The stories that made the most impact in the forex industry this past week, judging by the popularity among our readers, involved regulatory sanctions against automatically managed retirement savings FX accounts, switching to raw spreads by FXCM (NYSE: FXCM) in more markets and the expansion plan of London Capital Group Holdings (LON:LCG).
ASIC Banned Monarch FX and Quinten Hunter
The Australian Securities and Investments Commission (ASIC) has started court proceedings at the Federal Court of Australia against Monarch FX (Monarch FX Group Pty Ltd). ASIC temporarily banned Monarch FX and the broker’s former director and current general manager Quinten Hunter (formerly Quinten Hann) from offering financial services in until November when the hearing resumes. The firm was operating as an authorized representative of FXTG, but that authorization was revoked once the announcement was made.
Mr. Hunter was formerly a professional snooker player, appearing at international ranking tournaments in an 11-year career that earned him an estimated $800,000 in prize money. Nicknamed the ‘The Wizard of Oz’ by the snooker community, Mr. Hann’s career came to a distasteful curtain call in 2006 when he was banned for 8 years by reason of match-fixing.
FXCM Expands Raw Spreads Pricing Model to Australia and the U.K
FXCM, one of the world’s largest retail brokers, has announced that its Australian branch, FXCM AU will be introducing a proprietary FX pricing model which will allow the broker’s range of platforms to display raw spreads being received from liquidity providers. The reduced spread structure is compensated by a separate commission charge paid on each trade. The move to a commission-based structure reflects an industry trend where clients prefer to see raw spreads and pay commissions separately.
In addition, FXCM UK has initiated a new retail FX pricing model as well. FXCM claims that “trading costs could be reduced up to 50% when compared to previous typical spreads”. When looking at specific currency pairs, the new pricing model introduced by FXCM claims to reduce the visible spread by over 2 pips on all major pairs. The announcement made our readers question FXCM’s expected revenue under the new model which slated to become eligible on Friday, 24 October.
LCG New Management Details Its Market Share Expansion Plans
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A slew of changes has taken place after an extended period of resignations and workforce reshuffling at London Capital Group Holdings (LON:LCG). Ever since the initial public offering back in August 2008, the company’s share price and market share have been on a steady decline.
In mid-July, as London Capital Group Holdings PLC (LON:LCG) continued to lose market value and burn its cash reserves, a new strategic investor emerged to dedicate a substantial amount of capital into the company and to later take the Executive Chairman role – industry veteran Charles-Henri Sabet. Forex Magnates reporters spoke exclusively with LCG’s new Executive Chairman and the company’s new Head of Sales and Trading, Francois Nembrini, about the new market niche on which LCG is focusing.
Plus500 Granted a Cyprus License
London Stock Exchange listed multi-asset provider of financial derivatives, Plus500 (LON:PLUS), has received authorization from CySEC to operate as a regulated investment firm, following the successful assistance by consultant Map S.Platis. The listed brokerage firm extends its European coverage through the newly granted licensed-entity, as it establishes a presence in Europe’s second most popular hub for retail currency dealings.
Plus500 offers FX and CFD trading to a global audience. The firm’s website is translated into a total of 34 languages, covering Europe and Asia extensively. Under the CySEC license the firm will compete with other Cypriot regulated brokers, each having its own niche market. The latest news of Plus500’s recognition under CySEC comes five years after the financial regulator, issued a warning against the brokerage firm outlining the fact that the firm was not regulated in Cyprus.
French Watchdog Publishes Four-Year FX Study
Autorité des marchés financiers (AMF) has issued an announcement warning investors of the potential dangers of trading FX, following a mounting number of complaints from investors. According to the results of its exclusive study, about nine out of every ten individual customers experiences net losses – the sample size included both FX and CFD (Contract For Difference) traders in France.
Furthermore, the final results of the study yielded that over a four-year period (2009-2012), the percentage of investors experiencing losses came in at 89%. The average loss of a customer during this period was $13,800 (€10,900). In the four years combined, a total of 13,224 customers experienced aggregate losses of nearly $220 million (€175 million), with the remaining 1,575 customers earning a combined $17.51 million (€13.8 million).