Customer Complaint Dated July 30, 2013

CLEINT submitted a complaint to the Financial Commission regarding the following:Trading account number XXXXX.

During the period of the active trading on the investment account from 1 to 30 July 2013 (made about 2000 trades during this month) BROKER systematically executed client’s pending Stop orders with several-seconds delay and a few-pips slippage, thus limiting the potential profit of the client. According to calculations by the client, this resulted in the lost profit in the amount of $ 200,000.

Customer demands compensation of the lost profit by recalculating execution prices and reimbursing the difference.

Decision on the complaint was made on the basis of information provided by the BROKER and the CLIENT.First of all, it should be noted that the Buy Stop and Sell Stop orders by their nature do not guarantee the execution of the client’s orders at the exact specified price. Depending on market conditions, such orders can be executed either at the exact specified price or at a worse price. Pending Buy Stop (Sell Stop) order becomes active as soon as at least one quote in the stream of the broker’s price broadcast reaches the value specified by the client. After activation, the pending order is executed at the first available quote in the stream of broker’s price broadcast. Under high market volatility, the execution price of the pending order may differ by a few pips from the price specified by the client.

This pending order execution practice is not contrary to the official response of BROKER, received by the client in response to his complaint. According to the trading policy of BROKER, “all pending orders and orders «IF-Done» are executed by the Company at the stated price or at the price available at the time of order execution, while the execution price may differ from the price specified in the order” (para. XX.XX Trading Policy).

The client complaint refers to a fairly large amount of trades done over a relatively long period of time. It can be assumed that market conditions could not always be the reason why the broker executed the pending orders with delay and slippage. However, it can be seen from the client’s trading log that most of the client’s orders were executed in periods of high market activity (the height of European or American trading sessions), and usually shortly before, or during, or immediately after the publication of important economic news. Typically, these events are accompanied by increased market volatility, which inevitably leads to the increase in the spread and the slippage.

In our view, it is incorrect to argue that low-quality execution of pending orders resulted from broker’s evil intent – since no item of the Trading Policy was violated.

In summary, we can assert that the broker provided acceptable conditions for the client’s trading, despite the fact that these conditions were not the best from the client’s point of view. Thus, the Dispute Resolution Committee sees no violations in the broker’s actions and sees no grounds for the client’s complaint.

This complaint was reviewed by the members of the Dispute Resolution Committee of the Financial Commission and was processed by the head of Committee Anatoly Bulanov.

01/30/2014