“It is FXCM’s policy to credit accounts to a zero balance when debit balances occur as a result of trading.”
Hello,
is there any catch to this? so under any circumstances even such as the usd/chf incident I will never owe FXCM money for going in a negative balance? Thank you.
Hi coughs,
FXCM’s updated negative balance policy was released on Friday. Here is the policy as applicable to FXCM UK:
The changes to the Negative Balance Policy will include the following, subject always to the terms and conditions provided in the client’s master trading agreement:
FXCM Updates Provision in Master Trading Agreement: Clients subject to the Negative Balance Policy who incur negative balances in excess of US $50,000 (determined by aggregating all of the client’s negative balances across all accounts held by FXCM and any of its affiliate(s), incurred over a 24 hour period of time) will be responsible for and owe FXCM the value of the total negative balance above US $50,000, regardless of market conditions. Subject to certain exceptions, FXCM will waive the first US $50,000 of a client’s total negative balance (determined by aggregating all of the client’s negative balances across all accounts held by the FXCM group, incurred over a 24 hour period of time). This policy will apply to negative balances incurred during all market conditions, including exceptional market movements.
Specific Exceptions: Each client’s master trading agreement will detail all of the specific exceptions to the Negative Balance Policy. Some of the key exceptions to this policy include the following: negative balances incurred by legal entities, omnibus relationships, white label relationships, Eligible Contract Participants, Eligible Counterparties and/or Professional Clients (as defined in the client’s master trading agreement) and/or negative balances incurred on share CFD positions or products traded on an exchange.
FXCM is a global foreign exchange broker regulated in multiple jurisdictions. Regulated entities may require different notice periods for changes to the master trading agreement. As such, the effective date of the revised Negative Balance Policy will vary by jurisdiction in which an account is held. Clients will be notified accordingly. The revised Negative Balance Policy will only apply after the effective date and will not apply to negative balances incurred before such date. This release contains general statements regarding FXCM’s planned revisions to its Negative Balance Policy, is for informational purposes only, and should not be considered to form part of any client’s agreement with FXCM.
The press release in its entirety can be found here: FXCM to Update Its Negative Balance Policy (NYSE:FXCM)
The Negative Balance Policy will be offered by the following FXCM group trading entities: Forex Capital
Markets Limited (FXCM UK), FXCM Securities Limited, FXCM Markets Limited, FXCM Bullion Limited and
FXCM Australia Limited.
Jason
Thank you.
So is that around £33,000 for your UK Customers?
That is correct. The negative balance policy covers US $50,000 regardless of the base currency of the account. FXCM will calculate the USD value of the negative balance based on the exchange rate when a negative balance has occurred. Here’s a list of FAQ’s you may find helpful http://www.dailyfx.com/forex_forum/fxcm-negative-balance-protection/645334-fxcm-negative-balance-policy-faqs.html . FAQ #7 discusses your question about non-USD accounts.
Jason
can you please explain for ‘layman’ like me , the exceptions in this policy. point no.#2 in the FAQ’s provided by you. I am a full time individual trader and please specifically explain what happens to us in the context of huge rate difference like the recent CHF in Jan2015.
Hi Prasadvissa,
We have tried to make the language here as basic as possible to understand:
[I]“Each client’s master trading agreement will detail all of the specific exceptions to the Negative Balance Policy. Some of the key exceptions to the policy include, without limitation: negative balances incurred on share CFD positions and certain other products; negative balances incurred by legal entities (other than retirement vehicles where the specified beneficiary is a natural person), omnibus relationships, or white label relationships; and negative balances incurred by Eligible Contract Participants (as defined by the U.S. Commodity Exchange Act), clients classified as Professional Clients (as defined by the UK Financial Conduct Authority) and clients classified as an Eligible Counterparty (as defined by the UK Financial Conduct Authority).”[/I]
That means, if you have an FXCM UK trading account in your name as an individual, and you are not classified as a Professional Client or Eligible Counterparty (as defined under UK regulations), then you have up to $50,000 in Negative Balance Protection resulting from forex trading losses.
If you require further clarification on this, please consult a legal professional for assistance.
Assuming you are not classified as a Professional Client or Eligible Counterparty, if a similar market event occurs in the future that results in a negative balance in your account due to losses from forex trades, then your individual FXCM UK account would have Negative Balance Protection for up to $50,000.
That means, if your negative balance was $50,000 or less, then you would owe no money at all. However, if you had a negative balance of $52,000 for example, then the first $50,000 would be forgiven, and you would owe $2,000.
That all seems very reasonable
@Jason Rogers,FXCM, Thank you for your information and clarification on the subject. However, people like me, staying outside UK, are handicapped to know the “legal definition” of Professional Client or Eligible Counterparty , was the “exact reason” to have clarification on this subject. your inputs on this will be much appreciated and will go a long way for many customers/traders like me. Thank you.
Hi Prasadvissa,
Since FXCM UK is regulated by the Financial Conduct Authority (FCA), we must follow their rules defining Professional Clients and Eligible Counterparties. These definitions are found in the FCA Handbook.
If you require further clarification on this, please consult a legal professional for assistance.