Hong Kong Subsidiary of GMO Click Fined $1.6m
- GMO Click’s GMO-Z.com brand mishandled the execution and slippage of 17 clients.
The Securities and Futures Commission of Hong Kong just announced that it has taken action against the local subsidiary of GMO Click, GMO-Z.comForex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term HK Limited. The financial regulator has identified deficiencies in the order execution and Slippage Slippage In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price Read this Term handling procedures of the brokerage.
In conjunction with an independent third party reviewer supplied by GMO Click, the SFC concludes that GMO-Z.com Forex HK executed 243 transactions for 17 clients involving more than
[gptAdvertisement]$270,000 at the last tradable price instead of the next available price. According to the SFC, the order execution and slippage handling procedures and the relevant policies were inadequate.
Resulting from the investigation, the SFC is imposing a fine of $1.6 million on the company.
The electronic trading system which the Hong Kong branch of GMO-z.com used at the time didn’t operate as intended and under specific circumstances could have affected the execution of clients. The brokerage didn’t inform its clients that order execution would not be confirmed until the company had hedged its risk exposure.
The SFC also states in a Statement on Disciplinary Action that there was a lack of policies and procedures in the process and controls over the making of manual adjustment on client order executions.
According to the regulator, manual adjustments appeared uncommon and were usually made in favour of clients. The risks arose from the lack of documented policies and procedures that could be made to client order executions.
“In determining the sanction, the SFC considers that GMOHK’s cooperation has significantly expedited the investigation and disciplinary proceedings. Similar failures would have resulted in a substantially higher level of fine,” the regulator highlights in its statement on the matter.
GMO Click’s Hong Kong subsidiary is the first one that the company opened outside of Japan.
The action on the part of the regulator comes after a complaint about the execution of a liquidation order was filed on the 24th of August 2015. The SFC made enquiries into the order execution procedures and slippage handling policies over the period from October 2015 to June 2016.
The Securities and Futures Commission of Hong Kong just announced that it has taken action against the local subsidiary of GMO Click, GMO-Z.comForex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term HK Limited. The financial regulator has identified deficiencies in the order execution and Slippage Slippage In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price Read this Term handling procedures of the brokerage.
In conjunction with an independent third party reviewer supplied by GMO Click, the SFC concludes that GMO-Z.com Forex HK executed 243 transactions for 17 clients involving more than
[gptAdvertisement]$270,000 at the last tradable price instead of the next available price. According to the SFC, the order execution and slippage handling procedures and the relevant policies were inadequate.
Resulting from the investigation, the SFC is imposing a fine of $1.6 million on the company.
The electronic trading system which the Hong Kong branch of GMO-z.com used at the time didn’t operate as intended and under specific circumstances could have affected the execution of clients. The brokerage didn’t inform its clients that order execution would not be confirmed until the company had hedged its risk exposure.
The SFC also states in a Statement on Disciplinary Action that there was a lack of policies and procedures in the process and controls over the making of manual adjustment on client order executions.
According to the regulator, manual adjustments appeared uncommon and were usually made in favour of clients. The risks arose from the lack of documented policies and procedures that could be made to client order executions.
“In determining the sanction, the SFC considers that GMOHK’s cooperation has significantly expedited the investigation and disciplinary proceedings. Similar failures would have resulted in a substantially higher level of fine,” the regulator highlights in its statement on the matter.
GMO Click’s Hong Kong subsidiary is the first one that the company opened outside of Japan.
The action on the part of the regulator comes after a complaint about the execution of a liquidation order was filed on the 24th of August 2015. The SFC made enquiries into the order execution procedures and slippage handling policies over the period from October 2015 to June 2016.