issued a statement expressing severe disappointment at the charges leveled against the firm by the Commodity Futures Trading
Commission (CFTC), stating that they are “unprecedented and unwarranted”.
claims relate to when the Swiss National Bank (SNB) surprised financial markets
by announcing in the middle of a trading day that it was discontinuing the minimum
exchange rate of the Swiss franc to the euro.
close of business on January 15, 2015, FXCM customers lost approximately $225
million. As a result of these losses, FXCM experienced a one-day regulatory net
whereas the CFTC alleges that FXCM “failed to immediately notify the CFTC”
about this shortfall, the firm claims in its statement that it “promptly
notified both the CFTC and the National Futures Association (NFA) of its net
capital shortfall due to the unforeseen SNB event”.
describes the CFTC’s claim as “unwarranted”, stating that the firm was timely with its notification of the
shortfall and adds that “within hours” of that notification, teams of CFTC and
NFA personnel were on site at its offices.
is very disappointed by the CFTC’s decision to file this complaint and attempt
to punish FXCM who, like other market participants, was a victim of the SNB
event,” it says in the statement.
that the firm and its board of directors worked “around the clock” to raise the
funds needed to cure its regulatory shortfall, and by the next afternoon did
exactly that through a $300 million loan from Leucadia National Corporation.
averted the crisis. Given those facts, we could not be more disappointed that
the CFTC has decided to pursue an undercapitalisation violation claim against
FXCM. Such a claim under these circumstances is unprecedented and unwarranted.
also disappointed in the CFTC’s intimation that the company’s “seatbelt”
system contributed to FXCM’s undercapitalisation during the SNB Event. To the
contrary, the company’s seatbelt system prevented FXCM and its customers from
suffering additional trading losses that day,” says FXCM in the statement.
It concludes: “We also see no basis for the
CFTC’s claim that the company improperly guaranteed customers that they would
not lose money. To the contrary, FXCM repeatedly represented to and warned its
customers of the significant risks of trading FX and that such trading is
appropriate only for individuals who can assume risk of loss in excess of their
investment and margin deposit. In fact, FXCM customers were required to
acknowledge in writing that they received no guarantees of profit or freedom of
losses from FXCM or its representatives.
“This action is unfortunate and disappointing,
but the good news is that, because we acted as expeditiously as we did in
January 2015, we protected our clients, we protected our employees, we
protected our shareholders, and we protected our franchise,” the statement says.