February 15th, 2017: New York & Hong Kong: FinaCom PLC, operator of the Financial Commission (FinancialCommission.org) – an independent self-regulatory organization and external dispute resolution (EDR) body for the online trading industry including FX and CFD market participants, retail financial consumers, brokerages, and technology providers, today announces the results of its 2016 Annual Report.
Financial Commission’s 2016 annual report recaps another year of continued growth. As the number of approved membership applications increased during the year, so did the number of complaints that were filed with Financial Commission during 2016.
There was further expansion from new appointments to the Dispute Resolution Committee (DRC) and significant cross-border synergies with other regulatory and non-governmental organization (NGOs), as well as meetings with foreign regulators and industry event participation in Europe and Asia where key Industry themes were observed and collected from market participants’ feedback.
On the backdrop of challenging market conditions, Financial Commission was well positioned to handle a significant increase in the number of complaints together with the addition of new members, as factors such as trading volumes and volatility ranged from low to high surrounding major events throughout 2016 and which led to considerable changes in asset values for active and passive market participants.
Whether due to volatile market conditions or from the normal course of day-to-day operations, disputes may arise between customers and their broker from time-to-time. When such grievances cannot be amicably resolved, a formal complaint is filed with Financial Commission – where it is then examined using a systematic approach and is fully investigated before being reviewed by the DRC to render a non-bias decision. Using a proven dispute resolution process, Financial Commission achieved another record year across the board during 2016 including the following key highlights:
Financial Commission operates as an independent EDR using a membership-based structure and is not a governmental organization or sanctioned by any jurisdiction, and is domiciled in Hong Kong under FinaCom PLC. The ethos of our mission statement is transparency, swiftness, and education, which are the paramount drivers that uphold our operations.
Supporting self-regulatory efforts is just one of the benefits provided by the Financial Commission to its members who join voluntarily – yet must adhere to strict guidelines in order to maintain membership and demonstrate transparency, compliance, and integrity to their customers.
The Financial Commission helps intermediate fair dealings by providing an unparalleled dispute resolution process between online brokerages and their end-customers, in the rare but inevitable cases of trade disputes that cannot be resolved.
The subject of each complaint can be as diverse as the underlying broker, product, or customer, yet all disputes share one thing in common which is to seek fair dealings regardless of the financial services products, providers, trading technologies, or pricing issues related to market participants’ transactions, from the complaints that are filed.
Financial Commission guarantees protection of the interests of both brokers and traders, thus is providing a fair and neutral platform to effectively resolve complaints. Financial Commission ensures that traders and brokers are getting their disputes resolved in an efficient, unbiased, authentic, and a quick manner and walk away with a well-founded answer.
Below the Commission presents further details of its Annual Report for 2016, which also provides statistics on the number of complaints handled and key metrics regarding processing and mediation results. The statistics information is insightful to our Members and their clients, the public, and for brokerages that are considering the benefits of obtaining membership with the Financial Commission and/or are interested in learning about the organization’s structure.
The need for transparency continues to grow. Building trust is crucial and using fair and neutral 3rd party dispute resolution – that Financial Commission provides – is an effective solution in cases where clients or brokers cannot resolve matters together and seek an independent channel and wish to avoid often complex legal or costly arbitration alternatives. The Financial Commission continues to achieve this objective by providing brokerages and technology firms with the benefits that accompany membership status, as seen in the statistics results for 2016.
A significant increase of 77% was achieved in the total number of complaints received in 2016 (165 complaints filed), compared Year-over-Year from 2015 (93 complaints filed). This nearly 80% increase was driven from the addition of new members reflecting the increasing credibility and positive reputation Financial Commission has been earning since its foundation, and coupled with market volatility from major geopolitical events during the year.
The monetary amounts for complaints filed during 2016 ranged from as low as $10 to as much as $57,199.00, and the total amount of compensation that was paid out was $157,326.00 from a total of 165 complaints filed.
Total Complaints filed 165 (100%)
Total amount of compensations $157,326.00
Total amount of resolutions (against Members)
Trading complaints are directly related to the process of trading on the market and the affect of execution of orders, payment of margins, calculation of commissions, forced liquidation of positions and other parts of the trade cycle. These complaints are considered by the Dispute Resolution Committee and included in the statistics.
Total amount of trading complaints 57:
Financial complaints are related to transactions on the account, and in majority of cases involve delays in withdrawals. Such complaints do not fall under dispute resolution process; however, the Financial Commission never rejects such complaints and helps advocate the payment process with clients till the end. We do not record cases of non-payment of funds to the clients by Member-companies. Nevertheless, in cases when such complaints are received against non-member companies providing of a refund to the client from the broker is often very problematic.
Total amount of financial complaints 56:
Non-trading complaints are often clients’ complaints about the facts of losses incurred as a result of cooperation with the administering traders and sales consultants. To a lesser extent these are complaints for automatic copying transactions systems and signaling services. Such complaints do not fall under the dispute resolution process; however, we always analyze the contract, risks warning, correspondence and negotiations with the client and also give our assessment of the situation and recommendations for a possible settlement of the dispute.
Total amount of non-trading complaints 52:
Financial Commission was one of the exhibitors at the 2016 iFX Expo in Hong Kong which took place at the end of January, followed by the 2016 iFX Expo in Cyprus in May. The main focus of these events were recent developments within the online trading industry including challenges, opportunities and ongoing trends discussed among market participants.
Financial Commission’s stand was in a very prominent location during the Cyprus event and benefitted from the increased exposure to the event’s industry delegates. The collective feedback that Financial Commission received during these events from industry media resources, attendees, and fund managers was highly supportive. Chairman Peter Tatarnikov had an opportunity to give a few interviews during the Cyprus event including to local TV channels as well as to Internet media resources for the financial industry.
|After participating at the Cyprus conference, on July 22nd, 2016, in Minsk, Belarus, Financial Commission signed a Memorandum of Understanding (MoU) with the Association of Financial Market Development (ARFIN). The MoU provides a basis to develop favourable conditions to support the Foreign Exchange market for ARFIN members and was signed during a meeting between Financial Commission Chairman, Peter Tatarnikov, ARFIN Chairman, Alexey Sidorov and representatives of the National Bank of the Republic of Belarus. The MoU will enable cooperation to improve the dispute resolution process in Belarus, and the exchange of information between both organizations.|
On October 12th, 2016 Peter Tatarnikov, Chairman of the Financial Commission (FinaCom PLC) took part in the press lunch dated for discussion of the bill on forex market regulation in Kiev, Ukraine. During the event such topics as lack of the legislation regulating forex market in Ukraine, vulnerability of private investors, the most effective approaches to forex market regulation and the liability of Ukraine towards investors were discussed.
