FXCM starts operating in Europe
FXCM, the major global broker, was deprived of the CFTC license to provide financial and brokerage services in the United States. The company, supervised by the Financial Conduct Authority (FCA) in the UK, has now focused on a European audience. FXCM UK is headquartered in London with offices in France, Germany, Greece, Italy, Australia, and other countries. The broker is regulated and licensed in every region. The reason for the relocation was the fraud of FXCM against its clients in early 2017.
FXCM lied to traders
As the Commodity Futures Trading Commission (CFTC) found out, the company traded against clients and also hid the fact that the owner of the market maker broadcasting the quotes was its employee, the managing director. Representatives of the broker deliberately reported false information to the US National Futures Association of the United States to obtain registration.
FXCM lied to consumers, claiming that it does not hold any positions and there is no conflict of interest between the broker and its customers. This lasted from September 2009 to 2014.
The parent company of the broker, FXCM Holdings LLC, paid a fine of $7 million to resolve the situation. In addition to revoking registration, the CFTC demanded that FXCM will not apply for a new license.
Before the unpleasant facts became known, FXCM, founded in 1999, was called the largest forex broker in the USA with a market share of 34 percent and the third largest trading volume in the world. The daily turnover of the company reached $12 billion.
After making an agreement with the financial regulator, FXCM was obliged to transfer the accounts of its American clients to its closest competitor, GAIN Capital Holdings, and to sell off part of its assets in the US. During the transition period, the company continued to serve traders, saying that the revoking of a license in the United States would not affect its overseas business and customers around the world. Later, the company's top management significantly changed, and a representative of American holding company Leucadia was appointed head of the board of the FXCM Group. Leucadia remains the main FXCM's capital holder.
The loss of the right to work in the American market had a wide resonance but was not the only problem of the broker. In particular, traders complained about the difficulty of withdrawing funds.
At the same time, there are traders who still speak positively about the broker.
Forex in the USA: severe limitations
Forex trading in the US is covered by mystery. Some believe that there are ideal conditions across the ocean, others that it is impossible to trade in the country. There are other opinions, but the truth, as always, is somewhere in the middle.
In 2010, the States introduced a law called the Dodd Frank Act which is one of the anti-crisis measures that were designed to reduce overall risks in the financial sector. Thanks to accepted restrictions, many operations for other countries became illegal in the United States. At the same time, it became forbidden for large banks to have hedge funds and invest customer funds in such organizations.
As a result, the majority of brokers not registered in the United States were forced to leave. Of course, this greatly affected forex trading, and the number of companies providing services in this area decreased dramatically.
Donald Trump, the 45th President of the United States, elected in November 2016, promised to change the situation and ease the restrictions.
After the forced exit from the US market, FXCM continues to strengthen its position and increase its presence in Europe, mainly in its eastern part. In addition to London, a large office is planned to be opened in Sofia, Bulgaria.
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