CFTC Hits Gain Capital UK with $500K Fine over Onboarding US Traders

The Commodity Futures Trading Commission (CFTC) has filed and settled enforcement actions against Gain Capital UK Limited, the London-based arm of the largest retail FX broker in the United States.

Gain UK was ordered to pay a civil penalty of $250,000 over allegations it illegally signed up US investors to its FX Trading Platform Trading Platform In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real Read this Term. It has also agreed to disgorge $241,671, as well as to “cease and desist” from any futures breaches of the Commodity Exchange Act or CFTC regulations, the order said.

The watchdog explains that Gain UK, which operates the group’s retail brands FOREX.com and City Index, and one of its agent had referred and accepted US clients despite never having been registered with the commission. According to the allegations, the broker acted as a counterparty to US-based FX traders without registering as an RFED between February 2014 and March 2019.

The order further details that Gain UK onboarded clients that were obviously located in the US as they used, part of their registration, mailing addresses and provided documents confirming their US residence. To avoid any doubts, one customer informed a Gain UK employee that she was a student at a U.S. university when she applied to open a trading account.

The CFTC also accuses the British broker with lapses in its supervision system as it knowingly allowed an unregistered commodity trading advisor (CTA) to solicit US customers without being authorized to do so. The unnamed introducing partner has caused one of its referrals to incur losses of $280,000 while Gain UK earned $241,671 in commissions.

The filing also noted that Gain UK and its referring agents never disclosed to its clients that their IB business lacked registration or that its operators themselves were not registered with regulators.

The CFTC does not permit Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term brokers to act as a counterparty to US retail forex traders unless the firm registers with the CFTC, SEC or bank regulator. They also must secure approval from the NFA. And when a foreign or local forex dealer accepts American retail clients without being a CFTC-registered Retail Foreign Exchange Dealer (RFED) or Futures Commission Merchant (FCM), they become a target of CFTC enforcement.

The Gain UK’s parent is one of few CFTC-registered RFEDs, together with Oanda Corporation from Canada and IG US.