Participants of the event announced their visions of the forex market and regulatory challenges on the territory of Ukraine, while sharing their international experience, answering journalists’ questions and providing several examples of forex regulation in Western countries.
Mr. Tatarnikov expressed his opinion – during the press lunch – concerning the need of creating a compensational fund, which would enable clients of financial services providers to be compensated in case of bankruptcy of their financial services provider. The event was also attended by Roberto d’Ambrosio – CEO of Alpari Research, Vitaly Shapran, member of the Executive Committee of Ukrainian society of financial analysts (USFA) and Natalia Evseeva – Director of Alpari official partner in Kiev. The gathering had also been widely reported in many Ukrainian media, including: Finance.ua, Business capital, Hubs, Business channel and other media outlets.
Vadim Sviderski, Editor, Finance Magnates
Peg Reed, COO, Forex Development Corporation
Nir Porat, Co-Managing Partner, Ben Basat, Porat & Co
There is a clear shift towards a further reduction in leverage that is gaining momentum in various jurisdictions. Furthermore, the marketing of Forex and CFD trading is becoming increasingly regulated to help counter the significant degree of misleading advertising that is still prevalent in the online brokerage industry – albeit mostly from unregulated firms including binary options providers or in regulated environments that lack marketing guidelines.
Moreover, the recent expulsion from the National Futures Association (NFA) – a membership-based self-regulatory organization (SRO) in the United States, of online FX and CFD broker FXCM, a Nasdaq-listed company, highlights another major challenge that is prevalent in the industry – brokers claiming to offer agency execution who are routing orders to a 3rd party dealer where the agency broker has common ownership in that dealer.
While draconian measures may be taken by various regulators to eradicate these challenges, it will also likely add a notable compliance burden to firms in terms of increased time and effort (manpower) that will be needed to adhere to stringent compliance requirements with regard to order routing, execution, risk-management, disclosure requirements, and other such costs that will lead to an increase in regulatory compliance expenses.
For brokerages operating in less stringent regulatory environments and jurisdictions where no such formal rules have been outlined, there will be even more difficult challenges ahead in distinguishing a genuine offering from firms purporting to be legitimate brokerages – yet who are not, increasing the need for acquiring regulatory licenses from a bona-fide regulatory hub, and becoming members of independent SROs, as a means to demonstrate a firm commitment to compliance and best practices to win and maintain clients’ trust.
While there remains uncertainty in how the Trump administration would go about repealing parts of the Dodd-Frank Act in terms of the Wall Street Reform and Consumer Protection Act, a repeal would directly affect the global online brokerage industry. One school of thought holds that this could benefit brokerages that will be able to provide clients a greater degree of trading freedom while having less compliance burden.
Another school of thought is that loosening regulations in the US could increase chances of unfair dealing where greater risk falls on the client and away from the broker. A repeal of Dodd-Frank could possibly spark a global race where regulators in Europe and Asia roll-back restrictions to avoid regulatory arbitrage where consumers and brokerages may seek more favorably conditions in the U.S.
As reiterated in Financial Commission’s 2015 report and here again for 2016, online brokerages who put their clients’ interests first, whether agency brokers, market-makers or those who operate a hybrid-model, as well as technology providers that develop trading platform, by joining the Financial Commission demonstrate a firm commitment to clients and help support customer education efforts where the foundation of trust is built on understanding.
With financial product complexity on the rise, client education has never been more important when it comes to understanding the details of how an investment product works, including a broker’s procedures, processes including their internal controls – which can all affect how products are handled and what is permitted.
Financial Commission continues to strive to educate clients, and brokers, and support related initiatives while holding brokers to high standard and investigating each case thoroughly using a proven approach to the dispute resolution process and in a new era of geopolitical uncertainties and market volatility as 2017 is underway.
“We are delighted to share the results of another successful year marked by further growth in key areas of operations, as highlighted in our 2016 annual report. Thanks to the support from our members, staff, and the online forex and CFD industry at large, Financial Commission continues to deliver an essential service to market participants, and against the backdrop of challenging market conditions including a shifting regulatory landscape.
A promising new year is already underway with new members approved, additions made to our in-house staff, and strategic objectives outlined to help sustain our momentum from 2016 through the end of 2017 and forward.
As the focus on best-execution practices and price discovery came under the spotlight from the Global FX Code initiative, this is an area that we have been working with for several years already, and are well-positioned to continue to support companies and customers to help resolve trade-related disputes to help ensure fair dealing is being upheld.
We also commend other global initiatives underway such as the IOSCO survey surrounding derivatives that concluded in December 2016, regarding margin FX and OTC products, aimed to help increase awareness and enhance regulatory reforms and improve market integrity while best supporting companies and the customers they serve.
I stand behind what I voiced last year and reiterate that we welcome brokerages and technology providers, whether regulated, unregulated, or self-regulated, to submit their membership application to Financial Commission, and review our requirements to see if your firm will qualify for approval. Approved members show a firm commitment to their customer, by adding an extra level of support where Financial Commission will stand by both sides in cases where a complaint is brought, and with the aim to bring it to resolution quickly and fairly.”
To learn more about the benefits and requirements of joining the Financial Commission, available for brokerages and technology providers, contact us and visit www.financialcommission.org
2015 Membership Growth, New Appointments, Key Events and Industry Observations
February 4 2016: New York & Hong Kong: FinaCom PLC, operator of the Financial Commission (FinancialCommission.org) – the first independent neutral mediator for multi-asset brokers offering Forex, CFD’s, Binary Options and Cryptocurrency, announces today its Annual Report for 2015.
Presented here below, Financial Commission’s 2015 annual report highlights another outstanding year which further solidified the need for increased self-regulatory efforts, such as the benefits provided by the Financial Commission to its members – who join and maintain membership voluntarily while adhering to strict guidelines.
