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 Client was fully aware of margin requirements for hedged/unhedged positions on the financial instrument USTEC in the Broker’s platform prior to the incident. The information on margin requirements for hedged/unhedged positions can be found in the specification window of the Broker’s trading terminal. Judging by the information in the Broker’s trading terminal (the specification of the financial instrument USTEC), the latter offers their clients the possibility of hedging positions with zero collateral (hedged margin is 0). Nevertheless, the Client should be aware that:

a) The Client’s positions will be forcibly liquidated by the Broker if the margin level falls below the critical level of 50% specified by the Broker;

b) The Client’s positions will be forcibly liquidated by the Broker if there are no Client’s funds left on the trading account;

c) 100% hedging (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 hedging (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.

d) Asymmetrical unwinding of a hedged position will result in an unhedged position which is treated as a newly opened position. Thus, margin for this position is calculated based on the increased margin requirements and is distributed proportionally between the open transactions that involve the hedged financial instrument.

2. Second, as for the hedging mechanism to which the Client refers in the text of his complaint, the Broker indicates that their system has two settings for hedging:

• First setting is when the strong hedge setting is enabled, then the hedge position will open only when Free Margin will be non-negative after the execution. Clients are still able to open hedge positions when they are having negative free margin, if after the position opening, the free margin will go positive.
• Second setting is when the strong hedge setting is disabled, a hedge position can only be opened if free margin remains non-negative after that or if margin requirements are reduced after the hedge position has been opened. Therefore, after opening a hedge position, the free margin can be still negative, but the position could be activated if the margin requirements are reduced.

3. Third, according to the Broker, in this case, the USTEC has a strong hedge enable, therefore the hedge position would be able to open if the free margin after the execution of the order becomes positive. However, the Client was not able to hedge his USTEC trades since the free margin would still be in the negative. The Broker indicates that this issue was explained to the Client before, on the previous complaint submitted on 12.01.2022 and therefore, the Client was already aware of this. The e-mail correspondence between the Client and the Broker provided by the latter (ticket #1632509) confirms this fact. The Broker claims that the Client was overexposed on Long positions and tried to hedge these trades in a last-minute effort to protect his account. The Client could have taken additional steps such as depositing additional funds or closing some positions to reduce their exposure in addition to his hedging attempts but chose not to do so or had run out of additional funds. 

4. Furthermore, judging by the server log records, as well as the history of transactions performed by the Client, it is quite obvious that the Client does not fully understand the principles of margin calculation applied for hedged/unhedged positions on the Broker’s platform. In the course of trading operations, the Client had the opportunity to monitor the state of the margin level on his trading account in a special window of the Broker’s terminal. On the day of the incident, by the moment of time 20:46:59, the Client has the following situation on this trading account (see server log attached):

1. the total volume of Long positions was 190 lots,
2. the total volume of Short positions is 205 lots,
3. the amount of free margin was (-)11.14 USD.

Thus, in order to fix the floating losses on previously opened Long positions, the Client opened a comparable volume of Short positions (190 lots) without any problems with the Broker’s hedging mechanism, thus freeing up the maximum possible margin for opening new positions. At the same time, the volume of hedged positions amounted to 380 lots (190*2), while the remaining Short positions with a volume of 15 lots were unhedged. A further increase in the volume of Short positions became unavailable for the Client due to the requirement of 100% margin for maintaining them (margin deficit). The Client tried to reduce his financial losses by operating 15-20 lots in unhedged Short positions, but did not succeed in this matter. 

5. The trading terms on the Client’s account suggest a floating spread and 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. According to the Broker, in the period of the incident the Equity/Margin ratio on the Client’s account fell below the critical level (50%) several times. As such, due to insufficient margin, the disputed positions were liquidated by the Broker. This fact is confirmed by the server log records provided by the Broker. In this regard, it should be noted that the Broker acted in full compliance with the provisions of their regulatory documents:

15.1 Upon opening a Transaction, you will be required to pay us the Initial Margin for that Transaction, as calculated by us.

15.2 You acknowledge that the Initial Margin for certain Transactions (for example, Share CFDs) will be based on a percentage of the Contract Value of the Transaction and therefore, the Initial Margin due for such Transactions will fluctuate in accordance with the Contract Value.

15.3 Initial Margin is due and payable to us before you enter into a Transaction (and for Transactions that have a fluctuating Initial Margin based on a percentage of the Contract Value, immediately on opening the Transaction and thereafter immediately on any increase in Contract Value taking place).

15.4 You agree that for different Financial Products there will be different Margin requirements and they may be displayed on the Website. The Margin requirements are subject to change without notice to you so you should make yourself aware of the Margin requirements.

15.5 You also agree that you have a continuing Margin obligations to us to ensure that at all times during which you have open Transactions you have Margin Cover in your Account and that it is positive at all times.

15.6 You must maintain at least the amount of Margin Cover required by us whether or not we give any notice to you to make those payments.

15.7 It is solely your responsibility to monitor and to satisfy all Margin Cover requirements.

15.8 You are required to maintain the Margin Cover, which might mean you must pay more Margin, whether or not we give you a Margin call and even if you are not contactable.

…

15.11 XXX 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, XXX 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.

6. To ensure an objective investigation of the case the DRC requested historical price 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. Verification of price feeds from other independent providers of financial services has not identified any significant deviations in the Broker’s prices. This circumstance confirms the fact that the quotes published by the Broker at the time of execution of the disputed transactions were always consistent with actual market prices.

7. Finally, it is quite obvious that in the period of the incident the Client was ready to lose the entire balance on their trading account, under certain circumstances, since he had chosen to manage his risk not by using pending Stop Loss orders attached to his Long positions or by keeping them fully hedged for the entire period of the highly volatile trading session, but, on the contrary, the Client decided to manage his risk manually: the Client multiple times asymmetrically unwound the part of the hedge and tried to reduce his unrealized losses by making multiple short-term operations, at market prices, but suffered even more losses because of unfavorable change in the price of the financial instrument USTEC, as well as due to slippage.

