FXCM Asia Limited, the Hong Kong-based subsidiary of FXCM Holdings LLC, has sent its clients emails, informing them of changes to their client agreements.
The changes concern the sensitive issue of negative account balance protection: according to the revision, clients of the Forex broker will be made fully responsible for any debit balances on their accounts. That is, they will always have to cover any deficits that their accounts with FXCM Asia incur.
In particular, the changes affect section 13.2 of the agreement, whose revised version goes as follows:
Client shall at all times be liable to FXCM for any deficit balance in Client’s Account(s).
Next up is the revised section 32, which is the one that makes the clients fully responsible for any losses on their accounts resulting from (amid all other events) an “Exceptional Market Event” which shall be defined as the suspension, closure, liquidation, imposition of limits, special or unusual terms, excessive movement, volatility or loss of liquidity in any relevant market, currency, or relevant trading instrument or where FXCM reasonably believes that any of the above circumstances are about to occur.
One more piece of information from section 32, to which some attention should be paid is: “FXCM is not liable for any failure or delay to meet its obligations due to any cause beyond its reasonable control which shall include but not be limited to…any cause beyond its reasonable control which shall include but not be limited to fires, riots, strikes, lock-outs, wars, governmental control, restriction or prohibition whether local or international, technical failure of any equipment, power failure, or any other causes which results or is likely to result in the erratic behavior of the spot FX prices transactions”.
The revised terms come into force on March 9, 2015, with clients who have any questions or objections invited to contact the company before March 6, 2015.
It is still unknown to us whether the changes will affect Client Agreements of other FXCM businesses across the globe. It is important to note, however, that some jurisdictions, like Japan, prohibit the practice of brokers forgiving negative client balances. In the United States the laws do not oblige Forex brokers to compensate deficits in client funds. Several of the retail FX giants opted for such a step nevertheless in the aftermath of January 15, 2015, with FXCM forgiving negative account balances to 90% of its clients.
The move that the Hong Kong business has made is clearly preemptive as volatility across Forex markets has not been subsiding for months and this trend looks likely to continue in the future.
You can find the full (pdf) text of the revised Client Agreement here.
And below is the text of the email sent to clients of FXCM Asia:
Please note that FXCM Asia has updated the Client Agreement and all changes are effective from 9 March 2015.
The update refers to the amended section 13.2, amended section 32, amended risk warning notice and deletion of section 13.3 of the Client Agreement. These changes modify the client liability for any debit balances in client’s account(s). In specific, clients shall at all time be liable to FXCM for any debit balance in client’s account(s). To view changes and new contract terms, please click here. No action on your part is necessary in order to adopt these changes. Unless we hear from you before 6 March 2015, the updated Client Agreement will become effective from 9 March 2015. However, should you have any questions, please contact us.
FXCM Asia is dedicated to offering clients excellence in service through first-class execution, exceptional support and a commitment to the highest regulatory standards. If you have any questions or concerns, please contact FXCM Asia by phone at(852)2119-0116 or by e-mail at [email protected]