About the Financial Commission
|The Financial Commission provides an unparalleled dispute resolution process between online brokerages and their end-customers and encompassing a wide range of complaints-processing related to product, market and pricing related issues brought by financial market participants. The Commission guarantees protection of the interests of both brokers and traders, thus providing a fair and neutral platform to effectively resolve complaints.|
2015 saw growth across many of Financial Commission’s key business drivers including the number of important news that was reported on the website of the Financial Commission during the year that aided the organization’s developments.
New appointments to the Dispute Resolution Committee (DRC) were made during 2015, and three new members of the Commission were approved, bringing the current total number to fifteen members. In addition, Financial Commission participated in key industry events across the globe, meeting with clients and members at important industry conferences.
Below the Commission presents its Annual Report for 2015, which also provides statistics on the number of complaints handled and key metrics regarding processing and mediation results.
The statistics information is insightful to our Members, their clients and the public, and for brokerages that are considering the benefits of obtaining membership with the Financial Commission, and interested in learning about the organization’s structure.
The need for transparency continues to grow. Building trust is more important than ever, and a using fair and neutral 3rd party dispute resolution – that Financial Commission provides – is an effective solution in cases where clients or brokers cannot resolve matters together and seek an independent channel, and wish to avoid often complex legal or costly arbitration alternatives. The Financial Commission continues to achieve this objective – by providing brokerages and technology firms with the benefits that accompany membership status – and as seen in the statistics reviewed for 2015.
60% higher Year-over-Year (YOY), a significant increase in the total number of complaints received in 2015, 18% YOY increase in the proportion of complaints that escalated to the Arbitration Committee. The increase was mainly fueled by the addition of new members, when compared to the prior year.
The monetary amounts of complaints filed during 2015 ranged between $27 to $40482, from a total of 93 complaints filed.
From the total number of complaints, 82 were Forex related, and the remaining 11 were related to Binary Options trading.
73 complaints were successfully resolved through the Financial Commission Dispute Resolution Process, and 1 still remain in progress (as of this writing), and 15 complaints lacked sufficient information to further proceed. Overall, from the number of complaints that met the information requirements to proceed nearly all have been successfully processed with one case still in progress and pending resolution.
General complaints Statistics:
Summing up 2015, several important points and trends are noted in the activity of the Financial Commission below:
Complaints Related to Stop-Out Liquidations
Just as in 2014 a significant portion of complaints (about 25%) were related to the problem of forced liquidation of clients’ positions by brokers in view of margin deficit (also known as “stop-out”).
Traders often do not pay enough attention to the risk management and consequently get a stop-out from the combined leverage and/or market volatility that can turn even a small position into a huge loss forcing a liquidative margin call or stop-out to occur.
This can either happen quickly on large positions – even with stop-loss orders attached – or over a long period of time (or sooner) when a stop-loss order is not attached to a trade. The main risk factors that are overlooked by traders with lack of experience are:
It’s important to note how while the mechanism of Stop Out (i.e. margin-call or liquidation-call) may vary by broker, the main proponents are to protect the brokers trading capital and the client’s capital from adverse price fluctuations.
Background on Stop-Out Liquidations:
The liquidation of trades that occur when a stop-out (i.e. margin call or liquidation call) is triggered attempts to act as a sort of insurance in the form of a financial airbag or safety net that is used by the parties of transactions in situations that could otherwise cause a deficit balance or more substantial loss.
Quite often the situation is such that if the broker does not forcibly close the loss-making positions of the client, the client’s losses will exceed the amount of the available margin (or cash deposit) in their account, and consequently, the broker will have to cover this difference at their own expense or based on the customer agreement if enforceable.
The most common reason for closing positions by Stop Out or Liquidation Call is that during the period of increased market volatility the amount of spread on financial instruments is expanding as well as the price itself moving rapidly.
As a consequence, having an opened position or several opened positions, can add to the amount of floating loss (or Marked-to-Market) into the unrealized Profit and Loss (P&L) total, while the amount of floating income – if any – is falling or offset by a larger degree.
The consequence or cause of this phenomenon is mainly lack of margin – as the available margin is eaten up by the floating losses thus creating the stop-out scenario, without which could not prevent to attempt to stop a negative balance from occurring.
Thus, when the ratio of Equity/Margin (cash equity including floating P&L relative to margin collateral used for opened positions) falls below the critical stop-out level (triggering a liquidation) defined by the broker, then the closure (stop-out) of unprofitable positions of the client occurs, or in some cases all positions may be closed during the stop-out event (depending on the broker/customer agreement) and stop-out/margin-call policy (and level or percentage).
News-Driven Increased Market Volatility
The publication of important economic and political news continues to attract many novice traders who are trying to earn large sums in short periods of time, based on the sharp fluctuations in price. However, it is necessary to understand that in such market conditions slips and expansion of the spread often occurs, among other risks during new events.
These events have been the main cause of market volatility contributing to the Stop Out or Liquidation calls examined by the Financial Commission’s 2015 complaint findings.
One of the complaints received recently by the Financial Commission deserves special attention, although it belongs to the type of complaints described above.
The situation faced by the client is extraordinary in the sense that Stop Out was made due to the specific queue of pending orders caught in a price gap. In this particular case several client’s pending orders of different volumes got caught in the price gap generated immediately after the publication of Non-Farm Employment report in the US. As a result, all pending orders were activated on the broker’s server simultaneously. However, the first order executed was the maximum volume order, but not the order that was the first in terms of the order price. Consequently, the margin deficit appeared on the client’s account, resulting in Stop Out. For instance, on the interbank market in the situation similar to the above-mentioned – it is more likely that the larger volume order would be executed first as it corresponds with the logic of the market. The technology of execution of orders/transactions is structured in a way where orders/transactions of a larger volume are executed first and only afterwards the smaller volume orders/transactions could be executed at prices that remained.
The Financial Commission notes that, in 2015 one of the problems that traders continue to face is the delay in payments of earned income and the remaining trading capital by dishonest brokers. It is important to say that none of these complaints were brought against member-brokers of the Financial Commission.
Broker Deposit Bonus Promotion Disputes:
Apart from the cases mentioned above, the Financial Commission received complaints on the brokers’ rejections to pay rewards citing violation of regulations set in some bonus programs offered. It should be noted that in some cases the terms and conditions were insufficient.
