Tag: Effex Capital

Effex Capital

Questions, Questions, Questions

FXCM has known its share of controversy in recent years and now the firm has been barred from operating in the US. Profit and Loss staff report on an issue that has triggered another round of introspection in the FX industry.

Just over two years after staving off bankruptcy due to losses resulting from the Swiss National Bank’s decision to unpeg the Swiss franc, FXCM has been forced to withdraw from operating in the US, changed its name and seen its two principals step down from the business.

The unravelling of FXCM has impacted across the FX industry with questions being asked around the effectiveness of self-regulation, how the Global Code of Conduct could deal with a repeat offence, and how the industry moves forward in an atmosphere of mistrust?

FXCM: The Other Side of the Story

The FX industry has, by and large, been swift and united in its condemnation of the actions of FXCM, for which the firm was banned from the US and fined $7 million for defrauding FX customers.

But, as they say, there are always two sides to every story and so Profit & Loss has been talking to various market sources that provide different perspectives on this case. This is challenging because as part of the legal agreements between FXCM and the Commodity Futures Trading Commission (CFTC), the firm neither denied nor admitted the allegations against it, and therefore cannot speak to the press about the issue.

And Another Thing…

FXCM has been fined and banned from trading in the US retail FX market, but there are so many other questions to be asked regarding this whole mess – not least what should we do about the market maker named in the complaint? This case highlights the problems with the blurred line between retail and institutional because here we have a scandal that spans both segments and while at the retail end we can do something about it apparently, there are questions as to what, if anything, can be done about the institutional abuse.