Summarizing all the above the Dispute Resolution Committee has ruled in favor of the Broker. In the general opinion of the DRC members, in the period of the incident the Broker acted in full compliance with the provisions of the regulatory documents and trading rules established by the Company. The Client’s financial losses have nothing to do with the settings of the hedging mechanism applied on the Broker’s platform. The Client chose very aggressive trading strategy and was ready for the loss of entire balance on his trading account. Analysis of the history of the Client’s trading operations performed on trading account # 1700091006 in the period from 19.11.2021 to 11.05.2022 confirms this fact (more than 10 Stop Out events). Accordingly, the claim of the Client for compensation of losses in the amount of 48000 USD was found by the members of the Committee as having no grounds.

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

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 neither on the day of the incident nor 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 unfavorable 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

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, according to the Broker, prior to the incident the Client identified a technical problem on the Broker’s side and implemented a strategy aimed at making risk-free profits at the expense of lagging / non-market prices. According to the Broker:

a) The Client has been trading XAUUSD via high quality low latency VPS (IP address 89.31.124.153) which is located in the UK. The Broker allows using EAs and VPS, provided that combination of VPS and EA is not trying to abuse the Broker’s MT4 infrastructure.

b) The Client’s operations were probably driven by the means of EA. On the other hand, the Broker indicates that the EA driven trading activity is not verified by MT4, as the reason of all trades in the trading terminal history is ‘Client’ and not ‘Expert’. In the Broker’s opinion “this is usually done (hidden) on EAs that are trying to abuse the system”.

с) Most of the Client’s trades were opened and closed within minutes in volatile market conditions and most of them were counter positions with the same volume.

d) Having compared their pricing with other major LPs like LMAX, the Broker is confident that in most cases the Client was getting better prices. The Broker believes that trading operations of this kind confirm the fact of the Client’s deliberate trading using system vulnerabilities.

e) The Client have been trading XAUUSD under 2 leg price arbitrage strategy by taking various and counter positions on 2 or more brokers and locking profit upon closing.

f) All trades performed on the Client’s account were placed from 89.31.124.153. The Broker indicates that the VPS located on the specified IP address was used by one person for managing account # 599941130, as well as other clients’ accounts, by the means of the exact same trading strategy. The history of investors’ logins into trading account # 599941130 provided by the Broker confirms this fact.

2. Second, it should be noted that in order to make a decision on this case the DRC has analyzed the Client’s trading activity in the account # 599941130.

a) Analysis of the nature of the transactions performed by the Client showed the following:

• The Client’s transactions were made in the period from 22.02.2022 to 01.03.2022;
• The 100% of the Client’s transactions were made with one financial instrument (XAUUSD);
• The time of the disputed transactions’ execution was within the period from 05:21 to 22:39 (server time, GMT);
• The duration of the Client’s transactions ranged from 2 minutes up to several hours, however roughly 35% of all transactions had their duration of 2-3 minutes;
• The most of transactions were performed during the hours of active market, however no correlation between the time of important news releases and the time of trades performed by the Client was found;
• All Client’s transactions were opened manually, without using EA, as confirmed by the server log provided by the Broker.

b) The analysis of the financial results of transactions performed by the Client showed the following:

• After 89 transactions the Client received a net profit in the amount of 3657 USD;
• The share of Short positions established by the Client was 41.57% or 37 transactions;
• The share of Long positions established by the Client was 58.43% or 52 transactions;
• The share of profitable transactions performed by the Client was 51.69% or 46 transactions;
• The share of unprofitable transactions performed by the Client was 48.31% or 43 transactions.

3. Third, the DRC has verified the validity of the Broker’s assertion regarding the Client’s use of the vulnerabilities of their technical equipment and software for profit. For this purpose, the DRC has examined the documentary evidence provided by the Broker, as well as the history of price data on the financial instrument in the disputed transactions, obtained from independent providers of financial services. To ensure an objective investigation 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. The analysis of execution quality of the Client’s trades showed that vast majority of them were opened and closed at actual prices available on the market.

4. On the other hand, the experts of the DRC did not see any intelligible explanation why the Client’s actions violate any Trading Rules of the Broker:

a) Experts did not see any problem with the client using a VPS, nor any problem with a client using an EA, nor any problem with the EA using “client” tag instead of “expert” tag;

b) Experts did not see any risk-free trading from the statement on the Client’s account, since most of the Client’s positions were opened and held for a long time without locking. The advantage in the opening or/and the closing price can be leveled by the movement of the market. As such, trading risks were in place in this case.

с) In the experts’ opinion, price arb between brokers is a really smart way to trade. There is no problem with this since it is a very well accepted way of trading that is used by the highest level of professional traders at bank and hedge funds;

d) Also, the pricing of the product (XAUUSD) in the period of the incident was obviously very aggressive, but in the end that pricing was received from an LP and passed to the Client or generated by the Broker themselves. Scenarios like this have been seen before: where the LP skews its pricing according to its own exposure, which makes the prices much more aggressive and exposes the broker. This is not uncommon practice, but this is a problem that the broker needs to take care of with their LP, not with the trader.

As such, in the common opinion of the DRC members, the Broker does not have sufficient grounds to assert that the disputed transactions performed on the Client’s trading account # 599941130 were executed at lagging / non-market prices. It is unlikely that the Client might have used special technical means (EA) exploiting vulnerabilities in the Broker’s quotation system.

Based on the above, the members of the DRC of the Financial Commission have ruled in favor of the Client and decided the following:

1. Recognize the transactions disputed by the Broker as legitimate.
2. Consider the cancellation of the financial results of this series of transactions by the Broker as unlawful.
3. Hold the Broker liable for belated provision of the requested documentary evidence (statement, server log records).
4. Hold the Broker liable for the provision of edited version of the statement, which makes it impossible to conduct a swift and thorough analysis of the Client’s trading activity.
5. According to the DRC’s decision a compensation in the amount of 3657 USD should be paid to the Client.

Also, the experts of the DRC expressed their common opinion with regards to the organization of the sustainable operational process of the Broker’s infrastructure: DRC experts believe that if a Broker cannot provide a normal supply of prices, they should look for another source of information. Currently, there are many companies offering high-quality Market Data that can be used without any risk to business. According to the experts of the DRC, the Broker should take on the risks associated with the quality of the quotations supplied.