The Financial Commission strongly recommends that the brokers should describe such regulations or terms and conditions very carefully to clients, and also use various examples of trading requirement calculations (for bonus redemption) for a clearer perception of the information by the clients. This will help to avoid misinterpretation of data and reduce the number of disputes as well as the reputational risks for companies, or any stigma left on the bonus promotions industry-wide.
At the same time the Financial Commission strongly recommends that the clients should carefully study the conditions offered by brokers’ bonus programs and ask clarifying questions via e-mail or other recorded transcripts. If the communication with the company’s representatives is carried out via online chat, the client has to be sure that he keeps a log of the discussion for reference. This will help to protect clients’ interests if a dispute arises, and lessen the need for a complaint.
Special attention has to be paid to the bonus programs which restrict client’s access to their own funds. Typically, these promotion programs offer incredibly high bonuses (up to 100% of the deposit amount) and signing of a separate contract with the broker, and require clients to perform certain actions. Financial Commission found that in most cases the requirements put forward by the brokers were extremely high and led to a situations where the client had to make a large number of transactions (pay high commissions) and/or meet specific total trading volume thresholds, before getting access to their funds.
In other words, the client guarantees to pay commission to the broker, thus putting himself in a vulnerable position where the high-trading requirements add further pressure and increased risk. The Financial Commission does not encourage such programs and calls on clients to study the proposed conditions very carefully and decide whether the requirements warrant the effort and based on their experience and skill level. Ask your broker to show you the size of the required fees and required trading volume in US dollars, and also specify whether the bonus funds cover possible losses from trading operations.
In June, the Financial Commission participated in international forex conference FXIC in New York. On the agenda of the conference was innovations in trading technologies, development of international forex regulations as well as the development of cryptocurrency as a modern financial instrument.
In October, the Financial Commission visited the MICEX forum in New York. The forum highlighted the success of modernization of Russian market infrastructure, problems of corporate governance that Russia continue to face and growth of domestic investors base.
In November, the Financial Commission participated in Forex Magnates London event which was visited by over 1000 professionals from the online brokerage industry. Broker-Members of the Financial Commission were able to meet with the organization’s representatives, including DRC members who were present and had visited the Commission’s dedicated exhibitor booth, including firms that cater to traders in forex, CFD, Binary options and Cryptocurrency markets.
August: Maor Lahav – COO and co-founder of Panda Trading Systems in Haifa, Israel, has joined the Dispute Resolution Committee (DRC) of the Financial Commission.
October: Financial Commission Chairman Peter Tatarnikov joins CRFIN advisory board. In August of the same year, the Financial Commission and CRFIN announced a partnership.
December: Kristina Nettles, Vice President of Integral Development Corp, Palo Alto, CA United States, has joined the Dispute Resolution Committee (DRC).
December: NPBFX is an international forex broker registered in Belize and regulated by International Financial Services Commission has joined the Financial Commission.
December: ЕQMarkets (Infinity Trade LTD) registered office is located in Saint Vincent and the Grenadines, has joined the Financial Commission.
November: AITS FX is the new global brand in forex industry, which is located in Saint Vincent and the Grenadines, has joined the Financial Commission.
With 2016 already underway, the Financial Commission had just returned at the end of January after successfully participating as an exhibitor at the iFX Expo in Hong Kong.
The event marked expansion in Asia for the Financial Commission as new agreements were reached with providers in the region, and as the online brokerage industry sees strong demand in Asia. The growth noted both at the event and in the media – included from China and ASEAN countries, and as a large percentage of the world population circles within a dense area of East Asia where brokers eye to acquire new and existing market-share. The iFX expo event took place within the major financial hub that Hong Kong is, and at the modern Hong Kong Exhibition Centre in the city’s financial district.
In addition to future participation in key industry events during 2016, Financial Commission expects to see continued interest from brokers both in Asia, Africa, and Europe, as well as from the Americas, where both technology providers and brokers aim to build trust and integrity with their clients by taking steps to improve credibility and transparency.
Brand promise steps revolve around product offerings (marketing), sales efforts, customer support and retention, and include broker’s own steps from self-regulatory compliance, obligatory regulatory mandates, and voluntary efforts – such as afforded by membership with the Financial Commission.
Volatile Market Conditions in FX, and Global Stock Markets
The increased market volatility of 2015 continues to escalate into 2016 and is still accelerating and creating huge risk/reward opportunities for market participants and as higher volatility drives trading volumes and broker revenues. While this can be an exciting opportunity for new and experienced traders, such market conditions can also provide traders – especially new entrants – with either unrealistic expectations or the exact opposite – an unexpected market move and potentially substantial losses.
If 2015 taught traders one thing, following the CHF anomaly, and subsequent weekend-opening volatility surrounding the GREXIT crisis, clients need to be aware of the risks of holding open positions through news events and especially over weekends or when markets are closed.
Customer Education still Key Driver of Relationship and Sales
Online brokerages who put their clients interests first, whether agency brokers, market-maker or both, show a firm commitment when joining the Financial Commission, as do technology providers who aim to employ best practices.
Client education continues to be on the forefront of brokers concerns as it’s seen as both a tool to improve sales results and conversions, while reducing the chance of complaints from misunderstandings, or scenarios where clients had misinformation about a product or service (i.e. education improves retention rates and conversion).
Financial Commission continues to aim to educate clients and support related initiatives, as a large number of complaints are related to such issues – compared with purely technical complaints – as an example.
To learn more about the benefits and requirements of joining the Financial Commission, available for brokerages and technology providers, contact us and visit www.financialcommission.org
Closing Remarks from Financial Commission Chairman
“We are pleased to report a successful 2015 in our annual report, and as the value that Financial Commission brings to the online brokerage industry has proven to be of great importance to companies and their clients, and as evidenced by our expanded membership growth.
Over the last few years the Financial Commission has evolved from a core mission statement and set of standards, to provide the online trading community with a specialized and reliable alternative dispute resolution platform, and since then our fitness has strengthened to process complaints and handle membership needs and certifications more efficiently and effectively. We’ve achieved a reliable and robust organizational structure and look forward to an already promising 2016.
We welcome brokerages and technology providers, both regulated or unregulated, and self-regulated, to join the Financial Commission and by doing so to remind your clients of your commitment to them. We will stand by both of your sides in cases where a complaint is brought, and with the aim to bring it to resolution quickly and fairly.”
