Bloomberg News

FXCM Agrees to Pay $14 Million to Resolve CFTC ‘Slippage’ Claims

October 03, 2011

Oct. 3 (Bloomberg) -- Forex Capital Markets LLC agreed to pay $14.2 million to settle U.S. regulators’ claims it failed to properly oversee handling of more than 57,000 accounts that used the New York-based firm’s foreign-exchange trading platform.

FXCM, between 2008 and 2010, deprived customers of $8.26 million in “positive price slippage,” advantageous price changes that occurred after the clients placed orders and before the transaction was executed, the Commodity Futures Trading Commission said in an administrative order filed today. The firm agreed to reimburse the damages and to pay a $6 million penalty, the CFTC said.

FXCM had agreed in August to pay restitution to the customers in a settlement with the National Futures Association, which also imposed a $2 million penalty. As part of today’s settlement with the CFTC, the firm agreed to retain a monitor for its trade-execution practices.

While customers didn’t receive the benefit of positive price slippage, they did absorb losses from negative movements, the CFTC said. The CFTC faulted the firm for failing to supervise employees’ handling of market orders and margin liquidation orders, according to the administrative order.

“FXCM has previously enhanced its execution system to pass along all price improvements on every order type,” Drew Niv, the firm’s chief executive officer, said in a statement today. “We are happy to have settled all our regulatory matters in the U.S., to have this behind us and to see this come to an end.”

--With assistance from Catarina Saraiva in New York. Editors: Lawrence Roberts, Gregory Mott

To contact the reporter on this story: Joshua Gallu in Washington at jgallu@bloomberg.net

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net


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