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

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 according to the information provided by the Broker:

a) On 12.08.2022 at 21:16:40 GMT the Client placed his limit Take Profit order at 24248.43 BID price level which secured him 407.24 USD of profit. The profit was duly credited to the Client’s account; therefore, in the Broker’s opinion, the disputed position # 75210080 was not closed by an error but on the contrary according to set instruction of the Client.

b) The Client was duly and most importantly timely informed about the technical problems on the platform and difficulties clients could face. According to the logs of the system the Client tried to set the “Take Profit” to the claimed level of 24771.94 at 23:29:07 GMT, what is 24 minutes after he was well informed about the technical situation on the platform.

c) The Broker believes that the Client accepted and assumed the risk and consequences of technical failure of the platform. In support of their position the Broker refers to their regulatory documents:

Risk Warning

“…Clients undertake transactions on any electronic system, they will be exposed to risks associated with electronic systems, which include the failure of hardware, software, servers… The result of any such failure may be that a Client’s order is either not executed according to his/her instructions or is not executed at all.”

Agreement for international financial services

4.10. The Company shall bear no responsibility for any circumstantial, special, accidental and penalty losses of the Client including (but not Limited) any lost profits, the loss of any expected savings or the loss of a profit in case the Client was informed by the Company about the possibility of such losses. Moral damage is not subject to any compensation.

d) The Company does not admit any of the allegations of or liability towards the Client but as an exception and as a gesture of a goodwill on 07.09.2022 the Company has asked the Client to accept execution of the order by 24300.51 and extra profit in the amount of 287.39 USD. The reason for this particular amount is that the Client attempted to make this modification of the order and the price would have reached that level during the period of difficulties.

2. Second, according to the information provided by the Client (the screenshot of conversation between the Client and Customer Support taken from live chat), on the day of the incident the Broker indeed had acknowledged the issue faced by the Client but could not help him with changing the parameters of pending Take Profit order. Their advice to the Client was as follows:

“In this case it remains to wait for the system operation to be reinstated.”

3. Third, 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 change the parameters of his pending Take Profit order attached to the disputed position # 75210080. In the period from 23:13:44 to 23:29:07 (12.08.2022) the Client made many attempts to do that but failed due to system failure.
• The second event is related to trading operations which the Client performed after technical failure of the platform. When the operation of the Broker’s platform got back to normal the Long position # 75210080 was closed with profits and the Client opened new Short positions ## 75211034, 75211462, 75211843, 75212128 in the period from 23:55:25 (12.08.2022) to 01:03:37 (13.08.2022).

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

a) Initially the Client had indicated his intentions toward the disputed position # 75210080 as follows: closing position via Take Profit order at 24248.43 price level.

b) Between 22:40 and 22:45 the BID price of the financial instrument BTCUSD reached the 24237 price level, as confirmed by the price dynamics of the said instrument in the MT4 platform offered by the Broker.

c) As such, since the Client’s Take Profit order was not filled, at 22:45:03-22:45:31 (that is, before the Broker informed the Client about the platform’s malfunction), following the price advance, the Client changed his intentions toward the disputed position # 75210080 as follows: making attempts to change the parameters of the pending Take Profit order from 24248.43 to 24800.

d) In the next couple hours before the full recovery of the platform’s operations the Client made several additional attempts to change the parameters of his pending Take Profit order (@24800>@24300.51>@24300.2>@24400.7>@24363.92>@24364.46>@24410.62>@24410.09> @24385.54>@24386.29>@24386.69>@24403.01>@24399.7>@24400>@24792.88>@24771.94), thereby introducing uncertainty into his intentions towards the price level where the disputed position should have been closed.

e) Thus, in the general opinion of the DRC experts, the only reliable indicator of the true intentions of the Client in relation to the disputed position # 75210080 could be considered the actions taken by the Client after the restoration of the platform operation, namely the opening of new Short positions ## 75211034, 75211462, 75211843, 75212128, from the 24406.44 price level or higher.

Summarizing all the above, the members of the DRC determined the following:

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.

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 not to mention the fact of their inability to transfer the Client’s request to the Dealing Department.

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 is ready to partially compensate the Client for unrealized profits, which could have been secured under normal operation of the Broker’s platform. Nevertheless, in the general opinion of DRC experts, the compensation amount offered to the Client were deemed as not enough.

As such, taking into account the circumstances of the incident, the DRC has made a compromise decision, according to which the Broker must offer the Client additional compensation of unrealized profits on position # 75210080, calculated at best possible price (24406.44) at which the Client might have closed his position. The amount of additional compensation is calculated as follows:

667 * 200 * (24406.44/24174.63 – 1) – 407.24 = 871.93 USD

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

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 leverage does not affect profit/loss in any way, but only affects the volume of positions that the Client can open taking into consideration the amount of free equity available on his trading account. On one hand, the Client declares that he suffered losses because the Broker did not reduce his leverage from 1:500 to 1:50, but on the other hand, the Client does not mention the fact that reducing the leverage would cause him even more Stop Outs, since reducing the leverage to 1:50 would increase the margin requirements by 10 times. Also, the client with a higher leverage can always personally limit his trading volumes, taking into account the part of his deposit that he would like to use: having a leverage of 1:500, the client can independently keep his risks at the level, as if his leverage were 1:50, that is, independently use less funds and limit the maximum volume of opened positions by the level corresponding to the necessary leverage.

2. Second, according to the information received from the Broker, the Client had been changing his leverage on several occasions and used the higher 1:500 leverage on multiple dates. Moreover, the Client kept changing back and forth from higher leverage to a lower one, and vice versa. Therefore, the Broker is sure about the fact that the Client was fully aware of how the leverage works and how to differentiate a higher to lower leverage. As such, once the Client had requested the most recent update to his leverage from 1:500 to 1:50 on 22.6.2022, surely, he would have realized that the margin requirement for his positions was still quite low, relative to the intended 1:50 leverage which would have required him to pay 10 times more to open a new position. Unfortunately, the Client was informed of the successful leverage change on the same day but due to a technical issue this was never updated on the platform. In this regard, in support of their position the Broker refers to clause 10.23 of their Terms and Conditions according to which:

10.23 You agree that: 

(g) there are significant risks in using an Electronic Trading Service to deal in our Financial Products because it is operated by computer and telecommunication systems.

