Hong Kong SFC fines HK FXCM Asia HK$ 4 million


Hong Kong regulator, SFC fines HK FXCM Asia HK$ 4 million. On which grounds did the SFC decide to impose such a large fine on the brokerage?

19 October, AtoZForex – The Hong Kong Securities and Futures Commission (SFC) has rebuked and charged FXCM Asia Limited (HK FXCM) HK$4 million. The fine is imposed due to not complying with the order execution practice in Forex trading.

FXCM Asia Limited, now known as Rakuten Securities Hong Kong Limited, is an online leveraged forex trading provider in Hong Kong. FXCM Asia Limited was acquired by Rakuten Securities, Inc. a year ago, on the 11th of September 2015.

Multibank
4.9/5
Multibank Review
Visit Site
eToro
4.9/5
eToro Review
Visit Site
Capital.com
4.8/5
Capital.com Review
Visit Site

Hong Kong SFC fines HK FXCM Asia

According to the investigation of the Hong Kong regulator, during four years, between December 2006 and December 2010, FXCM together with its affiliate held earnings amounting at US$1,452,926.69. These profits were generated from favorable price movements in Forex trading that took place between receiving of client orders and executing of orders. Whilst, unfavorable price movements were transmitted to clients.

The SFC reported that the brokerage did not treat its clients honestly and did not manage to execute their orders on the best available terms and to act in their best interests as required by the Code of Conduct. In addition, FXCM presented to its clients that the orders would be carried out at the best available price. However, clients didn’t obtain benefits from improvements connected to their traders. Furthermore, the regulator discovered that the company didn’t have appropriate internal policies and controls that would guarantee order execution practice adherence to regulatory requirements.

Which things SFC considered while making the decision? 

Before implementing enforcement actions, the SFC considered the following aspects. FXCM cooperated with the regulator to resolve the SFC’s concerns and voluntarily agreed to make a compensation to the affected clients in the amount of US$1,452,926.69. Currently, FXCM stock (100%) is held by Rakuten Securities Inc. Whereas, misconduct took place during the former management which was changed. In addition, there was no previous disciplinary record with the regulator. According to Isky So, Marketing Manager at Rakuten Securities Hong Kong Ltd:

"The execution practice has been rectified by FXCM Asia in December 2010. Since then, all price improvements were passed on to the clients".

Clients of FXCM who did not profit from the price improvements in their trades would have their accounts credited within 30 days.

"Affected clients will be contacted within 30 days", -commented Isky So.

Furthermore, HK FXCM will get in touch with clients who no longer hold an account to inform them that their accounts have been temporarily reopened for this objective.

The President of Rakuten Securities HK, Kazunori Iida stated:

"This was a historical issue. After the acquisition in September 2015 , Rakuten Securities HK has implemented a totally new and rigorous corporate governance policy.

We committed whole-hearted effort to sustaining a high standard of business ethical conduct, thus we constantly reviewed and make sure all clients trading are correctly executed”.

Think we missed something? Let us know in the comments section below.

Leave a Reply

Your email address will not be published. Required fields are marked *