Customer Complaint Dated May 22 2022

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

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 incident on the Client’s account occurred in the period of thin market: during rollovers market very often experiences significant decrease in liquidity. In turn, this circumstance radically changes the flow of quotes, 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. Second, the Client should take into account that even 100% locking on trading accounts with a floating spread is impossible, due to the absence of a fixed difference between the Buy and Sell prices. In the case of position locking (which was the case in this case), spread widening automatically reduces the unrealized positive financial result on profitable positions, while increasing the unrealized negative financial result on unprofitable positions. In some market situations, spread widening can lead to undesirable consequences, such as Stop Out.
3. Third, the trading terms for the Client’s account suggest a floating spread and a Stop Out at 50% level. This information is clearly defined on the Broker’s website. By opening a trading account of the selected type, the Client agreed to accept the trading terms provided by the Company. In this regard, it should be noted that according to the information received from the Broker, at the time of the incident, the Equity/Margin ratio on the Client’s account dropped below 50% level due to widening of the spread in the financial instrument XAUUSD from several cents to more than 10 USD (at the time of market opening, 22.04.2022). As such, all Client’s positions were closed automatically, at prices available on the market (Stop Out). This fact is confirmed by the records from the server log, provided by the Broker. In the period of the incident the Broker acted in full compliance with the provisions of their Terms and conditions:

15.11 The Company may (without notice to you) Close Out, but will not be obliged to Close Out or to attempt to Close Out, some or all Open Positions, at that time or any later time as we determine (whether in our discretion or by automatic trading platform management) if: 

(a) your Account Value falls below the Liquidation Level; or 

(b) you fail to maintain the required Margin Cover; or 

(c) at any time, and from time to time, the Company determines that the value of all of your Open Positions (and not taking into account any cash balance in your Account) represents a substantial net unrealized loss to you such that, in our belief, the continued trading, or failure to Close Out, one or more of your Open Positions will or is likely to materially prejudice your Account Value. 

15.12 Details of Margin amounts paid and owing by you are available by logging onto your Account.

• At last, to ensure an objective investigation of the case the DRC requested historical data on the financial instrument in the disputed transactions 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. In the general opinion of the DRC members, the financial result on the disputed transactions performed on the Client’s accounts on the day of the incident, 22.04.2022, should be canceled by the Broker. Experts of the DRC have come to such a conclusion after a comparison of the Broker’s quotes offered to the Client with the quotes received from other reliable sources. At the time of forced liquidation of the specified transactions, the quotes on the financial instrument XAUUSD in the Broker’s quotes feed differed significantly from the quotes received from other independent providers of financial services and, as such, did not reflect the actual situation on the market.  

Summarizing all the above, the Resolution Committee of the Financial Commission has made a decision in favor of the Client and decided as follows:

1. The Broker must cancel the financial results received by the Client in the disputed transactions performed on his trading accounts on the day of the incident, 22.04.2022.
2. To consider the actions of the Broker to forcibly liquidate the Client’s disputed positions as unlawful.
3. The Broker must restore the Client’s disputed positions closed as result of illegal liquidation.

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