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Source (
www.ft.com)
FCA fines FXCM £4m for keeping clients' profits
28 minutes ago
Are UK regulators getting serious about protecting people who may be getting ripped off in over-the-counter foreign exchange dealings?
Judging by the size of Wednesday's fine against FXCM, a relatively well-known operator in the market, the scrutiny is ramping up.
The Financial Conduct Authority, the UK's main markets watchdog, has levied a £4m fine on FXCM for withholding as much as £6m in profits that should have been passed on to its customers.
FXCM placed over the counter foreign exchange trades known as rolling spot forex contracts on behalf of retail clients, which were then executed by another part of the FXCM Group, the FCA said.
Over a near four-year period between 2006 and 2010, the company kept the profits from favourable market movements between the time of order and the time of execution between the two units, while any losses were passed on to clients in full – a practice known as "asymmetric price slippage", the regulator said.
Said Tracey McDermott, the FCA's director of enforcement:
Not only did FXCM UK fail to treat its customers fairly or correctly apply our rules, I am particularly disappointed that it was not transparent in its dealings with the FCA.
We expect all firms to put customers at the heart of their business, and we have taken action to ensure clients of FXCM UK will get redress.
As part of the penalty, FXCM will have to repay customers as much as $9.8m owed. The FCA will reclaim what's left after 15 months.
