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Articles tagged by Retail Fx

NFA Creates Dedicated FX Compliance Rule The US National Futures Association (NFA) has adopted a new compliance rule (2-36) to govern foreign exchange transactions. NFA says that it has done so because, “Given the differences between off-exchange transactions and traditional exchange-traded futures and options, the board ...
Saxo Bank Targets MENA Expansion With Two Senior Hires Saxo Bank has hired Mario Camara as head of Saxo Dubai and Anwaar Ahmed as head of institutional business development for MENA, as it looks to build out its presence in the region. In a statement issued today Saxo Bank ...
And Finally... Sometimes you just hear things that make you shake your head. More specifically, the sheer arrogance of some people that loudly proclaim to be in the client service business but who are wantonly and deliberately acting against their clients’ best interest is staggering. It appals and angers me that these people still exist in the FX industry – and that some jurisdictions seemingly are content to let them operate within their borders. We should all be worried though because, sadly, the industry is broadly judged by the standards of the lowest.
Australia Moves into Line Over Client Funds The Australian government has announced it is proceeding with reforms regarding the use of client funds by OTC derivatives brokers. The move will bring the country into line with other jurisdictions such as the US and Canada and mean client funds held by retail brokers will have to be held in trust. Australian-domiciled retail brokers can currently use money held on behalf of their clients for a wide range of purposes, including for working capital. Use of client money for these purposes is either not permitted, or is more heavily regulated, in a number of other G20 economies. This means Australian retail clients are at a greater risk of loss in the event of a broker’s insolvency.
CFTC Forces FXCM to Exit US Market, Issues $7m Fine The US Commodity Futures Trading Commission (CFTC) has fined FXCM and its founding partners $7 million and ordered the firm to withdraw from doing business in the US for defrauding retail FX customers. In an order issued today the Commission settled charges against FXCM, its parent company, FXCM Holdings, and two founding partners, Dror (“Drew”) Niv, and William Ahdout, who are the CEO and managing director of FXCM, respectively. “The Order requires Respondents jointly and severally to pay a $7 million civil monetary penalty and to cease and desist from further violations of the Commodity Exchange Act and CFTC Regulations, as charged.
CFTC Hits FXCM with Another Fine FXCM has agreed a settlement for $650,000 with the US Commodity Futures Trading Commission (CFTC), relating to allegations that the firm was under-capitalised following the volatility caused by the Swiss National Bank’s (SNB) decision to abandon its peg to the euro. The CFTC originally filed the civil action against FXCM’s US subsidiary in the Southern District Court of New York on August 18, 2016. The action alleges that FXCM US was briefly under-capitalised as a result of the SNB’s unexpected announcement on January 15, 2015, that it was abandoning its historical policy of pegging the Swiss franc to a fixed exchange rate of 1.2000 Swiss francs per euro.
And Another Thing... Last week’s diatribe following the FXCM fine and banning in the US triggered a fair amount of feedback – thankfully all of it supportive – and I think it is fair to say that the consensus is that if people continue to deal with the firm then they should be warned now they will have no recompense if things go wrong. This week I would like to look deeper into a worrying aspect of this episode - the broader FX industry's failure to heed the warning given three years prior.
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.
Last Men Standing FXCM’s forced exit from the US leaves only two major retail OTC FX-focused brokerages in the market. Galen Stops talks to the CEOs of these firms about what this means for the industry. “The retail foreign exchange market has suffered a less than exemplary reputation for some time now,” concedes Vatsa Narasimha, CEO of Oanda. The latest blow to the industry’s reputation comes as the US Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) concluded that FXCM had defrauded its US customers, ordering it to withdraw from doing business in the country and fining the firm and its founding partners a total of $7 million.
And Finally... OTC versus the exchange. It’s a debate in foreign exchange that is almost as old as this oldest of markets. You’ve read the arguments and listened to the debates where the argument is driven by people passionate about their preferred mechanism, and still you can't make up your mind who makes the most sense. So what should be the important drivers of this debate? What should our end goals be? Profit & Loss’s deputy editor Galen Stops may have found the answer…in Cuba.
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?
CFTC Adds 71 Names to RED List The US Commodity Futures Trading Commission has more than trebled the number of names on its Registration Deficient (RED) list of unregistered foreign entities that the CFTC has reason to believe are soliciting and accepting funds from US residents at a retail level for, among other things, trading in binary options or FX and who are required to register with the CFTC but, in fact, are not registered. CFTC has added 71 names to the list that previously contained 30 firms, the full list can be found at www.SmartCheck.gov/REDList.
And Another Thing... The retail FX sector has long bothered me, as regular readers can attest, and my distaste for many providers in the sector was only heightened when one offered me “expert comment” on what will likely to happen to the euro in the wake of Sunday’s French election result…on Wednesday. This is so detached from the reality of the modern FX market that it makes me wonder how this firm thinks it is providing good service by offering “commentary” almost four days after the results?
Sucden Targets Growth Through Diversity Following the launch of Sucden Financial’s new OTC FX options service, Galen Stops talks to Noel Singh, head of e-FX business development at the brokerage, about how it’s planning to diversify its FX offering. Despite having an FX franchise that is over 30 years old, an e-FX offering that has been around for more than eight years and a balance sheet of over $100 million, Sucden Financial is not exactly a household name in the wholesale FX market. But the firm is now working to change that as it seeks to diversify its FX business in response to changing market conditions.
