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Screenshot of a breaking news alert e-mail from Q2 2017
The Securities and Futures Commission (SFC) has reprimanded and fined GMO-Z.com Forex HK Limited (GMOHK) $1.6 million for deficiencies in its order execution and slippage handling procedures, and failures in its electronic trading system for leveraged foreign exchange contracts.
In August 2016, the SFC and GMOHK jointly engaged an independent reviewer to review GMOHK’s controls, which found that:
- GMOHK’s order execution and slippage handling procedures and the relevant policies were inadequate, and resulted in 243 transactions of 17 clients involving more than $270,000 being executed at the last tradable price instead of the next available price;
- GMOHK failed to adequately disclose to its clients its policy that the clients’ order execution would not be confirmed until GMOHK had hedged its risk exposure; and
- GMOHK’s electronic trading system for execution of client orders in leveraged foreign exchange contracts did not operate as intended and could affect the execution price and the execution time in certain circumstances.
The SFC considers that GMOHK’s failures fell short of the standards as set out in the Code of Conduct.
In determining the sanction, the SFC considers that GMOHK’s cooperation has significantly expedited the investigation and disciplinary proceedings. Similar failures would have resulted in a substantially higher level of fine.