FXCM Fined $200,000 By The NFA

On July 18, 2014, the National Futures Association (NFA) fined Forex Capital Markets LLC (FXCM) for doing business with an unregistered entity that was required to be registered, and for failing to submit trade data to the NFA.

In August 2013, the NFA conducted examinations of FXCM, which included a review of some of FXCM's client accounts. One such account was for Revelation Forex Fund LLP (Revelation), which had opened an account with FXCM in July of 2011. Revelation was required to be registered as a Commodity Pool Operator with the Commodity Futures Trading Commissions (CFTC). They had filed for an exemption to this requirement, on the basis that they would only trade a de minimus amount of forex. After being informed of this, FXCM agreed to open an account for them, and in fact allowed them to open an additional 11 accounts, 9 of which included forex trading. However, Revelation did not qualify for the exemption. Based on all of these accounts, and all the forex that was traded in them, FXCM should have determined that Revelation did not qualify for the de minimus exemption, and therefore should have been registered with the CFTC. The NFA concluded that FXCM did not take adequate steps to ensure they were not conducting business with an unregistered entity that required registration.

During the same review of FXCM in August 2013, the NFA determined that for most of 2013, FXCM submitted incomplete trade execution data to the NFA via the FORTRESS system. In all, millions of trade executions were not submitted to the NFA during the period. Further, in 2014 FXCM failed to report required adjustments to FORTRESS data within the timelines specified by NFA compliance rules.

Based on the allegations made to FXCM by the NFA, FXCM submitted an offer to settle the complaint, which did not admit or deny the allegations. The NFA agreed to the offer and ordered FXCM to pay a fine to $200,000. The complete details of this regulatory action can be found on the NFA website.

So is FXCM a scam broker? This regulatory action against FXCM is not enough to conclude that FXCM are scammers. The average retail client of FXCM was not likely harmed because of FXCM's behavior in this matter. However, this is not the first time that the regulators have taken action against FXCM. There are four separate instances of FXCM being fined by the regulators prior to this event for various reasons. Any potential client of FXCM may wish to consider this pattern of regulatory action against FXCM before making their decision to select a broker.

FXCM is an online foreign exchange dealer registered with the NFA under NFA ID 0309179. They are registered as a Futures Commission Merchant and a Retail Foreign Exchange Dealer with the CFTC. They are also regulated by the FCA in the UK under #217689 and the ASIC in Australia under AFSL #309763. They are headquartered in New York, USA and are a publicly traded company trading on the New York Stock Exchange. They are one of the largest forex dealers offering services to retail clients.

 

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Title: FXCM Fined $200,000 By The NFA
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