Complaint Matter

Mr. XXX has lodged his complaint with Financial Commission on the following grounds:

The incident occurred on November 6, 2015 during the publication of Non-Farm Employment report in the US.   Prior to the incident the balance of client’s account was 13501 RUR. The client had several opened positions in EURUSD, the total volume of client’s short position in EURUSD amounted to 80000 units of base currency. Just before the publication of the report the client placed three additional Sell Stop pending orders:

146331265   06.11.2015 sell  0.20  EURUSD   1.08500 (was not executed due to lack of funds)

146330490  06.11.2015 sell  1.50  EURUSD    1.08300 (order was executed)

                       06.11.2015 sell  1.50  EURUSD   1.08000 (order was not executed)

At 13:30 GMT there was a period of increased market volatility caused by the publication of unemployment data in the United States. At the moment of publication of the report the price gap of more than 10 points has occurred on the EURUSD market.

Client claims that the broker has violated the procedure for opening pending orders caught in the price gap, what in turn led to a deficit of margin and the subsequent liquidation of his positions by Stop Out. Client believes that pending order # 146331265 should have been executed first, instead of pending order #146330490 and explains that in case of the right sequence of execution of orders the order # 146330490 would have been cancelled due to lack of funds.

Client considers broker’s actions as misconduct and demands compensation (at least the lost deposit should be restored).

Complainant Broker
XXX YYY
Financial Commission Complaint #ZZZ
Complaint Raising Date Complaint Filing Date
11/17/2015 12/04/2015
Complaint Response

The decision for this complaint is based on the information provided by Mr. XXX and Broker YYY.First of all, it should be noted, that above mentioned reaction of the market on publication of important macroeconomic data in the US is not rare and often lead to the increase in volatility,  short-term decrease in liquidity and, consequently, to price gaps and increased spread size in the instrument.

Secondly, it should be also mentioned, that Buy Stop/Sell Stop type orders by their nature do not guarantee the execution at exact price specified in them. Depending on market situation such orders can be executed either at exactly specified price or at a price that is worse than indicated in the order. Buy Stop/Sell Stop type pending order become active as soon as at least one quote in the broker’s price feed reaches the price that is specified by the client. After activation of pending order it must be executed at the first available quote in the broker’s price feed. In this particular case, client’s orders #146331265 and #146330490 got in a price gap and were activated at broker’s server simultaneously. This fact was confirmed by the server’s log-file records provided by the broker.

Thirdly, the broker does not regulate the procedure for execution of orders in the price gap. For comparison, on real Inter-Bank market in the situation similar to abovementioned it is more likely that the larger volume order would be executed first as it corresponds with the logic of market. The technology of execution of orders/transactions is structured in a way where orders/transactions of a larger volume are executed first and only afterwards the smaller volume orders/transactions could be executed at prices that remained.

Such practice of execution of pending orders does not contradict the official response of the Broker YYY received by the Client.

Based on the above information the Dispute Resolution Committee does not find any violations from broker’s side, consequently there are 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 the Committee Anatoly Bulanov.

Ruled in Favor Compensation
Broker None
If you have any questions regarding this investigation, please send them to the following address info@financialcommission.org
Acknowledgement
I certify that all information was considered by the Dispute Resolution Committee of the Financial Commission and hereby confirm that the decision was made fairly, impartially and without interference. I am confident that the information provided in the document is true.
Signature Designation Date

Head of DRC

12/04/2015