US financial regulator for derivatives organizations, the National Futures Association (NFA), has issued a monetary penalty to New York listed brokerage firm, FXCM. The broker is reported to have breached a number of regulatory rulings, these include dealing with an unregistered firm and for the failure to report trading data.
The fine comes during a sensitive period for global FX markets, as investigations into currency rates manipulation by banking staff has caused friction in the markets.
The financial watchdog reacted to a complaint against the broker, which stated that FXCM was conducting business with a firm that was supposed to hold necessary registrations to operate in financial markets trading. The firm was required to be registered with the CFTC as a commodity pool operator (CPO) and as an NFA member.
FXCM, a global financial services firm, is one of the largest operators in the sector, with offices in key financial centers in the UK, USA and Hong Kong. The broker has been coordinating with the regulator in response to the complaint, and has rectified the shortfalls in its procedures.
A spokesperson at FXCM commented about the fine in an exclusive statement to Forex Magnates, saying: “FXCM has settled a complaint brought by the NFA relating to charges of doing business with an unregistered entity and for failing to submit certain trade data reports.
FXCM has resolved these matters and has taken steps to avoid similar occurrences in the future.”
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Details in the complaint state that, RFF GP LLC (RFF) a general partner of Revelation Forex Fund, had filed an exemption for registration under the CFTC’s Regulation 4.13(a)(3), which meant that if it met the regulators criteria it did not need to be registered. However, the regulator states that the firm did not qualify for exemption and FXCM did not take sufficient steps to address this.
Furthermore, FXCM was in breach of NFA rulings relating to trade reporting. The final decision, which was issued by the Business Conduct Committee, found that the brokerage firm had failed to submit trade data to the NFA through NFA’s Forex Transaction Reporting Execution Surveillance System known as FORTRESS.
The NFA website lists detailed criteria firms need to fulfil in order to be exempt from registration, these include, ‘(The firm) does not receive any compensation or other payment, directly or indirectly, for operating the pool, except reimbursement for the ordinary administrative expenses of operating the pool.’
CTAs and CPOs who believe they fulfil the regulator’s criteria can submit an online application for exemption, the regulator has a video tutorial on its website to describe the process.
FXCM’s share price closed in the green, trading at $13.34 in New York, up 1.68%.