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 the disputed position # 202333806 was closed automatically, as margin level declined below the minimum permitted level of 50%. In the period of the incident the Broker acted in full compliance with the provisions of their regulatory documents and trading rules established by the Company:

15.7 It is solely your responsibility to monitor and to satisfy all Margin Cover requirements.

15.8 You are required to maintain the Margin Cover, which might mean you must pay more Margin, whether or not we give you a Margin call and even if you are not contactable.

…

15.11 XXX 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, XXX 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.

4. Finally, it also should be noted that the Client was able to monitor the state of his trading account (equity, margin, equity/margin ratio), not to mention that in the account parameters of the trading terminal, the Client could always see his leverage, therefore, the Client was fully aware of the risk of an early liquidation of his positions. Furthermore, after opening the disputed positions, the Client did not use pending Stop Loss orders to limit possible financial losses in the event of an unfavorable price change. This circumstance indicates the fact that the Client was ready for a situation with a complete loss of his account balance.

Summarizing all the above the Dispute Resolution Committee has made its decision in favor of the Client. In the general opinion of the DRC members, the Broker must bear limited responsibility for the Client’s financial losses and reimburse the latter only for losses on order # 202333806 closed by Stop Out. If the Client changed leverage before and saw margin live on the platform it is hard to believe that he has not noticed lack of change.

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

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

The decision on this complaint is based on the information provided by the brokerage company 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. According to the information received from the Broker, they have experienced a Swap incident on USOIL positions that were incorrectly charged to their clients starting December 23, 2020. The Broker sent out client communication on January 4, 2021 prior to the actual adjustments to inform affected clients that investigation is in place and adjustments would be made shortly. On the same day, adjustments were made and client communication sent to inform affected clients. In this regard the Broker claims that they acted in full compliance with the provisions of the regulatory documents and refers to the appropriate clauses of their Client Agreement:

2.5 CHARGES AND CREDIT TO YOUR ACCOUNT

…

(c) If we discover that we have made an error in respect of any fee calculation, we will rectify that error

by giving you written notice within 28 days. 

…

3.5 ERRORS IN PRICES

Errors in pricing may occur from time to time. In these circumstances, we may adjust any element of your Position. See section 3.7 of the Product Disclosure Statement for more information about the basis on which we can do this. 

…

12.1 EXCLUSION OF LIABILITY

To the maximum extent permitted by law, we are not liable for: 

1. f) any Error that may occur; 
2. h) any error or inaccuracy in, or unsuitability of, or omission from the Agreement, or any other information provided by us, whether negligent or otherwise; 
3. i) any Loss or Claim suffered or incurred by you in respect of our Trading Platform including due to the unavailability of the Trading Platform or Trading Platform, system and data errors, delays, inaccuracies, errors or omissions in data provided to you, software or computer viruses or the unauthorized use of the Trading Platform at any time;

2. Also, the Broker claims that the Client received their Credit Bonus under the condition that the Client’s account equity balance must not fall below credit balance, otherwise, the Credit Bonus will be removed, as outlined by the provisions of clause 16 of the Bonus Promotion Terms & Conditions:

16. If your Account Equity balance falls below the credit balance the trading credit will be removed and your open trades will be closed. 

The Broker claims that the Swap adjustment made to the Client’s account lowered his account equity level and triggered the removal of the Credit Bonus. It was also partially due to an overnight USOIL price increase from 48.351 to 48.941, which enlarged the Client’s trading loss.

3. It should be noted that trading terms for the Client’s account suggest a floating spread and a Stop Out at 20% level. This information is clearly defined by the Broker’s regulatory documents (see Product Schedule). By opening a trading account of the selected type, the Client agreed to accept the trading terms provided by the Company. According to the Broker, at the time of the incident, the Equity/Margin ratio on the Client’s account fell below the critical 20% level. As such, due to insufficient margin, the Client’s positions ## 56617870, 56617871, 56617872, 56618848, 56618862, 56623804, 56623805, 56623832, 56623833, 56623834, 56691961 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.  

4. It is quite obvious, that from a legal standpoint the Broker acted in full compliance with the provisions of their regulatory documents. At the same time, it should be noted, that from an operational perspective it does not seem that the Broker acted in a very professional way. The Broker made the error, and only after 2 weeks fixed things opportunistically without explaining to the Client or giving them the chance to deposit additional funds or reduce their position.

5. 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.

Summarizing all the above the Dispute Resolution Committee has made a decision in favour of the Client. In the general opinion of the DRC members, the Broker should bear the loss of their errors, as well as communicate much more clearly and take appropriate measures in order to avoid the occurrence of such situations on their clients’ accounts in the future. Accordingly, the Broker must fully satisfy the Client’s requirement for compensation of losses in the amount of 7000 USD incurred by the incident.

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

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 massive actions of market participants to fix profits, after significant growth in the cryptocurrency market and the ETHUSD asset reached the psychologically important price level of 2000 USD on the eve of the incident. The growth of market volatility and, as a consequence, a significant decrease in its liquidity is a typical market reaction during a period of volatility. The client should understand that circumstances of this kind radically change the flow of quotes, since it often involves price gaps, widening spreads and slippage during order execution. The client should be aware that trading in such market conditions is accompanied by significant risks.

2. Secondly, according to the information received from the Broker, the quotation of the ETHUSD financial instrument, disputed by the Client, was received from the Broker’s liquidity provider – the Kraken crypto exchange. In turn, the history of tick data from Kraken indicates that during the incident, the Bid quotes (for which Long positions are closed) for the ETHUSD instrument on the specified exchange dropped to the price level of 690 USD. At the same time, on the Broker’s platform, the minimum value of Bid quotes is registered at 997.92 USD. The Broker explains the difference in the minimum quotes by the fact that his trading system uses filtering mechanisms that do not allow single quotes with serious deviations from the previous ones to enter the stream.

3. Thirdly, according to the trading conditions specified in the “Trading Conditions” section on the Company’s website, the Client’s account type assumes Stop Out at the level of 10%. At the time of the incident, the margin level on the Client’s trading account dropped below the critical level, and therefore the Broker forcibly liquidated the Client’s unprofitable positions. This fact is confirmed by the trade server log entries provided by the Broker. The Broker’s actions during the incident fully comply with the provisions of the Client Agreement:

12.1  In case the Margin Level on the Client’s trading account becomes equal or lower than the Stop Out value, the Company has the right to close all open positions on the Client’s trading account compulsory at the current market price without any preliminary notification and the Client’s consent. Stop Out values for all account types are specified in a comparison table of account types on the Company’s website.

