FXCM Discloses U.K. Regulatory Probe

FXCM disclosed in a quarterly SEC filing that the U.K. Financial Services Authority (FSA) launched an inquiry into the firm’s past trade Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term practices.

In the filing the company stated that: "Although we are in the process of complying with the FSA's requests, we have not been formally notified whether or not the FSA intends to take any action against us with respect to our trade execution practices."

The FSA investigation follows a similar probe by the U.S. regulator Commodity Futures Trading Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (CFTC) in 2011, in which the CTFC alleged that FXCM failed to change the price a customer received on a currency transaction if an exchange rate became more profitable for the investor while a trade was in progress. However, according to the CFTC, FXCM did amend the price if the rates shifted in FXCM's directional benefit. FXCM in August 2011 agreed to pay about $14.2 million in a settlement related to those charges.

In Friday's filing, FXCM estimated that its possible loss related to the FSA investigation and other claims or litigation could be up to $5 million, as of Sept. 30. Last week FXCM reported quarterly operating results in which third-quarter income increased 33% to $4.5 million on revenues of $114.9 million.