GAIN Capital and Ikon Fined $779,000 by NFA

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I'm not sure this is the sort of publicity GAIN Capital would want, particularly during their long drawn out IPO, but these things are sent to try us. The National Futures  Association has just announced that:

On June 30, 2010, NFA issued a Complaint against Gain and [Glenn] Stevens that cited Gain for engaging in margin and liquidation practices that had a detrimental impact on certain of Gain's customers on certain slipped trades, failing to maintain records for certain unfilled orders that were placed on the MetaTrader trading platform prior to May 2009, failing to adequately review the activities and promotional material of Gain's unregulated solicitors, failing to respond promptly to certain inquiries and requests made by NFA during NFA's audit of Gain and, together with Stevens, failing to supervise the firm's operations.

Gain and Stevens neither admitted nor denied the allegations of the Complaint and agreed to settle the case on the following terms: Gain agreed to refund to customers the amount of negative slippage they experienced on the trades that were placed in their accounts between May 1 and July 31, 2009 and which were attributable to the Virtual Dealer Plug-in that Gain used on its institutional and retail servers, Gain agreed to refund to customers the losses they incurred as a result of Gain's practice of adjusting leverage and margin requirements on Fridays, as alleged in Count I of the Complaint; Gain agreed to pay $459,000 to NFA as a monetary sanction; Gain agreed that in the future any and all slippage parameters that Gain uses in determining whether a customer's order will be executed or re-quoted, shall be symmetrical in nature and neither advantageous nor disadvantageous to the customer or to Gain; and Gain agreed not to reinstate its practice of adjusting leverage and margin requirements on Fridays, as described in Count I of the Complaint, which it has discontinued.

The NFA has also just announced that:

On October 27, 2010, NFA issued a Complaint against IKON and [Diwakar] Jagannath that cited IKON for engaging in acts or practices regarding prices received by customers on the MetaTrader trading platform that, in certain instances, were disadvantageous to customers; failing to supervise the MetaTrader platform to ensure that all customer orders experienced slippage when prices moved in their favor just as often as when prices moved against them; and, together with Jagannath, failing to supervise the firm's operations.

On October 27, 2010, NFA's BCC issued a Decision accepting an Offer of Settlement submitted by IKON and Jagannath, in which IKON and Jagannath neither admitted nor denied the allegations of the Complaint and agreed to settle the case on the following terms: IKON agreed to refund to customers the amount of negative slippage they experienced on the trades that were placed in their accounts, which were attributable to the Virtual Dealer Plug-in that IKON used on its Metatrader trading platform; IKON agreed to pay $320,000 to NFA as a monetary sanction; and IKON agreed that in the future any and all slippage parameters that IKON uses in determining whether a customer's order will be executed or re-quoted, shall be symmetrical in nature and neither advantageous nor disadvantageous to the customer or to IKON.

I  assume that the timing of the two announcements is not entirely coincidental! Note however that the NFA's allegations have "neither [been] admitted nor denied", but that nonetheless in addition to the "monetary sanction" some FOREX.com and Ikon customers will also be receiving refunds.  The NFA certainly seems to be sending a very clear message to forex brokers that they are not entirely happy with every aspect of the MetaTrader 4 architecture, and that they need to be very careful how they configure MetaTrader now and in the future.

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