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Compensation Sought by FX Traders from Brokers Drops 3% to $3.3M in Q4

by Solomon Oladipupo
  • This is according to FinCom's Quarterly Complaints Digest for Q4 2022.
  • The EDR body said range bound FX prices as well as winter holidays affected key metrics.
FinComm Awards 36% More Compensations to Forex Traders in Q3 2022
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The total compensation sought by online forex brokers from all brokerages declined slightly to $3.3 million during the fourth quarter of 2022, which is down from $3.5 million in the prior quarter. Similarly, the compensation awarded to traders dropped by 23% to $60,919 during the past quarter.

On the contrary, the compensation sought from member brokers of the Financial Commission (FinCom), the independent external dispute resolution (EDR) body for the forex industry, surged by 66% during the fourth quarter of last year. These details are according to FinCom's Quarterly Complaints Digest for Q4 2022 published on Monday.

In the third quarter of 2022, total compensation sought from both member and non-member brokers of FinCom jumped by 51% to $3.5 million. in addition, the self-regulatory organization awarded more compensation to traders during the period as the amount awarded rose by 36% to $79,494.

FinCom noted that “range bound forex and derivatives prices, as well as winter holidays” affected many of its key metrics during the last quarter.

Compensation Sought by Forex Traders from Brokers Drops 3% to $3.3M
Compensation sought from FinCom member brokers surged by 66% during Q4 2022.

Did Retail Traders Forgo Active Trading during Q4 2022?

In other metrics, FinCom reported declines in the total number of new complaints it received, resolved and ruled in favour of traders during the quarter. While newly filed and resolved complaints decreased by 38%, those in favour of traders came in 2% lower than the prior quarter.

“Slowdowns in filed and resolved complaints, as well as compensation sought suggest traders may be finding less opportunities on traditional markets in light of range bound price fluctuations or simply forewent trading at the end of the year,” FinCom explained in the quarterly report.

Furthermore, FinCom noted that there was a “noticeable change” in the focus of complaints during Q4 2022. While trading-related complaints only accounted for 11.7% of complaints during Q3, this category rose by 5% to 19.8% during the recent quarter “despite the general drop in new complaints for the quarter.”

Nonetheless, non-trading complaints continue to be the major topic of complaint, accounting for 41.8% of all complaints during Q4. In addition, finance-related complaints are still the second most common complaint, accounting for 35.1% and 38.4% during Q3 and Q4, respectively.

Moreover, complaints' average resolution time slowed by 33% to 6.1 days, which is down from 4.6 days during the last quarter.

“Complaints listed in the value category $1-10K and $10K+ increased their overall share of complaints 5%, highlighting the continued importance of the organization to investigate complaints with higher monetary values,” FinCom added.

FinCom, an EDR body founded in 2013, regulates international online brokers, exchanges and blockchain platforms that are active in the global forex, derivatives, CFDs and cryptocurrency markets.

The total compensation sought by online forex brokers from all brokerages declined slightly to $3.3 million during the fourth quarter of 2022, which is down from $3.5 million in the prior quarter. Similarly, the compensation awarded to traders dropped by 23% to $60,919 during the past quarter.

On the contrary, the compensation sought from member brokers of the Financial Commission (FinCom), the independent external dispute resolution (EDR) body for the forex industry, surged by 66% during the fourth quarter of last year. These details are according to FinCom's Quarterly Complaints Digest for Q4 2022 published on Monday.

In the third quarter of 2022, total compensation sought from both member and non-member brokers of FinCom jumped by 51% to $3.5 million. in addition, the self-regulatory organization awarded more compensation to traders during the period as the amount awarded rose by 36% to $79,494.

FinCom noted that “range bound forex and derivatives prices, as well as winter holidays” affected many of its key metrics during the last quarter.

Compensation Sought by Forex Traders from Brokers Drops 3% to $3.3M
Compensation sought from FinCom member brokers surged by 66% during Q4 2022.

Did Retail Traders Forgo Active Trading during Q4 2022?

In other metrics, FinCom reported declines in the total number of new complaints it received, resolved and ruled in favour of traders during the quarter. While newly filed and resolved complaints decreased by 38%, those in favour of traders came in 2% lower than the prior quarter.

“Slowdowns in filed and resolved complaints, as well as compensation sought suggest traders may be finding less opportunities on traditional markets in light of range bound price fluctuations or simply forewent trading at the end of the year,” FinCom explained in the quarterly report.

Furthermore, FinCom noted that there was a “noticeable change” in the focus of complaints during Q4 2022. While trading-related complaints only accounted for 11.7% of complaints during Q3, this category rose by 5% to 19.8% during the recent quarter “despite the general drop in new complaints for the quarter.”

Nonetheless, non-trading complaints continue to be the major topic of complaint, accounting for 41.8% of all complaints during Q4. In addition, finance-related complaints are still the second most common complaint, accounting for 35.1% and 38.4% during Q3 and Q4, respectively.

Moreover, complaints' average resolution time slowed by 33% to 6.1 days, which is down from 4.6 days during the last quarter.

“Complaints listed in the value category $1-10K and $10K+ increased their overall share of complaints 5%, highlighting the continued importance of the organization to investigate complaints with higher monetary values,” FinCom added.

FinCom, an EDR body founded in 2013, regulates international online brokers, exchanges and blockchain platforms that are active in the global forex, derivatives, CFDs and cryptocurrency markets.

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