FXCM UK has recently notified its clients that the conditions for automated trading are changing and that they will need to consent to the change in order to keep their access to some of the services.
The broker explains to its client that the British regulator – the Financial Conduct Authority (“FCA”) – has decided that for automated and semi-automated trading systems to be used, the service provider that exercises investment discretion by automatically executing the trade signals of third parties has certain regulatory obligations to which it must adhere.
As a result of this, FXCM UK is required to assess client eligibility to use various trading signals, which include but are not limited to trading advice that originates from Expert Advisors (“EAs”) and Automated Strategies, and obtain each client’s’ consent to execute trades on his behalf.
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For justification, the FXCM UK notification letter links to a January 2015 FCA guide, based on a European Securities and Markets Authority (ESMA) Q&A on MiFID and Investor Protection published in June 2012, which set out how the automated execution of trade signals should be treated for the purposes of MiFID investment activities.
The broker asks its clients to approve its new eligibility assessment points as well as a Risk Appetite and Investment Objective Notice by no later than 17:00 BST on 15 June 2015. Clients that won’t submit their consent by the stated deadline will have their access to purchasing EAs on the FXCM App Store blocked, and they will not be permitted to use auto/semi-auto copy trading systems going forward. Furthermore, the broker warns that any open positions at the time the account is locked will not be closed automatically and will remain open until the client manually closes them.
Eligibility Assessment Points
These are the statements clients must agree to in order to keep their access to autotrading systems with FXCM UK:
- I understand the risks associated with trading in an automated or semi-automated environment and I have read the Trading Risks associated with that activity;
- I confirm that the funds that I use to trade with, by and through, automated or semi-automated strategies, signals, or platforms are derived from disposable income and that if lost, would not significantly affect my personal financial wellbeing;
- I confirm that I have sufficient automated or semi-automated trading experience in either demo or live environments and that I comprehend the unique risks that come along with this form of investment, such as but not limited to trades executing without manual intervention, possible differences in execution prices between signal provider and client, and/or a reliance on a third party not controlled by FXCM; and
- I understand that automated and semi-automated trading is highly speculative and the possibility exists that I could sustain losses in excess of my deposit. I further understand that (a) trading losses may accrue faster through the use of automated and semi-automated trading than losses that might otherwise accrue through self-trading, and (b) through the use of automated or semi-automated trading, a high number of trades may execute between each time I log into my account(s) and that FXCM strongly advises that I actively monitor my account(s).
- I agree that FXCM may, in its sole and absolute discretion, remove my ability to trade one or all automated or semi-automated systems.