FXCM Inc. (“FXCM”), a leading online provider of foreign exchange (forex) trading and related services to retail and institutional customers worldwide, announces that its U.K. subsidiaries, Forex Capital Markets Limited (“FXCM Ltd”) and FXCM Securities Limited (“FXCM Securities”) (together “FXCM UK”), has entered into a settlement with the Financial Conduct Authority (“FCA”). The settlement addresses trade execution practices concerning the handling of price improvements on FXCM UK’s offsetting orders from August 2006 – December 2010.
Under the terms of the settlement, FXCM UK has agreed to pay fines totaling £4 million to the FCA and to provide approximately $10 million in restitution to the affected clients. FXCM recorded a reserve $15 million in the third quarter of 2013 for this matter and will record an additional $1.9 in the fourth quarter to reflect the terms of the settlement and related expenses. All clients receiving restitution will be notified within 60 days. Of the approximately $10 million being credited under this settlement, the impact on individual traders was typically very limited and averaged $3.70.
“This settlement is a significant step in our efforts to put this legacy trade execution issue behind us,” said Brendan Callan, FXCM UK’s Chief Executive Officer. “We are also pleased with the FCA’s 12 Feb 2014 MarketWatch Newsletter article on trade execution standards and we hope that it helps improve execution practices across the industry. We believe it is imperative that all firms operating in the retail FX and CFD market uphold the same high standards and execution policies which we fully implemented back in 2010. A recent analysis of trades over a six month period demonstrates how our customers have benefitted from our enhanced trading execution policy,” he added.
Price Improvements at FXCM today: Clients Received Over $15.5 Million Dollars from Price Improvement Technology during the Past Six MonthsAnalyzing a total of 43,128,901 forex and metal trades executed by FXCM during the six month period of August 2013 –January 2014, 6,391,641 or 15% of the trades benefitted from price improvements totaling $15,726,247. Of the total number of trades executed, 4,648,672 trades were limit and limit entry orders. Sixty percent of those limit and limit entry orders were positively slipped providing clients $7,296,520 in price improvements. Of the total trades executed in the six month period of August 2013 – January 2014 clients were executed at their requested price 73% of the time with no slippage. Only 12% of orders were slipped negatively. FXCM is currently one of the only firms in the industry to give price improvements on market and limit orders.