January 31 2015: New York & Hong Kong: FinaCom PLC, operator of the independent self-regulatory and dispute resolution organization, the Financial Commission (FinancialCommission.org) for Forex, CFD’s, Binary Options, and Cryptocurrency, today releases its 2014 Annual Report as presented here below.
Financial Commission, thru its offering to qualifying brokerages who meet and maintain the required criteria for membership within the organization, provides customers of member-firms the ability to seek a viable remedy via a free and fair dispute resolution process, when unable to resolve complaints directly with their broker.
During 2014 a number of major milestones unfolded, and as was reported on the Financial Commissions website during the year, such as new markets added and divisions created, in addition to the hiring of new staff, appointment of committee members, and strategic partnerships, as well as educational content and participation at several key industry events.
Below is a recap of our 2014 annual report for our members, their clients, and the public, and for brokerages that are considering the benefits of obtaining membership with the Financial Commission.
In addition, data compiled from various statistics related to complaints processing, the number of filings and other related metrics, presented below, can help provide a picture into the full year 2014.
During 2014 a total of 58 complaints were filed in total, of which 37 were against current members, and whereas 21 were against non-members of Financial Commission.
The claims involved amounts ranging from as low as $24 to as a high as $119,259 during the year. In total, 53 number of the filed complaints were Forex related, and the remaining 5 were pertaining to Binary Options trading.
35 Complaints were successfully resolved, using the Financial Commission Dispute Resolution Process, and 1 complaint still remain in progress (as of this writing).
With a specialized focus in Forex, CFD’s, Binary Options, and Cryptocurrencies, Financial Commission continues to focus on growing its effort to help the online brokerage industry and benefit online brokers and their respective traders, by expanding its solutions to more and more companies, as well as enhancing the number of solutions the Financial Commission offers to its members.
In order to achieve this outcome, during 2014, the Financial Commission participated in a number of key forex conferences, appointed a new member to its DRC committee, and developed new methods to cover additional instruments and cater to a different segment of the market – related to binary options, by certifying platform technology.
|At the start of 2014, the Financial Commission participated in the iFX EXPO International Conference in Macau, an important industry conference in Asia bringing a diverse crowd of brokerages and platform vendors together in one place.|
|The FX Conference in Turkey, organized by Forex Magnates, was also another important event that the commission participated in, during the first half of 2014.|
|At FX Congress in Russia, organized by the first Russian SRO CRFIN, where Anatoly Bulanov Head of DRC presented a benchmarking study of various local dispute resolution examples, highlighting their advantages and disadvantages.|
|At the end of H1 2014 the Financial Commission participated at the iFX EXPO International in Cyprus, and Chairman Peter Tatarnikov was a speaker, and presented a keynote speech regarding the functions of the organization as part of the presentation.|
|In November, the Financial Commission exhibited at the Forex Magnates London Summit, and had a dedicated booth were attendees interacted with Financial Commission staff, in order to provide information and educational materials on membership benefits.|
Educational Initiatives and Public Speaking:
|In June, Juan Jutgla become a member of the Financial Commission’s DRC|
|In October, Financial Commission announced it had appointed Akin Abbak to the DRC|
|In December, Financial Commission announced the appointment of Zack Ioannou as Head of the DRC|
|In July, the Financial Commission began publishing randomly selected complaints, that were subsequently anonymized in order to focus on the context of the issues that arose, and how they were later resolved through this unique mediation process.|
|During July the Financial Commission announced that it had underwent the process of certifying Binary Options platform technology, as a basis for helping to ensure binary options related complaints could be dealt with in an equitable manner, thus opening the doors for Binary Options brokers to become members.|
|Following the earlier announcement in July, The Financial Commission said it completed the first binary options certification process for the platform Binarystation for Binary Options, from the technology provider Binaryware LLC USA.|
|In August, the Financial Commission Announced the Launch of Educational Webinars, during which as series of webinars were conducted with Financial Commission Chairman Peter Tatarnikov.|
|The Financial Commission in early September announced the launch of the Crypto Division in order to provide its membership benefits to the Cryptocurrency industry, and in response to increased brokerage & trader demand of digital currency trading capabilities (such as Bitcoin,etc..).|
|The Financial Commission announced at the end of September that it signed an agreement with Ibinex (www.Ibinex) to provide regulatory services and compliance oversight for its planned Cryptocurrency ECN. The Ibinex project was developed and managed by Gallant Partners (GP), and the solution will enable brokers to offer cryptocurrency related trading products through Ibinex’s regulated ECN|
|Earlier in October the Commission had announced the successful certification of technology provider Act Forex. The company’s platforms include spot Forex, Forex Options, Forex Forwards, CFDs, ETFs, Futures and cryptocurrency. ActTrader is compliant with NFA, FSA UK, FSA Japan, and MiFID, according to the company.|
|In December, Financial Commission certified iBinex, a newly launched cryptocurrency ECN aimed to deliver liquidity to brokers for markets in Bitcoin and other cryptocurrencies that are becoming increasingly liquid and in-demand by traders.|
|In January, Financial Commission announced new member: RoboForex|
|In September, Financial Commission announced new member: MTrading|
|In October, Financial Commission announced new Member: TraderGlobal|
As part of the organizations mission statement to help customers through educational channels while providing brokerages an alternative medium to resolve disputes efficiently, the Financial Commission plans to continue to enhance its ability to cater to traders from a diverse range of markets, and across popular trading instruments such as spot Forex, CFDs, Binary Options, and Cryptocurrencies.
More Than Just Alternative Dispute Resolution, and Outsourced Compliance, Financial Commission helps in Multiple Ways:
In a world saturated with online brokerage and websites marketing often-inaccurate information or through un-regulated jurisdictions, the need to screen and verify information related to trading becomes even more important – yet remains incredibly challenging. This challenge is even more pronounced for people with no trading experience (i.e. beginners) and even sometimes to those who are more advanced or with multiple brokerages accounts already.
For example, one recent event highlighted weaknesses in the system – in one area – after recent volatility in the Swiss Franc (CHF) caused a large gap in related forex market prices. This event caused significant losses to traders that were short the CHF, even causing negative balances for some, and reminded of the importance to read and understand the customer agreement and how it defines the scope of the relationship between a customer and their broker, and provides a legal basis for resolving complaints.
