FXCM Inc. (NYSE: FXCM), a global online provider of foreign exchange (forex) trading and related services to retail and institutional customers worldwide, recently announced that its U.S. subsidiary, Forex Capital Markets LLC (“FXCM US”), has entered into a settlement with the National Futures Association (“NFA”).
The settlement terms principally relate to FXCM US’s practice concerning the execution of price improvements or “positive slippage” in its trading execution system prior to August 2010.
FXCM US originally enhanced its trading execution policy in August 2010 to help ensure that clients benefit from positive slippage on all market, limit and limit entry orders. The policy was further enhanced in December 2010 to address all order types, including stop and margin call orders, through FXCM’s No Dealing Desk (“NDD") forex execution model.
Under the terms of the settlement, FXCM US has agreed, without admitting or denying any of the allegations, to pay a fine of $2 million to the NFA and to provide restitution, which the company estimates to be $8 million, to the affected clients. As disclosed on August 11, 2011 during its Second Quarter Earnings Conference Call and in related filings, the Company is making a reserve for both the restitution and fine associated with this settlement and for its ongoing discussion with the CFTC. Certain partners of FXCM Holdings, LLC have agreed to reimburse the expense in substantially the amount of such reserve, resulting in no impact to the net income of FXCM Inc. All clients receiving restitution will be notified within 30 days. Details for FXCM US clients can be found at www.fxcm.com/clients.jsp.
“We are pleased to have reached an agreement that resolves the NFA’s concerns and that we believe is in the best interests of FXCM, our shareholders and most importantly, our clients,” said Drew Niv, Chief Executive Officer of FXCM.