4. Fourth, it should also be noted that the Client assumed the risk of a complete loss of funds in his trading account, under certain circumstances, since he did not use any restrictions on the amount of possible financial losses on open positions, although he could have done this, just as it was done by him in the case of restrictions on profit. For all disputed positions, the Client has placed pending Take Profit orders at the price level of 1676.23 USD.

5. Fifth, in the text of his complaint, the Client refers to technical problems with the Broker’s trading server and the freezing of his trading terminal, which allegedly took place during the incident. The client believes that this circumstance has deprived him of the opportunity to manage his trading account and monitor the price dynamics of the financial market. In addition, according to the Client, in the group of clients affected by this incident, there are allegedly 5% of accounts that survived the drawdown, although they used the same trading algorithm (EA). In this regard, the following should be noted:

• Upon the Client’s request, the Broker analyzed the operation of the MT5 Pro server. According to the data collected, the Client did not submit any orders that were not executed on the day of the incident. Also, there were no unsuccessful attempts to enter the trading platform. A general analysis of the platform’s operation showed that hundreds of other clients have successfully logged into the platform and performed trading operations. These facts are confirmed by the server log entries provided by the Broker.
• The fact that the accounts used “the same trading strategy” does not guarantee the same result. In addition, at the moment, the Broker does not have any data about other accounts that the Client said about, and, accordingly, the experts of the Committee have no opportunity to study and in any way comment on such situation. Moreover, there are many different factors that can lead to a similar outcome: for example, even if the same Expert Advisor works on two different accounts and sends orders with identical parameters, the trading results on these accounts may differ due to the difference in execution prices. Such differences, in turn, may occure for two identical orders sent at the same time.
• It should be noted that orders are not executed on the data center, but on the trading server, which centrally executes orders from all accounts opened on it. Moreover, there is no targeted segmentation or division of customers by data centers. Any client can choose any available data center for connection, and the trading platform automatically selects a data center for the client with a minimum ping.
• Limit orders ## 215349838, 215349839, 215349840, 215349842, 215349843, 215349844, 215349845, 215349846, 215349847, 215349848 of the Client, placed to open new Long positions, at lower prices, were activated at 16:23:03, i.e. at the same second when Stop Out occurred, but were immediately canceled because there was not enough free margin on the Client’s trading account to open the indicated positions. The trade server log entries provided by the Broker also confirm this fact:

2021.02.22 16:23:03.276   ‘37012959’: new account state: Assets: 0.00, Liabilities: 0.00, Equity -5118195.65, Margin: 585468.32, Free Margin: -5703663.97

2021.02.22 16:23:03.276   ‘37012959’: order #215349848 was canceled – not enough money for order activation [#215349848 buy limit 9.18518K ETHUSD at 1583.97]

2021.02.22 16:23:03.292   ‘37012959’: position stop out triggered [#215349836 buy 1.48346K ETHUSD 1631.75 tp: 1676.23] [#215397080 sell 1.48346K ETHUSD at 997.92] [997.92 / 1249.34]

• The reason why the charts in different screenshots look different is that one screenshot was taken before the end of the 15-minute period in which this price was present, and the second was taken after the completion of the candlestick formation. This is the standard logic of charting on the MetaTrader platform.

6. Finally, it should also be mentioned that, in the Client’s opinion, the quotes of the Kraken crypto exchange are not an authoritative source, and the brokerage company is obliged to aggregate prices from different crypto exchanges and provide clients with average prices. According to the experts of the Dispute Resolution Committee, this request is not realistic, since prices on different crypto-exchanges tend to deviate significantly from each other, especially during periods of low volatility, such as the one that took place during the incident. It should also be noted that in a decentralized market, which is the FOREX market, each broker can offer its clients prices close to the real market, although slightly different from the prices of other brokers. This is normal practice, given the varying transaction volumes for each individual broker, the ever-changing market situation and some other factors.

Considering the above and taking into account the abnormal market conditions during the incident, as well as the documentary evidence provided by the Broker, the experts of the Committee, by a majority vote, decided in favour of the Broker. According to the decision taken, the actions of the Broker to forcibly liquidate Client’s unprofitable positions ## 215349578, 215349585, 215349594, 215349606, 215349616, 215349623, 215349629, 215349635, 215349641, 215349653, 215349660, 215349665, 215349675, 215349680, 215349687, 215349693, 215349701, 215349710, 215349717, 215349723, 215349730, 215349737, 215349743, 215349752, 215349758, 215349766, 215349775, 215349782, 215349787, 215349794, 215349799, 215349807, 215349812, 215349817, 215349824, 215349831, 215349836 during the incident were recognized by the experts of the Committee as correct and executed in accordance with the provisions of the Broker’s regulatory documents and the trading rules adopted by the Company. Also, according to the general opinion of the DRC experts, the Broker should notify its clients from which crypto-exchange the quotes are taken, so that such questions do not arise in the future.

Based on the above, the Dispute Resolution Committee does not see any violations on the part of the Broker and does not see any 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.

Head of DRC

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 according to the information provided by the Broker, the values of quotations for the financial asset Bitcoin, as well as for other cryptocurrencies, are calculated according to generally accepted methods used on the Chicago Mercantile Exchange. The Broker uses data from several major online exchanges such as GDAX, Kraken, Poloniex, Bitstamp, Bitfinex and Binance. Thus, the quotes for the Bitcoin asset, broadcast by the Broker in their trading platform, react to the slightest market changes. This information is published on the Broker’s website.

2. According to the Broker, in the period from June 6 to July 1, 2020, the Client has used unfair and dishonest methods or ways of making trades (transactions) with the Company. By the foregoing Broker means the following definition of Market Abuse, adopted in the EU countries:

Market abuse by its definition is a type of behaviour when one/several market participants are involved in trading activity that gives them an unreasonable advantage. Under the EU zone definition, market abuse consists of two aspects: insider trading and market manipulation. The latter represents itself as a trading activity aimed to encourage false or misleading impressions.

