Alpari US has once again found itself the target of the regulators due to compliance violations as it has received a complaint from the Compliance Department of the NFA. In its complaint, the NFA is charging that Alpari violated and failed to supervise existing NFA compliance rules. The allegations become the second time the firm is being accused by the regulator. Back in June 2012, the broker settled a complaint and paid a $200,000 fine. At that time, the firm was charged for cancelling forex trades and failing to produce timely reports to the NFA.
In the current complaint, the NFA has accused Alpari of once again failing to submit correct reports of forex trades to the NFA’s Forex Transaction Reporting Execution Surveillance System (Fortress). Per NFA rules, FDMs are required to submit a daily electronic report of forex transactions to Fortress. Failure to do so can result in daily accrued fees or other penalties.
The current complaint stems around Alpari’s reporting of trades from its Alpari Direct product, a Currenex white label trading platform solution. According to the NFA, the regulator had requested from Alpari logs of trades from Alpari Direct to compare to those that were reported to Fortress. In its analysis of logs from October 16th, 2012,, the NFA found that over 3700 trades were not reported on Fortress. Based on the reporting gap, the NFA requested additional information to compare Alpari Direct records to those from Fortress’s launch in February 2011. After receiving data, the NFA found that only 55% of trades had been submitted to Fortress. Explaining the shortfall, Alpari attributed the gap to limitations of the Currenex platform which could only report a maximum of 1000 orders a day. However, the NFA stated that this explanation was refuted by Alpari’s submission of more than 1000 orders on multiple occurrences.
Is it Time For Banks to Move Over And Create Space For Blockchain?Go to article >>
Following up with Alpari, the NFA complaint stated that the broker had difficulties finding the missing data. The NFA also found that Alpari has incorrectly listed trades from non-retail customers as retail. Based on the above reporting deficiencies, the NFA charged Alpari for violating several of its compliance rules an could be subject to further six figure fines in the future.
Following the exit of GFT, FX Solutions, and Forex Club from the US market over the past year, expectations are that further contraction will take place and more firms will exit the market. In the CFTC’s latest release of financial data from FCMs, Alpari reported Retail Forex Funds of $12,503,088, which was one of the smallest figures among retail forex brokers. As a result, with a small customer base, possible new fines from the NFA, and high capital requirements to operate in the US, Alpari may decide it’s no longer makes economic sense to be regulated in the country.
Forex Magnates reached out to Alpari about the charges and the future of its US business.
According to a representative from Alpari, the broker in unable to comment on the case at this time as it is in ongoing discussions with the NFA.