG) got a green light from the National Futures Association (NFA) to operate on the US retail forex market. The US arm of IG Group, IG US LLC, has just been approved as a NFA member and is officially registered as a Retail Foreign Exchange Dealer (RFED). Read more

ASIC adds HBC broker to its warning list

Oct 09 2018 11:14:03

  The Australian Securities and Investment Commission (ASIC) has updated its list of “businesses to be wary of” with HBC Broker – an unregulated company that is trying to confound its potential clients by giving out some correct details of leading forex and CFD ... Read more

FBS wins ‘Best Copy Trading Application Global-2018’ award

Oct 05 2018 16:22:13

The prestigious “Best Copy Trade Application 2018 Global” award went to FSB  for their innovative CopyTrade platform. Read more

de | cn | ru