3.To justify their position, according to which the Client took actions aimed at manipulating the rate of the financial instrument Bitcoin outside the Broker’s platform, due to which he immediately received a risk-free profit on the Broker’s platform, the Broker uses analytical information obtained on the Binance Exchange trading platform. According to the Broker, being the world’s largest crypto exchange with the largest volumes of crypto transactions, transactions conducted on the Binance Exchange have the greatest impact on the quotes of crypto assets on any other sites around the world and, in particular, on the quotes of such assets, broadcast in the Broker’s platform.

4. The Resolution Committee checked to what extent the Broker’s statements regarding the fact of manipulation of the price of the specified asset for profit by the Client correspond to reality. For this purpose, the Committee examined the documentary evidence and the analytical information provided by the Broker. Based on the results of the audit, the Committee came to the following conclusions:

a) Analytical information on the number of transactions and the corresponding trading volumes on the Binance exchange during the period of the incident indicates that during the specified period, the Bitcoin market did indeed experience both an increase in the total number of transactions and a relative increase in trading volume, which might have led to a short-term change in the rate of the specified asset.

b) Information from the Order Book of client orders registered on the Binance platform during the incident, referred to by the Broker, demonstrates, in the Broker’s opinion, a lack of liquidity: 

• 31163 USD was enough to achieve a yield of -0.01% during the lifespan of transaction # 1319057826.
• 6828 USD was enough to achieve a yield of 0.02% during the lifespan of transaction # 1324114443.
• 99096 USD was enough to achieve a yield of 0.02% during the lifespan of transaction # 1328236807.

с) Judging by the history of the Client’s trading operations, during the period of the incident, the Client made three short-term transactions ## 1319057826, 1324114443, 1328236807 with the financial asset Bitcoin, as a result, taking advantage of the drop/rise in the Bitcoin asset rate by

-0.01%/0.02%, the Client received a total profit of 10940 USD.

d) At the time of blocking, the status of the Client’s trading account was as follows:

• Initial deposit 4015.01 USD,
• Withdrawal of funds 0 USD,
• Bonus funds 4005.01 USD,
• Account balances 19028.46 USD (4015.01 + 4005.01 + 11008.44).

5. The Committee could not provide an adequate assessment of the Client’s trading transactions, since the Broker did not provide any documentary evidence confirming the fact that this particular Client took targeted actions to change the price of the specified financial instrument on the Binance platform or somewhere else.

6. Finally, it should also be noted that several members of the Committee recognized the Broker’s arguments as insignificant since they believe that if the Broker gives the opportunity to trade options on low liquid crypto assets, then they should understand that such assets may well make significant price movements with an amplitude of up to 10 -20% per day. If the Broker wishes to reduce the risk, then they must have a well-established risk management process in place. In the absence of it, the Broker should stop offering trading in what they consider to be illiquid assets in order to prevent their clients from exploiting the vulnerability of their infrastructure in the future.

Based on the above information, the members of the Resolution Committee came to a unanimous opinion that the Broker does not have sufficient grounds to assert that the Client’s actions on the trading platform in any way violate the provisions of the Broker’s regulatory documents. The members of the Committee believe that the Broker should recognize the financial results of the disputed transactions ## 1319057826, 1324114443, 1328236807 of the Client as legitimate and unblock his trading account.

Summarizing all the above the Dispute Resolution Committee does not see any violations on the part of the Client and believes that the Broker must fully satisfy the Client’s requirements to unblock the trading account # 63226192, with the right to withdraw the initial deposit and the accrued profit in the amount of 15023.45 USD.

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

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 in order to make a decision on this case the DRC has analyzed the Client’s trading activity in the account # 72790 and received the following results:

• The Client conducted his trading operations from 11:49, Mar 13 to 21:55, Mar 14 (server time);
• The Client used major currency pairs and stock indices for trading operations;
• After 306 transactions the Client received a total profit in the amount of 12126.34 EUR;
• Excluding commission of 6503.05 EUR, the Client’s net profit amounted to 5624.31 EUR;
• The share of profitable transactions performed by the Client was 76.1% or 233 transactions;
• The duration of the Client’s profitable transactions ranged from 1 to 10 seconds.

2. According to the Broker, during the incident that occurred in the specified period, the Client identified a technical problem on the Broker’s side and implemented a strategy (Price Latency Arbitrage) aimed at making risk-free profits at the expense of quotes lagging behind the real market or, in other words, traded at non-market (non-existent) prices.
3. The DRC has verified the validity of the Broker’s assertion regarding the Client’s use of the vulnerabilities of its technical equipment and software for profit. For this purpose, the DRC has examined the documentary evidence provided by the Broker, as well as the history of price data on the financial instruments in the disputed transactions, obtained from independent providers of financial services. Comparison of Broker quotes provided to the Client with quotes from independent sources showed that during the incident the quotes published by the Broker were slightly behind the real market.
4. Based on the facts listed above, in the common opinion of the DRC members, it is highly likely that the Client used special technical means (high-frequency trading EA) exploiting vulnerabilities in the Broker’s quotation system.

According to the results of voting in the framework of this case there was an equal distribution of votes between the members of the DRC (both in favor of the Broker and in favor of the Client). Thus, due to the lack of opportunity to make a unanimous decision on this case, as well as taking into account the facts listed above, the members of the DRC have decided:

1. Not to recognize the transactions disputed by the Broker as legitimate;
2. Consider the cancellation of the financial results of this series of transactions by the Broker as lawful;
3. Hold the Broker liable for the following points:

a) The Company must bear the proper but limited responsibility for the occurrence of technical problems in its trading system and belated reaction in their elimination;

b) The Company must be duly responsible for the untimely notification of the Client about the revealed violations of its trading rules;

с) The Company should formulate more clearly the provisions of regulatory documents concerning price latency arbitrage. As an example, the following wording could be recommended:

You consent that the Company reserves the right to immediately terminate your access to the trading platform(s) or Account(s) or refuse or cancel any order, in the event you voluntarily and/or involuntarily partake in arbitrage unrelated to market inefficiencies, including but not limited to, latency arbitrage and swap arbitrage and/or contrary to good faith; under such circumstances, the Company may at its discretion, close any of your Account(s) and recover any losses incurred from such practices.

Based on the above, the DRC of the Financial Commission has decided that reasonable compensation should be paid to the Client. Also, according to the general opinion of the DRC members, the Broker   should provide necessary measures for timely detection of such technical problems and their elimination in the future.

