FXCM AU Deploys Updated Negative Balance Rules

Australia's margin FX market is set for change as FXCM's local unit join the other branches in changing terms of business relating to negative balances. The news come after Australia's chief regulator vowed to enhance the financial trading environment, particularly for retail currency brokers.

FXCM Australia issued a notification outlining the changes. The updated guidelines for Australian investors come three days after the UK-arm reported similar changes that clarify the broker's stance on the matter.

In the statement, FXCM AU, outlined its revisions, which state: "Clients subject to the Negative Balance Policy who incur negative balances in excess of US $50,000 (determined by aggregating all of the client's negative balances across all accounts held by the FXCM group, incurred over a 24 hour period of time) will be responsible for and owe FXCM AU the value of the total negative balance above US $50,000, regardless of market conditions. Subject to certain exceptions.

FXCM AU will waive the first US $50,000 of a client's total negative balance (determined by aggregating all of the client's negative balances across all accounts held by the FXCM group, incurred over a 24 hour period of time). This policy will apply to negative balances incurred during all market conditions, including exceptional market movements."

Australia's FX Broking Environment

The news comes on the same day a senior official at Australia's regulatory body announced potential changes that could shape the future of the operating environment. The country has recently been a magnet for international currency brokers looking for abode in a well governed, yet flexible jurisdiction. ASIC, the main financial watchdog has been dealing with cases of fraud through the GTL Trade debacle, to the oversight of Japanese clients slipping through the nets at Australian brokers.

The Chairman of the Australian Securities and Investments Commission (ASIC), Greg Medcraft spoke about a number of issues in a hearing and commented about the way certain retail providers use Australia as a place to lodge their business, and stated that the matter is being discussed within the regulatory circles.

FXCM is the first firm to amend its trading conditions on the back of the crisis, although it did not specify a start date for the update, it stated that it will be sending its clients further details on the matter, its statement added: "Each client's master trading agreement will detail all of the specific exceptions to the Negative Balance Policy. Some of the key exceptions to this policy include the following: negative balances incurred by legal entities (other than superfund accounts), omnibus relationships, white label relationships, Wholesale Clients (as defined in the client's master trading agreement) and/or negative balances incurred on share CFD positions."

FXCM like several brokers, was affected by the recent Black Swan event in the Swiss Franc that has altered the way margin FX providers operate. FXCM's initiatives are the starting point of a wave of new regulations that are anticipated once authorities digest and make sense of the activities that occurred on the 15th of January, with client money, capital adequacy and leverage among the topics of discussion.