Recent Market Conditions in Early 2015 Highlight Importance of Education and Due Diligence
As a large number of customers as well as their brokers had incurred negative trading balances after the SNB discontinued the minimum rate for the EUR/CHF pair and the above mentioned market gap occurred, the amount of losses that brokerage firms and in some cases their clients had to absorb was staggering, and ranging in the hundreds of millions of dollars or even close or higher than $1billion as the damages are still being calculated, as reported by Forex Magnates in the days following.
This event with the CHF gap itself will be the subject of many future developments and changes related to how forex trading is conducted, and has already caused significant changes. Although it is not the first time the FX market has gapped – it was very significant.
The Financial Commission Role in Helping Brokers and Their Customers
The above mentioned CHF event also emphasizes why using an organization such as the Financial Commission can help mitigate the sometimes-often hidden risks contained within either a brokers’ customer-agreement and/or in the rate logic of how their trading platform handles and processes trading instructions or how it will implement any disaster recovery procedures when needed. This can be the difference between your broker going bankrupt or protecting itself and its clients from a market anomaly, and the steps that the Financial Commission takes for its membership requirements adds an extra layer of due diligence to help mitigate that risk or minimize it.
In 2015, in addition to the above mentioned reasons for us to continue to offer our membership to the online brokerage community, and to their clients, the organization is focused on adding more members, as well as certifying more trading platforms, and we are pleased to report that 2014 was a great success. We are looking forward to a better year in 2015, and welcome the opportunity to serve you. To learn more contact us or visit FinancialCommission.org
Nuevas Decisiones, Corredores de Bolsa – Miembros de la Comisión, Miembros del Comité de Arbitraje, Efectividad de Resolución de Reclamaciones
A lo largo de la primera mitad (H1) del año 2014 han sucedido una serie de eventos positivos para la Comisión Financiera, la organización inspirada por las necesidades de la industria, que se gestiona por la FinaCom PLC, registrada en Hong-Kong, y tiene su sitio – FinancialCommission.org
Más adelante, ofreceremos a la atención de nuestros socios, sus clientes y a toda la opinión pública, un informe sobre nuestra actividad, mientras que nuevas compañía de corredores de bolsa y empresas ya existentes, están considerando la posibilidad de su membrecía en la Compañía Financiera, con el objetivo de mejorar sus relaciones de negocio y recibir ayuda para resolver sus cuestiones esenciales, por medio del uso de una decisión, ofrecida por un tercero, que es económicamente eficaz e imparcial. Los datos, que presentaremos más adelante, ayudarán a ver el cuadro general de las funciones y resultados, alcanzados por nuestra organización, a lo largo de los primeros seis meses del año 2014.
Estadística de la primera mitad del año 2014:
A lo largo de la primera mitad del año 2014, la comisión ha recibido, en total, 34 reclamaciones, 16 de las cuales se dirigían contra los socios actuales, mientras que las demás 18 reclamaciones se dirigían contar compañías, que no son socios de la Comisión Financiera.
Las cantidades monetarias de las reclamaciones eran diferentes: desde el índice más bajo de $ 24,00 hasta $ 26 000. Un total, 29 de las reclamaciones presentadas se relacionaban con trading de Forex, mientras que las 5 restantes se relacionaban con el comercio de las Oposiciones Binarias.
20 reclamaciones han sido resueltas exitosamente en el desarrollo del estudio del Comité de Arbitraje de la Comisión Financiera, y 2 reclamaciones más, quedan en proceso de estudio (para el momento de estar escribiéndose este artículo).
Además, entre las reclamaciones anteriormente mencionadas, 12 reclamaciones se relacionaban con el proceso de comercio, 13 reclamaciones se relacionaban con la retirada de medios monetarios y 4 reclamaciones resultaron dentro de la categoría de estafa. Entretanto, no hay información suficiente sobre 12 reclamaciones de clientes, dirigidas contra compañías, que no son socios de la Comisión Financiera.
|Cantidad total de reclamaciones 34||Resueltas|
Noticias y eventos de la Comisión Financiera en la primera mitad del año 2014
El enfoque de la Comisión Financiera sigue siendo el desarrollo de sus esfuerzos, con el fin de ayudar a la industria y proporcionar beneficios a corredores de bolsa online, y a los comerciantes correspondientes, ofreciendo sus decisiones a una cantidad creciente de compañías, asimismo, como aumentando la cantidad de decisiones, que la Comisión Financiera ofrece a sus socios.
Para alcanzar este resultado, en el período de la primera mitad de este año, la organización ha participado en una serie de conferencias claves de Forex, ha designado a un nuevo miembro a su Comité de Arbitraje y ha elaborado unos nuevos métodos para trabajar con instrumentos adicionales y para ofrecer servicios a otros segmentos de mercado, relacionados con opciones binarias, por medio de certificación de la plataforma tecnológica.
