Ayer recibí un mail de forexverified.com en el que me informaban de lo siguiente:
December 7, 2012 Headline: NFA Takes Emergency Action Against FXDD
On Friday the NFA took an emergency action against FXDD (US). Why? FXDD is going to be ordered to pay a yet-to-be-determined restitution (estimated at $3.3 million) and they want to make sure FXDD has enough money to cover it.
So they asked FXDD to put some money in an escrow account to make sure they'll have enough money. This is great but was an "Emergency Action" necessary?
In the last CFTC capital report (Sept 2012), they showed that FXDD has over $27 million in net capital on reserve. Those funds are already set aside to handle unforseen expenses like this. The NFA requires a minimum of $20 million on reserve.
The history: slippage scam?
It doesn't take much digging to find the history of this case. Between December 2009 and June 2011 FXDD did what was commonplace in the industry.
Positive Slippage: from the moment you presed the "buy" or "sell" button, if the market slipped in your favor (in the direction of your trade), they would still fill you at your originally quoted price. It's called "positive slippage", but FXDD limited it to 2 pips. They were willing to eat the loss on up to 2 pips of slippage in order to give you the originally quoted price. But if it was more than 2 pips, they would reject the order "Off-Quotes".
Negative Slippage: on the flip side, if the market slipped against you, rather than giving you the 'new' price at the better position, FXDD still filled you at the originally quoted price. Even if the market slipped against you by more than 2 pips.
"Asymmetrical price slippage practice" is what the NFA calls it. FXDD wanted to fill customers' orders at the requested price but were only willing to eat up to 2 pips of a loss to do it, while they were willing to take more than 2 pips of profit if the market had slipped the other direction.
Evil corporation. How dare they fill our orders at the price we clicked?!
But wait, there's more!
FXDD already stopped this practice in June, 2011. That's right; in June 2011 they changed the slippage allowance to only 2 pips on either side before the order was rejected.
In fact, this "issue" was mostly resolved a year before that, June 2010. Between December 2009 and June 2011 (19 months), the NFA found a total of 265,696 trades that had more than 2 pips of slippage benefiting FXDD. The first 7 months (thru June 2010) accounted for 215,464 of those trades (avg 30,780 trades per month). The last 12 months (July 2010 thru June 2011) only had 50,252 affected trades (avg 4,187 trades per month).
Here's a summary:
- For a 7-month period through June 2010, FXDD gave customers the price they clicked even when FXDD benefited from it by more than 2 pips, with 215,464 trades affected.
- For the next 12 months, the issue was largely resolved (perhaps due to faster trade execution?), with only 50,252 affected trades over the entire 12-month window.
- In June 2011 FXDD updated their policies and started rejecting any trades that had more than 2 pips of slippage.
Does this sound like a scammer company that was trying to rip off its clients? Or does it sound like a company that started out with normal industry practices, improved their execution speed and order fills, and worked to resolve issues whereby clients had too much slippage?
Keep in mind we're talking about 2009 and 2010. Our demands from brokers are far more advanced now. Back then execution was slower, slippage was more common, spreads were significantly wider. The retail Forex market was still in its infancy and computer technology, in general, was a bit slower. By 2012 our standards have risen and this type of slippage practice may sound horrible, but 3 years ago it was simply part of trading the massive Forex market from the comfort of your home.
June 29, 2012 (over 1 year later) the NFA issued the complaint against FXDD for the asymmetrical price slippage settings that mostly affected trades between December 2009 and June 2010, and which were completely stopped by June 2011.
December 7, 2012 culminates with an emergency action against FXDD demanding that they set aside money to cover the restitutions that are yet to be determined for clients that were affected by slippage 2-3 years ago.
The net result of this? Nothing changes at FXDD because they already took care of the slippage setting in June 2011. But now, over a year later, FXDD's reputation is hurt and those who do not read the details of the complaint think that FXDD was scamming people and the NFA "just" stopped them now. Thanks to the "emergency action" of course.
Don't get me wrong - I am thankful that we have a regulatory agency like the NFA that is looking out for the traders and keeping brokers in line. And I understand that it can take time to sift through millions of trades looking for slippage that benefited a broker.
But I seriously wish there was a better way to handle it. The recent news and emergency alerts floating around right now are demonizing FXDD as if they were still involved in some evil scam. First: it wasn't a scam, and second: the policy ended over a year and half ago.
If the NFA wants to fine FXDD and demand restitution, that's fine, but let's also emphasize that this is old news that mostly affects trades that were placed over 2.5 years ago.
Salud y pips... y cuidadin! (a veces los brokers más famosos y con más clientes son los peores...)Foro de Forex Trading United