SFC reprimands and fines FXCM Asia Limited HK$4 million

The Securities and Futures Commission (SFC) has reprimanded and fined FXCM Asia Limited (HK FXCM) (now known as Rakuten Securities Hong Kong Limited) HK$4 million for regulatory breaches in relation to its order execution practice for foreign exchange (Forex) trading.

An SFC investigation found that from December 2006 to December 2010, HK FXCM and its affiliate kept profits totalling US$1,452,926.69 from favourable price movements in Forex trading that occurred between receipt of client orders and execution of orders, while unfavourable price movements were passed on to clients.

The SFC considers that HK FXCM did not treat its clients fairly, and failed to execute their orders on the best available terms and to act in their best interests as required by the Code of Conduct.

HK FXCM also inaccurately represented to its clients that their orders would be executed at the best available prices when in practice, its clients were deprived of receiving benefits of price improvements in relation to their trades.

The SFC further found that HK FXCM did not have proper internal policies and controls in place to ensure its order execution practice effectively complied with all regulatory requirements applicable to a licensed corporation.

In deciding the sanctions, the SFC took into account that HK FXCM:

  • co-operated with the SFC in resolving the SFC’s concerns;
  • has voluntarily agreed to make full restitution to the affected clients in the amount of US$1,452,926.69;
  • is now under new ownership of which 100% shares are held by Rakuten Securities, Inc. in Japan from September 2015 and the failures were attributable to the former management of HK
  • FXCM which has been replaced; and
  • has no previous disciplinary record with the SFC.

HK FXCM’s clients who did not benefit from price improvements in their trades as a result of the firm’s order execution practice will have their accounts credited within 30 days. HK FXCM will contact clients who no longer hold an account to notify them that their accounts have been temporarily reopened for this purpose.

See the full announcement here.

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