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

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 rollover before a weekend, the market very often experiences a significant decrease in liquidity combined with a 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. Secondly, the trading terms on the Client’s account suggest a floating spread and a Stop Out at the 20% level. This information is clearly defined on the Broker’s website (“Trading conditions” section). By opening a trading account of the selected type, the Client agreed to accept the trading terms provided by the Company.

3. Thirdly, according to the information provided by the Broker (the history of ticks on the financial instrument EURUSD in the period of the incident), the quotes and the size of the spread on the currency pair EURUSD the Broker received from its LP, fully correspond to what the Company gave to its clients. The quotation 1.11396/1.11496 (which was used for positions liquidation) is the product of quotation 1.11402/1.11489 received from LP and the Broker’s income in the amount of 1.4 points.

4. To ensure an objective investigation of the case the DRC requested historical price data on the financial instrument in the disputed transactions 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 reflected the actual situation on the market. As such, taking into account abnormal market conditions in the period of the incident, the experts of the DRC have found the execution of all disputed transactions as correct and legitimate, since the quotes of the financial instruments published by the Broker in the period of the incident were consistent with acceptable market prices.

5. At last, at the time of the incident, the Equity/Margin ratio on the Client’s account fell below the critical level (20%). As such, due to insufficient margin, all 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.

Summarizing all the above the Dispute Resolution Committee has made a decision in favor of the Broker since the Broker acted in full compliance with the provisions of the regulatory documents and the rules accepted in the Company. Accordingly, the claim of the Client for compensation of losses in the amount of 1195.08 USD was found by the members of the Committee as having no grounds.

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

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.

Head of DRC

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 the release of important economic news, such as US GDP   and many others, the market very often experiences a significant decrease in liquidity combined with a 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. Secondly, it should also be noted that a Stop order, which also includes a Buy Stop/Sell Stop order, does not guarantee the execution of the client’s orders precisely at the price specified therein. Depending on the market situation such orders can be executed either precisely at the price specified in them, or at the price worse than specified. The pending Stop order becomes active, as soon as at least one quotation in the stream of the prices quoted by the broker reaches the value of the price specified by the client.

If reveal in detail the logic of execution of a Stop order in the real market, then it will look like as follows: at the time when the market reaches the price specified in the client’s pending order, the system submits a Market order at any price available in the market (within the Depth of the Market) for the specified volume. Execution of the order, in this case, occurs according to the queue of current positions on the broker’s trading server.

3. According to the information provided by the Broker (the history of ticks on the financial instrument EURUSD and the server log records), the disputed If Done Sell Stop order # 32674152 was activated at 15:30:01.645 (server time) after the price gap and then executed at available market price:

2019.04.26 15:30:01.095;1.11335;1.11369;

2019.04.26 15:30:01.555;1.11335;1.11354;

2019.04.26 15:30:01.645;1.11211;1.11260; order was activated 

2019.04.26 15:30:01.805;1.11198;1.11220;  

2019.04.26 15:30:01.865;1.11203;1.11229;

2019.04.26 15:30:01.975;1.11200;1.11226;

2019.04.26 15:30:02.095;1.11198;1.11216;

2019.04.26 15:30:02.195;1.11198;1.11219;

2019.04.26 15:30:02.305;1.11176;1.11201;

2019.04.26 15:30:02.415;1.11160;1.11191;

2019.04.26 15:30:02.505;1.11160;1.11187;

2019.04.26 15:30:02.615;1.11146;1.11176; order was executed

On the other hand, the first attempt to delete the disputed If Done Sell Stop order # 32674152 was made by the Client at 15:30:01.722 (Server time):

2019.04.26 11:15:00.254 195.201.246.109 ‘7241004’: order sell stop 1.73 EURUSD at 1.11240 sl: 1.11740 tp: 1.08240 exp: never

2019.04.26 11:15:00.256 195.201.246.109 ‘7241004’: order #32674152, sell stop 1.73 EURUSD at 1.11240

2019.04.26 15:30:01.722 195.201.246.109 ‘7241004’: delete order #32674152, sell stop 1.73 EURUSD at 1.11240

As such, the Client’s multiple requests to cancel the disputed If Done Sell Stop order # 32674152 were not executed due to the fact that they were received after the order # 32674152 had been accepted for processing. This aspect is specified in clause 7.4 of the Client Agreement:

7.4 Just when an order leaves a queue for executing, the Client is acknowledged by the message from server “Order is in process”. The client cannot cancel the order in case it has been accepted for execution.

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 reflected the actual situation on the market. As such, taking into account abnormal market conditions in the period of the incident, the experts of the DRC have found the execution of the disputed transaction as correct and legitimate since the quotes of the financial instrument EURUSD published by the Broker in the period of the incident were consistent with acceptable market prices.

Summarizing all the above the Dispute Resolution Committee has made a decision in favor of the Broker since the Broker acted in full compliance with the provisions of the regulatory documents and the rules accepted in the Company. Accordingly, the claim of the Client for compensation of losses in the amount of 926.57 EUR was found by the members of the Committee as having no grounds.

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

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 according to the server log records provided by the Broker, an attempt to modify the price levels of pending Stop Loss and Take Profit orders, made by the Client a few minutes before the incident, was successful:

2019.04.17 01:33:21.726 order /update 5002454 – {“ticket”:29685032,”tp”:0.908,”sl”:0.90273,”comment”:”WebTrader”,”info”:”IP : 82.132.223.89″}

2019.04.17 01:33:34.003 order /update 5002454 – {“ticket”:29685034,”tp”:0.908,”sl”:0.90273,”comment”:”WebTrader”,”info”:”IP : 82.132.223.89″}

2019.04.17 01:33:46.467 order /update 5002454 – {“ticket”:29685036,”tp”:0.908,”sl”:0.90273,”comment”:”WebTrader”,”info”:”IP : 82.132.223.89″}

2019.04.17 01:34:34.219 order /update 5002454 – {“ticket”:29685092,”tp”:1.92,”sl”:1.93,”comment”:”WebTrader”,”info”:”IP : 82.132.223.89″}

2. Secondly, it should be noted that during the release of important economic news, such as Consumer Price Index (CPI) and many others, 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.

