The FinancialComplaint Matter
Mr. XXX has lodged his complaint with the Financial Commission on the following grounds:
The Client used account # 720170772 for active trading operations in the Forex and CFD markets. According to the Client, on Friday, September 13 a Long position on the financial instrument CL was established on the specified account. The Client set a Stop Loss order for the position at 54.38 price level. Later that day, the Client adjusted his Take Profit order to 55.38 in order to close the position at break-even, since there were no intentions to hold the position opened over the weekend. However, because of a lack of volatility, the Client’s position was not closed on Friday.
Order Open Time Price Type Lot Symbol S/L T/P Close Time
41112027 13.09.2019 15:11:08 55.36 buy 1.00 CL 54.38 55.38 16.09.2019 1:05:06
Price Swap P/L
55.38 -13.83 6.17
The incident on the Client’s account occurred on Monday morning, September 16, at 01:05:06 (server time) when the crude oil market opened after weekend much higher with a price gap, with the highest price registered at 61.75 level. As a result, the Client’s Long position was closed by the Broker at 55.38 per barrel, at the price indicated by the Client in their pending Take Profit order.
The Client is not satisfied with the Broker’s decision (see below) and accuses the Broker in misconduct. The Client believes that the closing price 55.38 per barrel calculated by the Company is wrong since at the time of the incident there was no such a transaction price at the whole market, the correct closing price should be at 61.43 per barrel. In connection with the above, the Client requests the Dispute Resolution Committee to check the correctness of the execution of the disputed transaction and demands from the Broker compensation in the amount of 6050 USD, which equals to unrealized profit (61.43-55.38)*1000). The Client provided the screenshots of CL price charts taken from the Broker’s trading platform, as documentary evidence.
In turn, the Broker does not see any grounds for the Client’s complaint, since in their opinion all Client’s positions were closed correctly, in accordance with the provisions of the regulatory documents. The Broker provided the investigation with the trading history of the Client, the server log records, as well as the history of tick data on the financial instrument CL at the time of the incident, as documental evidence.
| Complainant | Broker | |||
| XXX | YYY | |||
| Financial Commission Complaint | #ZZZ | |||
| Complaint Raising Date | Complaint Filing Date | |||
| 16/09/2019 | 24/09/2019 | |||
| Complaint response:
The decision on this complaint is based on the information provided by the brokerage company YYY and Mr. XXX. After a comprehensive analysis of the documentary evidence provided by the Client and the Broker the Dispute Resolution Committee of the Financial Commission has come to the following conclusions: 1. First of all, it should be noted that during rollover periods, in particular, during weekend rollovers market very often experiences a significant decrease in liquidity combined with significant increase in volatility. In turn, this circumstance radically changes the flow of quotations, leading to dramatic expansion of spreads and generating price gaps. The Client should be aware that trading in such market conditions is accompanied by significant risks. 2. According to the information provided by the Broker (the history of ticks on the instrument) the CL market opened with 663 points price gap after the weekend rollover: 2019-09-13 23:58:58 54.80 54.86 2019-09-16 01:05:06 61.43 61.53 3. Despite the fact mentioned above, the Client’s disputed transaction # 41112027 was closed by the Broker at the price indicated by the Client in their pending TP order (55.38), which is confirmed by the records from the Broker’s server log. On the other hand, according to the provisions of the Broker’s regulatory documents: 1.32 Limit (Take Profit) is a type that is assigned to an Order in case such an Order is set at a price (rate) which is higher than the current market rate or to buy at a price (rate) which is lower than the current market rate. The main purpose of Limit Orders is to guarantee a Trading Operation execution at a price that is not worse than the one specified in the Order. This information is clearly defined in the Broker’s Client Agreement (Terms and Definitions section). As such, the Broker acted in full compliance with the provisions of the regulatory documents and the rules accepted in the Company. 4. To ensure an objective investigation of the case the DRC requested historical price data on the financial instrument in the disputed transaction from other independent providers of financial services. Comparison of Broker quotes provided to the Client with quotes from independent sources confirmed the fact that the quotes published by the Broker at the time of the incident (2019-09-16 01:05:06) reflected the actual situation on the market. However, this circumstance also proves that the Client’s order execution was off market. 5. In general opinion of the DRC members, the situation when the Broker acts in full compliance with the rules accepted by the Client, but at the same time executes the Client’s TP order at price not consistent with actual market prices is not acceptable. Such execution does not correspond to the Best Execution principles adhered by the Financial Commission and contradicts to Fair Market Practices which is widely recognized in the entire financial services industry. 6. Also, it is worth to mention that the Broker has acknowledged that their regulatory documents need better wording/additional clarifications with regards to Limit Orders (TP) execution after the price gap. This fact also gives the DRC a right to demand a better decision for the Client. As such, the DRC members suggested a compromise decision according to which the Broker will have to offer partial compensation to the Client. Summarizing all the above the Dispute Resolution Committee has made a decision in favor of the Client. According to the final decision the Broker has to offer the Client compensation either in the form of a non-withdrawable bonus in the amount of unrealized profit (6050 USD), or half of that amount (3025 USD) in the form of real funds. All profits that the Client may receive in the course of trading using a non-withdrawable bonus have to be available for withdrawal from the trading account without any restrictions. 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. |
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| Ruled in Favor | Compensation | |||
| Client | At Broker’s discretion | |||
| If you have any questions regarding this investigation, please send them to the following address [email protected] | ||||
| 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 | ||
| Anatoly Bulanov |
Head of DRC |
23/10/2019 | ||