Customer Complaint Dated April 25th 2022

The decision on this complaint is based on the information provided by the brokerage company XXX and The Client.

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 the incident on the Client’s trading account occurred against the background of reduced market liquidity associated with holidays in Europe and the USA. The Client must understand that, during international holidays, in particular Good Friday and such, 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 a 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. Second, in the common opinion of the DRC experts, it is necessary to divide the incident occurred on the Client’s trading account into two separate events:

• The first event is a technical failure of the platform due to which the Client could not close his positions ## 74105041, 74105055, 74105166, 74105180. In the period from 01:20:34.349 to 01:21:07.506 the Client tried to close only one position out of four, making many attempts, but failed due to system failure.
• The second event is related to trading / financial operations which the Client performed after technical failure of the platform. The Client replenished his trading account and opened positions ## 74105515, 74105641 despite the abnormal market conditions.

3. Third, according to the Broker, on the day of the incident their Customer Support acknowledged the issue faced by the Client and reimbursed him with 14676.38 USD prior to the submission of his claims to the Financial Commission. Also, the Broker indicates that although the Client had made attempts to close one of the few orders only, they have reimbursed the Client for all four orders. In addition to the losses on those 4 orders i.e., 1800000 JPY, the compensation included any profits the Client would have acquired should he managed to close his positions at the price of his first attempt, i.e., at the price of 164.867, which would make the profit in the amount of 280000 JPY. 

4. Fourth, when assessing the amount of compensation offered by the Broker, the experts of the DRC took into consideration the following:

a) Until the very moment of system failure, the Client has indicated his intentions toward positions ## 74105041, 74105055, 74105166, 74105180 as follows: closing positions via market orders at 164.867 (Ask) or lower price.

b) The Broker compensated the unrealized profit on the Client’s positions ## 74105041, 74105055, 74105166, 74105180 based on the price of 164.867 (Ask) available on the market at the time of system failure.

c) The local minimum price on the financial instrument GBPJPY in the specified period was registered at 164.756/164.839 level (Bid/Ask, TrueFX);

d) After the system failure, the Client has indicated its intentions toward his positions as follows:

• Pending Take Profit orders were placed on all 6 positions, but they could not have been executed subsequently, because the price levels of pending orders were not reached either on the day of the incident or in the next 10 days;
• Pending Stop Loss orders were not placed by the Client, and thus, the latter was ready for the loss of the entire deposit in case of an unfavourable change in the price of the financial instrument GBPJPY, which eventually would have happened in the next 4 days;

e) Thus, even if assume that the Client potentially could have closed with profits positions ## 74105041, 74105055, 74105166, 74105180 before the moment of system failure and, as a result, there would have been no grounds for unfolding the scenario with Stop Out on 15.04.2022, the Client would still have got a Stop Out on his positions ## 74105515, 74105641 during the trading session on 19.04.2022, even taking into account the Broker’s compensation and replenishment of the account by 1000000 JPY, made by the Client on 15.04.2022.

5. At last, as for the size of the spread in the financial instrument GBPJPY, to which the Client also refers in the text of his complaint, it should be noted that in order to ensure an objective investigation of the case the DRC requested historical price data on the specified financial instrument from other independent providers of financial services. Financial Commission uses several different sources, such as Tradeproofer, Tradefora, Verify My Trade, TrueFX, FX Benchmark and some others for the purpose of verification of the quality of trades’ execution. Comparison of the Broker’s quotes provided to the Client with the quotes received from independent sources confirmed the fact that at the time of the Stop Out (15.04.2022, at 06:19:27, GMT) the quotes published by the Broker reflected the actual situation on the market. As such, the experts of the DRC have found the execution of the disputed transactions ## 74105515, 74105641, 74105041, 74105055, 74105166, 74105180 as correct and legitimate, since the quotes on the financial instrument GBPJPY published by the Broker were consistent with acceptable market prices.

Summarizing all the above, it should be noted that when making a decision on this case, the votes of experts were divided equally:

a) The members of the DRC admitted that due to the system failure on the Broker’s side the Client’s trading plans were disrupted and this event had negative consequences on the Client’s psychological state. On the other hand, in the general opinion of DRC experts, after the first event, the Client should have proceeded to trading operations considering only the funds available on his account at that time, and not rely on any amounts of promised compensations, since the situation with it had yet to be resolved.

b) The negative aspect of the whole situation is the fact that the Broker does not have clearly defined provisions of the Client Agreement regulating the measures and deadlines of response to the consequences of technical incidents on their side.

c) In this regard it should be noted that Financial Commission is committed to the best business practices accepted throughout the industry which assume that, if there is some issue caused by the broker, there shall be minimum impact on the client, and some solutions shall be provided in a swift manner to mitigate negative effects of it on the client’s positions.

d) The Broker compensated the Client for losses and unrealized profits, which could have been secured before the system failure, on all open positions. In the general opinion of DRC experts, the Broker acted correctly, however, the speed of reaction (3 business days) and compensation amount offered to the Client were deemed as not acceptable by some members of the DRC.

As such, taking into account the division of experts’ votes on the case, the DRC has made a compromise decision, according to which the Broker must offer the Client additional compensation of unrealized profits on positions ## 74105041, 74105055, 74105166, 74105180, calculated at best possible price (164.839) available on the market in the period of the incident (112000 JPY).

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.

Head of DRC