Oanda Integrates with QuantConnect Retail FX trading platform Oanda has integrated its Algo Lab solution with QuantConnect’s open-source, cloud-based algorithmic trading engine in order to offer its clients the ability to research, build, test and deploy their own FX trading algorithms directly from the Oanda platform. The firms say the agreement provides Oanda clients with access to a community of algorithmic and quantitative traders, as well as series of online trading tutorials that could help add a new dimension of discipline to their trading strategy .
FCA Holds Off Retail Rule Change as ESMA Considers Stronger Intervention Following an announcement from the European Securities and Markets Authority (ESMA) that it is considering exercising its product intervention powers to address its concerns over the use of contracts for difference (CFD), rolling spot FX and binary options contracts by retail traders, the UK’s Financial Conduct Authority (FCA) says it will delay its own rules on the products. In a statement, ESMA says it has been concerned about the provision of speculative products such as CFDs, rolling spot FX and binary options to retail investors for a “considerable period of time” and has conducted ongoing monitoring and supervisory convergence work in this area.
And Finally... Regular readers know that the increasingly blurred lines between retail and institutional FX markets have bothered me for years. Too many customers are unsuccessful in the retail sector and the reputational risk for the entire industry is off the scale. We need to be asking many more intrusive and difficult questions of these firms – for if we do, I think the answers – assuming they are given honestly – will highlight the scale of the problem and help deliver a solution.
FCA Warns on Binary Options; Cryptocurrency CFDs The UK’s Financial Conduct Authority (FCA) has issued two warnings to retail investors over binary options and cryptocurrency contracts for difference (CFDs). On binary options, the FCA says it has concerns about the products – namely its data suggest that a majority of consumers lose money when trading binary options. “To make a profit, a consumer is likely to need both a sophisticated knowledge of financial markets and to ‘beat the odds’, which is always difficult to do,” the FCA says.
ADS Securities Hires Head of MENA Retail FX Sales ADS Securities has appointed Nael Saleh as head of retail sales in the Middle East and North Africa region, for its FX and CFD brokerage business. He will report to ADS Securities’ global head of retail sales, Jason Hughes and joins from GKFX MENA, where he was director of operations, heading teams responsible for customer services and sales across a wide range of products on FX, CFD’s and commodities brokerage platforms. Previously, he was head of global sales at IronFX.
CMC Markets Launches “Professional” Offering Online trading provider CMC Markets has responded to the recent announcement by the European Securities and Markets Authority (ESMA) that retail clients will no longer be able to use their current leverage levels, by creating a new CMC Pro account for eligible clients. The ESMA changes establish margin limits for clients, rather than the broker-dealers and CMC says the new account will allow clients to continue to trade with their current leverage levels.To be eligible, clients will have to demonstrate that they are capable of making their own investment decisions.
CVC Capital Partners Acquire Oanda Private equity group CVC Capital Partners’ Asia Fund IV has had an offer accepted to acquire all of the outstanding equity of online retail trading technology and analytics provider Oanda Global Corporation. Terms of the deal were not disclosed and it is subject to regulatory approval. Under the new ownership, Oanda will continue to be led by CEO, Vatsa Narasimha. Siddharth Patel, senior managing director at CVC, says, “We look forward to working closely with Vatsa and his team as we help support Oanda, especially in Asia, in making strategic acquisitions and in investing to further broaden its product set.”
ASIC Warns Retail OTC Industry Over Conduct The Australian Securities and Investments Commission (ASIC) has called on participants in the retail OTC derivatives sector to improve their practices after recent ASIC activities showed their conduct “fell short of expectations”. The products offered by retail OTC derivatives issuers in Australia include binary options, margin foreign exchange and contracts for difference. ASIC says that a recent review of 57 retail derivative issuers identified a number of risks associated with the products offered to retail investors by OTC derivatives issuers.
And Finally... We speak a lot about disruption in FX markets, but more often than not we focus on the trading piece of the puzzle. It is not only there that traditional models and values are being challenged, however, as was highlighted early in the Asian trading day today when news of three resignations from the UK government was reported. It is not a new phenomenon, but this morning offered a dramatic and, for the incumbents, disturbing insight into the future when the Twitter-sphere had the news out well in advance of the traditional news wires.
In the FICC of It Just two subjects fill our podcast this week as Colin Lambert and Galen Stops share (contrarian) views over the benefit (or otherwise) of closer links between retail and institutional FX markets. The cynicism Lambert brings to that subject also permeates the second main subject – the release last week of two reports from Global FX Committee Working Groups on disclosures and “cover and deal” operators using last look. Our podcasters also take a look at the GFXC’s annual survey of opinions on the FX Global Code and while he admires what he terms “the optimism of youth” as expressed by Stops, Lambert is again wearing the cynical expression as they discuss some potentially concerning findings in the survey. Not happy there, Lambert also tries to hit back at what he reports was “ridicule” aimed at him after last week’s podcast discussed his NOK/MXN prediction for 2019 by deflecting the issue onto one of Stops’ predictions – or rather one of what Lambert believes is a “non-prediction”. Will FX prime brokerage consolidation reverse (slightly) and will asset manager clients remain elusive? Find out by listening in.