What Forex Traders Must Understand About FXCM Being Barred From Operating In The US?
By Daisy Joseph
FXCM is a large forex trading company, which was reigning as the No. 1 forex trader in the US. The fate of the company changed dramatically, when NFA canceled FXCM’s membership and barred the company from operating in the US. NFA accused FXCM of executing deceptive and abusive activities detriment to the customers, while benefiting the company.
FXCM was advertised as a No Dealing Desk forex broker that executes trades directly in the market, instead of routing through a liquidity provider. However, a probe into the activities by CFTC showed that FXCM, in fact, used a dealing desk model with Effex Capital LLC, as the market maker. This company was controlled by FXCM and the executed deals benefited the broker. FXCM was engaged in messing with the trades of the clients, while receiving kickbacks from Effex capital.
As a result of the barring, FXCM had to sell the client base worth of $142 million to Forex.com operated by Giant capital. This move was completed a few days ago and it effectively ended FXCM’s business in the USA. Now, the American traders can choose between Forex.com and Oanda to carry out forex trading.
FXCM is not shutting down altogether, because it can carry its operations in the Europe. FXCM is registered with FCA, which allows the broker to continue its business in the Europe serving European clients. FXCM changed its name to Global Brokerage and it is available on the NYSE. The former CEO Dror Niv was also dismissed from his position, as the company undergoes massive administrative changes.
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