XTB: Comparing the situation to the one with the FXCM broker is incorrect

Confusion around the matter with asymmetrical deviation, financial penalty for XTB and KNF it seems to be endless. A month has passed since the postulates of the TJS Foundation were issued - meanwhile, there are still many ambiguities and contradictory opinions. This time there were comparisons between the "XTB scandal" with a famous case from a few years ago and FXCM broker, which was punished by British and American financial supervision significant amounts for ... unfair execution of orders. Are these things actually similar?

Read: XTB increases profit by 434%. Shares up strongly

XTB takes the floor

Checks carried out, among others by NFA and FCA regulators regarding FXCM broker activities since the year 2009 showed numerous irregularities in the way clients' orders were executed, which translated into greater trader losses and clearly mislead them. As it turned out a few years later, it was the beginning of the end of one of the largest retail brokers in the world (at that time).

Similar accusations have appeared in the network regarding the consequences of the method used to carry out orders by a Polish broker. Are the mechanisms used through XTB were identical to FXCM? According to X-Trade Brokers, no. Details regarding the case are contained in the official statement.

XTB statement

Recently, publications on FCA proceedings, i.e. British supervision against FXCM broker, have appeared in public space, which received a penalty for executing client orders contrary to their best interests and concealing information about the conduct of proceedings by the American supervision in this matter. Due to the fact that some publications attempt to compare the case for which XTB received a penalty for the FXCM case, we decided to take the floor. In our opinion, this information is false and misinterpreted.

The main difference is the type of orders offered by both brokers. XTB carried out orders immediately, whose characteristic feature is the fact that it must be only execution at the price of the order, while FXCM performed orders in the market mode, where the client placing the order does not know what the final price will be because it is agreed that it will be made at the current market price. In an instant order, the customer is guaranteed to execute the order at the price he sees, and in a market order the customer is guaranteed to execute the order at the market price.

More importantly, FXCM carried out its clients' orders with a liquidity provider. In each case, when it reached a price better at the liquidity provider than the price from the client's order, FXCM collected the difference, and the client's order was carried out at the price he requested, despite the fact that the type of the order (market) allowed for a price slip in favor of the client. When FXCM executed a hedging order at a price worse than the price on the client's order, the customer was charged with all the difference and his order was executed at a price worse than the price at the time of submission (unfavorable price slip). XTB is always the other side of the customer's transaction and does not secure the position with external suppliers. The deviation mechanism for instant orders was aimed at minimizing the number of rejections of placed orders and did not generate profit (as in the case of market orders at FXCM). So you can't talk about any loss of customers and XTB's profit, because XTB had market risk exposure and there was no difference in prices. Comparing both cases and finding an analogy is wrong.

source: Forex City