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Screenshot of a breaking news alert e-mail from Q2 2017
Australian retail forex broker IC Markets has raised the ire of a number of leading Australian news publications.
Each of the Australian Financial Review, The Australian and The Sydney Morning Herald ran articles today on possible trade execution anomalies at IC Markets on Swiss Franc Black Thursday (January 15).
In The Sydney Morning Herald’s version, IC Markets had told its customers that it was fed erratic FX prices by its liquidity providers (IC Markets is an ECN broker), resulting in the execution of client trades at prices at they shouldn’t have been done.
One trader who claimed to have lost $40,000 said that the rate misquotes were so far away from the market price that the misquote basically caused ‘fake margin calls’.
For its part, IC Markets said it was still working extensively to resolve issues with about 80 affected clients. IC Markets managing director Andrew Budzinski stated:
Any situation where a client was stopped out due to insufficient margin arising from unfavourable fills which we have since amended are being reviewed on a case-by-case basis, not dissimilar to the practices adopted by many brokers globally.
IC Markets is assessing whether further adjustments to client accounts is warranted. It is also apparently considering cancelling negative client balances, although a final decision has not been made.
We understand that the ‘problem’ actually stems from a very small number of clients (relative to the number of traders / trades placed that day) which followed a certain EA, whose stops ended up being problematic. But newspapers like ragging on forex brokers, so these articles – even in publications like these – aren’t surprising. A complaining client makes for good copy.
To be fair, we believe that a number of other retail forex brokers worldwide were faced with some of the same issues during a very hectic first half hour of trading the morning of Thursday January 15, after the Swiss National Bank announced it would no longer support the EURCHF 1.20 level. In an interview we posted with Saxo Bank, the company’s CFO/CRO Steen Blaafalk also described a half hour of relative illiquidity in CHF pairs that morning – meaning that it would have been difficult to value positions and execute trades. The brokers are now reviewing trades and clients on a case-by-case basis to fix any mistakes which may have been made.
The Sydney Morning Herald article can be seen here.
The Australian article can be seen here.
The Australian Financial Review article can be seen here.