Participación en conferencias de la industria Forex:
|A principios del año 2014, la Comisión Financiera ha participado en la Conferencia Internacional IFX EXPO en Macao, que es una importante conferencia departamental en Asia, y reúne en un lugar, una gran cantidad de compañía de corredores de bolsa y proveedores de plataformas.|
|La conferencia FX en Turquía, organizada por Forex Magnates, resultó otro evento de importancia, en el cual la comisión ha participado a lo largo de la primera mitad del año 2014.|
|En el desarrollo del congreso FX en Rusia, organizado por la primera Organización Autoregulable Centro de Regulación de Instrumentos Financieros Extrabursátiles de Rusia, el dirigente del CRD Anatoly Bulanov presentó una investigación-ejemplar de varios casos de resoluciones locales de disputas, subrayando sus ventajas y desventajas.|
|A finales del primer semestre del año 2014, la Comisión Financiera ha participado en la Conferencia internacional IFX EXPO en Chipre, donde el jefe de la Comisión Piotr Tatarnikov se presentó como conferenciante y, como una parte de su presentación, pronunció el discurso de programa sobre las funciones de la organización.|
Designaciones Claves y Cuerpo de Miembros:
|Juan Dzhutgla llegó a convertirse en un miembro del Comité de Resolución de Disputas (CRD) de la Comisión Financiera, con lo que fortaleció el panel ya bastante amplio de los dirigentes de compañía de la industria Forex, quienes participan en tomas de decisiones por reclamaciones, que se estudian por la organización.|
Nuevas Decisiones y Eventos Claves:
|Para demostrar la eficiencia del proceso de resolución de disputas en la Comisión Financiera, la organización ha empezado a publicar la toma de reclamaciones seleccionadas aleatoriamente, que han sido despersonalizadas posteriormente, con el objetivo de que las personas interesadas puedan concentrarse en el contenido de problemas surgidos, y en la manera de resolver las reclamaciones, posteriormente, en el desarrollo de este proceso único de intermediarios.|
|Con el fin de proporcionar preferencias para representantes de la industria de Opciones Binarias, la Comisión Financiera ha organizado el proceso de certificación de plataformas tecnológicas para Opciones Binarias, como la base para garantizar el estudio justo de reclamaciones, relacionadas con Opciones Binarias, con lo que se abren las puertas para corredores de bolsa de Opciones Binarias en su camino a la membrecía en la Comisión.|
|La Comisión Financiera ha anunciado la primera plataforma de certificación para las Opciones Binarias – Binarystation, del proveedor de la tecnología Binaryware LLC, USA.|
Compañías-socios de la Comisión para los Finales de la Primera Mitad del año 2014:
Actualmente, el Comité de Resolución de Disputas (CRD) está formado de los siguientes miembros:
Eventos Próximos para la segunda mitad del año 2014:
Dentro de la misión de la organización, dirigida a la ayuda de clientes a través de canales educativos, la Comisión Financiera está planeando crear tales instrumentos para comerciantes, como: seminarios web, materiales de instrucción para comerciantes, asimismo, como introducción de instrumentos tecnológicos, que les servirán a los comerciantes en su actividad de revisión de precios y cumplimiento de órdenes.
La organización tiene como objetivo, en el próximo trimestre en la segunda mitad del año 2014, aumentar la cantidad de nuevos socios, y certificar una cantidad más amplia de plataformas comerciales para Opciones Binarias, que pertenecen tanto a compañías de corredores de bolsa, como a proveedores ajenos de tecnologías, para Opciones Binarias.
A New Player in the Forex Scene – Six-Months Up and Running, with a Promising Future Ahead
In the industry of Forex, there is a distinct collection of entities that interact; the brokers (and IBs), the clients and the regulatory bodies. Like in every field or industry, friction and disputes do arise, and up till now – it has often been a long and rigid process to reach resolutions and manage disputes. Moreover, there has always been a veil of mystery around these disputes, with resolutions not being found, or even sought. This is where Financial Commission comes into the picture.
What the Financial Commission is all about
The Financial Commission is a neutral, third party dispute resolution entity in the field of Forex trading; solving disputes between traders and their brokers. A new player indeed, Financial Commission has filled a big vacuum of need in the industry. The Commission bases its philosophy on the following pillars:
1. Education. Knowledge is power. Oftentimes, disputes arise from a lack of knowledge or misunderstandings on the side of the traders, about how the Forex industry works. Slippage, pip spread, spikes and more could throw traders off track and cause them to believe there has been misconduct. Whether the dispute has arisen from a lack of knowledge or not, the disgruntled trader will in both cases feel acute lack of fairness. The Financial Commission has outlined its mission to give knowledge to the traders, so they are partners in their success, as opposed to mere onlookers, and never in the dark about how the industry works. On the other side of the same coin, Financial Commission educates its members on how to better communicate with their traders, in order to make the relationship a healthy two-way dialogue. For Financial Commission, education is of utmost importance due to its mission to deal with the root of the problems, rather than only providing on-the-spot solutions. This is the very philosophy that, for all parties involved, will transform our industry into a clearer and fairer one.
2. Transparency. Having a neutral, professional and unaffiliated body you can trust in this tumultuous world of Forex can make all the difference. The interest-free Financial Commission and the Dispute Resolution Committee (DRC) that is built up of a fascinating mosaic of experienced and esteemed figures in the industry, work together to review each and every case with one goal only; dispute resolution on the side of justice. With the bigger picture always in the background of making this industry clearer and granting traders more knowledge, Financial Commission zooms in on any complaint that arises in order to make sure that the parties walk away with the knowledge they need about the case, as well as an amicable and fair resolution. The healthiest dispute resolution that exists is one where a neutral body is pre-defined and gears into operation to objectively solve a dispute when needed. In the world of Forex, Financial Commission is it.
3. Swiftness and efficiency. The Financial Commission with the DRC at the heart of its operation works like clockwork on each and every complaint. In concretely organized steps, the DRC will reach a resolution of the case within several weeks, with intermediary milestones of communication along the way, with both sides of the dispute. Alongside the dedication to education and reliability, Financial Commission believes in the highest level of professionalism and meticulous conduct in every endeavor, in order to continue its impressive track record for years to come.
In Only Six Months, Impressive Results
During only six months of operation, the Financial Commission has resolved around 20 complaints from traders; most of which were only in the last 2 months. Alongside this, we are pleased to know that the traders’ community awareness regarding an independent arbitrator who can address their disputes against service providers in the financial markets has increased significantly. A remarkable fact is, that the bulk of claims are directly related to the most basic principles of Forex trading, which are still poorly understood by traders. This is purely in line with Financial Commission’s overall philosophy of giving education a major role within dispute resolution. Among these are some aspects of trading, such as execution of pending orders during the publication of important economic news, the way the margin for open positions is calculated in all trading platforms or for example, the purpose and the operation principle of Stop Out or Margin Call. Some traders get a better understanding of these things too late, and very often their open positions are closed by the broker because of lack of free margin. In this regard, the Financial Commission recommends that the brokerage companies pay more attention to the education of their customers. All brokers must do so in order to help their customers avoid some unpleasant situations while trading.
In addition to offering a dispute resolution framework and enhancing the education of the traders in order to reduce the overall number of disputes and grievances in the long run, the most important aspect of this mechanism, is that it helps the brokers to retain their critical mass of clientele. That is, due to the fact that many small traders never actually file complaints, but simply leave negative feedback in traders’ forums and spread the word in their communities, (often stemming from lack of knowledge), brokers could slowly but surely lose a significant number of traders, who will simply wander elsewhere in these cases.