3. Thirdly, it should also be noted that a Stop order, which also includes a Buy Stop/Sell Stop order, does not guarantee the execution of the client’s orders precisely at the price specified therein. Depending on the market situation such orders can be executed either precisely at the price specified in them, or at the price worse than specified. The pending Stop order becomes active, as soon as at least one quotation in the stream of the price quoted by the broker reaches the value of the price specified by the client. If reveal in detail the logic of execution of a Stop order in the real market, then it will look like as follows: when the market reaches the price specified in the client’s pending order, the system submits a Market order at any price available in the market (within the Depth of the Market) for the specified volume. Execution of the order, in this case, will occur according to the queue of current positions on the broker’s trading server.

4. According to the information provided by the Broker (the history of ticks on the financial instrument NZDCAD), the pending Stop Loss orders attached to Long positions ## 29685032, 29685034, 29685036 were activated at 01:45:02.071 after the price gap and executed at available market price:

2019.04.17 01:45:01.721; 0.90361; 0.90474

2019.04.17 01:45:02.071; 0.90056; 0.90190

2019.04.17 01:45:02.641; 0.90035; 0.90159

5. To ensure an objective investigation of the case the DRC requested historical price data on the financial instruments in the disputed transactions 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 reflected the actual situation on the market. As such, taking into account abnormal market conditions in the period of the incident, the experts of the DRC have found the execution of all disputed transactions as correct and legitimate, since the quotes of the financial instruments published by the Broker in the period of the incident were consistent with acceptable market prices.

6. At last, the trading terms on the Client’s trading account suggest a Stop Out at 20% level. This information is clearly defined on the Broker’s website (“Trading conditions” section). By opening a trading account of the selected type, client agrees to accept the trading terms provided by the Company. At the time of the incident the Equity/Margin ratio on the Client’s account fell below the critical level (20%). As such, due to insufficient margin, all unprofitable 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.

Summarizing all the above the Dispute Resolution Committee has made a decision in favor of the Broker, since the Broker acted in full compliance with the provisions of the regulatory documents and the rules accepted in the Company. Accordingly, the claim of the Client for compensation of losses in the amount of 165.5 USD was found by the members of the Committee as having no grounds.

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

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 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. Secondly, according to the information provided by the Broker (the history of ticks on the financial instrument AUDUSD in the period of the incident), the quotes and the size of the spread on the currency pair AUDUSD the Broker received from their LPs, fully correspond to what the Company offered to its clients. The quotation 0.70268/0.70516 (which was used for positions liquidation) is the product of quotation received from LP and the Broker’s income (mark-up) in the amount of 6 pips (0.0006).  The Broker claims that at 21:00:36.024 UTC a Stop Out was triggered on the Client’s account. After that the situation developed as follows:

• All Client’s orders were sent for closure, but due to very thin liquidity at the opening of the market, only a part of them was executed (## 1509763411, 1509763437, 1509763438, 1509763440, 1509765028, 1509765029, 1509765030, 1509765033, 1509765101, 1509765112, 1509765123, 1509765551, 1509765558, 1509765559, 1509765573, 1509765731, 1509765737, 1509765742, 1509765747).
• The rest of the orders returned to the Client’s account, where the account status has already changed after a number of trades were closed. This was the reason why the system did not re-send the rest of the Client’s transactions for execution of a Stop Out. However, the price still satisfied the conditions for execution of the Stop Loss order and liquidity was enough to close three more positions (## 1509769282, 1509769287, 1509769292).
• Then the price changed and ceased to satisfy the conditions for execution of the Stop Loss, so all other positions remained in the market and were closed by the Client few hours later (## 1509769277, 1509769279, 1509769284, 1509769285, 1509769288, 1509769293, 1509769295, 1509769399, 1509769278, 1509769278, 1509769281, 1509769283, 1509769286, 1509769289, 1509769290, 1509769291, 1509769294, 1509774775).

3. To ensure an objective investigation of the case the DRC requested historical price data on the financial instrument in the disputed transactions from other independent providers of financial services. Comparison of Broker’s quotes offered to the Client with the quotes received from other independent sources confirmed the fact that the quotes published by the Broker at the time of the incident (21:00:36.024 UTC) reflected the actual situation on the market. As such, taking into account the abnormal market conditions in the period of the incident, the experts of the DRC have found the execution the disputed transactions ## 1509763411, 1509763437, 1509763438, 1509763440, 1509765028, 1509765029, 1509765030, 1509765033, 1509765101, 1509765112, 1509765123, 1509765551, 1509765558, 1509765559, 1509765573, 1509765731, 1509765737, 1509765742, 1509765747 as correct and legitimate, since the quotes of the financial instrument AUDUSD published by the Broker in the period of the incident were consistent with acceptable market prices.

4. The trading terms on the Client’s account suggest a floating spread and a Stop Out at 30% level. This information is clearly defined on the Broker’s website (“Trading conditions” section). By opening a trading account of the selected type, the Client agreed to accept the trading terms provided by the Company. At the time of the incident the Equity/Margin ratio on the Client’s account fell below the critical level (30%). As such, due to insufficient margin, the disputed transactions ## 1509763411, 1509763437, 1509763438, 1509763440, 1509765028, 1509765029, 1509765030, 1509765033, 1509765101, 1509765112, 1509765123, 1509765551, 1509765558, 1509765559, 1509765573, 1509765731, 1509765737, 1509765742, 1509765747 were closed automatically, at prices available on the market (Stop Out). This fact is confirmed by the records from the server log and fix log provided by the Broker.

5. As for the disputed transactions ## 1509769282, 1509769287, 1509769292 (which, according to the Broker were returned to the Client’s account and afterwards were closed by Stop Loss, since the price satisfied the conditions for execution of Stop Loss and liquidity was enough to close those orders), in general opinion of the DRC members, the financial results (-32562.86 USD) received by the Client on these three disputed orders should be cancelled by the Broker. Experts of the DRC have come to such a conclusion after comparison of the Broker’s quotes offered to the Client with the quotes received from other reliable sources.  At the time of the incident (21:01:04 UTC), the quotes on the financial instrument AUDUSD in the Broker’s quote 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 Dispute Resolution Committee has made a decision in favor of the Client.

In accordance with the decision of the DRC, the Broker has to cancel the financial results on the disputed transactions ## 1509769282, 1509769287, 1509769292, and partially satisfy the Client’s requirements for   compensation (66060.01 – 32562.86 = 33497.15 USD).

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