Financial Commission also helps to expose new trends and phenomena that come up in the industry, based on the claims it receives. It is particularly interesting to note one category of claims, which included cases where clients of brokerage firms either intentionally or unknowingly used special software (Expert Advisors), which was designed to cheat, using trading technologies. The Financial Commission has taken a tough stance on this issue and believes that the use of such methods to generate profits is a violation of generally accepted norms and principles of doing business based on fair and mutually beneficial partnership. We feel it`s very important to mention here that Financial Commission may never be used as a bargaining tool for the traders who utilize such methods. The founders of the Financial Commission have repeatedly witnessed situations where a person using such techniques was identified and expelled from the ranks of customers of the affected companies. However, in some cases, such clients managed to withdraw some dishonest profits from their accounts. The official position of the Financial Commission on this issue is that on regulated markets such actions should be classified as fraud. Finally, we selected a specific category of claims related to failures in the technical provision of brokerage companies. Typically, such claims do not cause any problems and are resolved in favor of traders.
Looking at the final statistics on claims admitted to the Financial Commission during the period of its existence, around 26% of the claims were resolved in favor of traders
In addition to the aforementioned claims, the Financial Commission has received 12 complaints from clients of brokerage firms, who are not yet members of our organization. The geographical span of these customers is very extensive; clients from Russia, other countries of Eastern Europe and the CIS, China and Southeast Asia, the Arab countries and more. This again reinforces that fact that the problem of lack of a fair dispute resolution mechanism, actually exists. We are communicating with brokerage companies from these regions and highly recommend to them to join the Financial Commission in order to further work together to solve these problems in a more efficient way. Finally, there is a mechanism to do so, which will be favorable for all.
The Members of the Financial Commission
Over the course of only six months, Financial Commission has already had the pleasure of welcoming seven of the biggest names of the industry as members, and the activity of the Financial Commission is gaining speed, as this new and exciting mechanism is gaining its well-deserved place on the map.
AForex, Alpari, FXOpen FXFair, Lionstone Investment
The Dispute Resolution Committee
The driving mechanism of the Commission as a whole is the Dispute Resolution Committee, the DRC. Top and esteemed figures from the industry; no less than the CEOs and Presidents of the leading Forex educational bodies and technical provider companies come together to make up the DRC, which solves each and every dispute that reaches it.
The disputes are addressed, investigated and solved by a combined endeavor of this impressive group of top figures. The goal is to create a framework where rich experience and knowledge are key, as well as giving a multi-dimensional view of every dispute, based on the variety and diversity of expertise these top figures bring with them, after years in their respective fields. When having one’s dispute resolved by the Financial Commission, and in essence by the DRC, every Forex trader knows that his/her dispute will be overseen by the absolute top levels, with the highest and most refined levels of expertise, and of course – with full neutrality and objectivity.
The Current DCR Members are:
Anatoly Bulanov – Head of the DRC
Ilan Azbel – CEO, AutoChartist
Francesc Riverola – CEO, FX Street
Carl Elsammak – CEO, Kammas
Ilya Sorokin – CEO, ACT Forex
Simon Grunfeld – Partner, Stone Street Solutions
Andrew Ralich – Co-Founder, oneZero Financial
Lior Nabat – CEO, Tradency
Aleksey Kutsenko – CEO, Tools4Brokers.com
Kevin Millien – President, Millien Consulting Group
Financial Commission is on a constant quest to enrich the DRC, by welcoming no less than the very top figures of the industry. These leading individuals in the field come together to form the ultimate dispute resolution setting; a trader or broker could not ask for more. The accumulated years of experience and profound knowledge, sitting in one room, to deal with each and every dispute is the very reason why the Financial Commission has made such a grand appearance on the scene of the Forex industry.
The DRC is expanding and enriching its collection of members, and this manifests itself especially in the latest new appointment; Anatoly Bulanov as the Head of the DRC. Mr. Bulanov is a well-known figure in the industry, having over a decade and a half’s worth of acumen; with an emphasis on traders’ education, live trading, analysis and the technical aspects of trading and platforms as well.
Financial Commission in the Press
With the appearance of the unique Financial Commission onto the scene, the media and press have noted this as a turning point in the field and have been covering its developments closely. Big names in the media such as the examples below, have been seeking to tell the FX world about the Commission and its mission;
FXStreet; “if the commission should succeed, no doubt it is a good and a right step towards making FX a real asset class for traders all over the world”
iLearney alluded to the importance of Financial Commission’s role in Russia; “protecting the rights of the traders and investors is vital, because according to experts, Russia has around 400 thousand people in the FX industry, and with this growth brings with it a higher number of claims against brokers”
Interfax, a leading news agency in Russia, has been following Financial Commission and included its developments in their prestigious Annual FX Market Development Research outlining the fact that Financial Commission is an important and effective tool in the field of Forex, bridging traders and brokers and playing a crucial role.
In addition to this buzz in the media, Financial Commission is invited to many global FX events and Conferences; the Forex Magnates Summits in London and Tokyo in 2013, as well as the iFX expo in Macau, 2014 are just a few examples of the global presence Financial Commission has gained in the industry.
Financial Commission has received vast support from the industry, on regional and international levels, and this reinforces the notion that this unique type of operation is much needed in the FX field and shows very clearly, where it is going from here.
At the Start of 2014; Looking Forward
After six months, it is safe to say that the Financial Commission has paved its way into the Forex industry, and was certainly welcomed by it. It is clear that the need for neutral and hassle-free dispute resolution has been around for a while, and the time has come to address this need. As the famous phrase says; “necessity is the mother of invention” – this was indeed the case in the creation and introduction of this first-ever neutral and professional dispute resolution body, which seeks to resolve disputes as well as transform the whole industry and the way Forex traders’ grievances are addressed and handled. Looking forward to following years, the Financial Commission will be welcoming additional members, and will be expanding its activity to more and more geographical locations.
Most importantly, and being the very fabric of the Financial Commission’s activity, the Commission will be responsible for a new way of thinking. Finally, for the traders, there is a body, which is there to resolve disputes. For the brokers, there is a way to show reliability and enhance credibility and thus confidence, for existing and potential clients. In addition to constant expansion and global exposure, Financial Commission is also enhancing its capabilities on a professional and technical level. That is, Financial Commission is extending its operation to cover more financial instruments and trading mechanisms, as well as branching out to more and more areas within the FX industry where disputes could arise.