Trading Forex/CFDs on margin carries a high level of risk and may not be suitable for all investors as you could sustain losses in excess of deposits. The products are intended for retail, professional and eligible counterparty clients. For clients who maintain account(s) with Forex Capital Markets Limited ("FXCM LTD"), retail clients could sustain a total loss of deposited funds but are not subject to subsequent payment obligations beyond the deposited funds and professional clients could sustain losses in excess of deposits.
Originally founded in New York in 1999, London-based FXCM grew rapidly on both sides of the Atlantic, becoming one of the world’s largest retail forex broker following the 2010 acquisition of UK-based ODL Group. Regulatory issues began one year later, starting with fines triggered by accusations of slippage malpractice and ending with a permanent ban on U.S. operations as part of a February 2017 settlement with Commodity Futures Trading Commission (CFTC). Jefferies Financial Group, formerly Leucadia National Corp, stepped in as primary economic owner after the bankruptcy of FXCM’s parent later that year and still holds a majority interest.
The broker is now licensed in the United Kingdom, Australia, South Africa, and several EU countries, providing a limited range of forex, CFD and spread betting products to retail, professional and institutional clients. It currently runs 10 sales offices on 5 continents, leveraging the Jefferies relationship to restore its damaged reputation. They adhere to EU Markets in Financial Instruments Directive (MiFID) requirements, revised under MiFID II and MiFIR in January 2018, and are compliant with ESMA regulations that went into effect in August 2018. Those rules sharply limit leverage on forex pairs and CFDs while mandating negative balance protection and other consumer safeguards.
Impressive platform choices support all types of trading styles and account levels while a robust educational portal focuses primarily on lower-skilled clients. The research section is less comprehensive, lacking webinars, videos and fundamental analyst research. Bottom line trading costs are difficult to estimate from site documentation, generating transparency issues for both standard and active trader accounts. This lack of full disclosure would greatly benefit from multiple real-world examples and detailed side-by-side cost comparisons.
MetaTrader and homegrown Trading Station
Social/Copy trading platforms
Algo trading APIs and third-party specialty platforms
Weak CFD coverage
No share coverage
Specialty platforms incur fees
The broker is authorized in the United Kingdom through the Financial Conduct Authority (FCA) under registration number 217689 and insures clients against default for GBP 50,000 through Financial Services Compensation Scheme (FSCS). They provide no additional protection through private insurance. They are also regulated in Germany, Italy, France, South Africa, and Australia. Client funds are segregated from company funds but FXCM is counter-party for all client transactions through a dealing desk. The hookup with Jefferies Financial Group, a well regarded financial institution, goes a long way in fixing their damaged reputation but trust will take years to fully restore.
Clients can open forex, CFD and spread bet trades using the industry standard MetaTrader 4 or the broker’s homegrown Trading Station, which includes many additional features. They also provide a social/copy trading platform through ZuluTrade as well as multiple third party and API applications. However, many higher-end products incur subscription fees or are restricted to active trader accounts. The Trading Station web platform has migrated from Adobe Flash to HTML 5 in the last year, adding a layer of security lacking in the soon-to-be discontinued Flash.
Trading Station for iOS, Android and the web are more feature rich than MT 4 mobile apps, which are offered as an alternative. Clients can access a broad range of technical indicators and advanced order types but two drawbacks undermine the proprietary app’s functionality. First, it provides no second layer of authentication, continuing an omission found in MetaTrader platforms. Second, push notifications for Android are not enabled and don’t support real time alerts, a core feature on other mobile platforms.
Research sections feature a standard set of trading tools, including economic calendar, third party market news and daily technical levels. However, the depth of basic and advanced fundamental analysis is well below industry average, with few in-house or macro market resources. The section doesn’t stream webinars or videos, adding to a subpar portal that could use a major redesign. In addition, many technical analysis resources are hidden behind an entry form that requires opting in to a marketing list.
The educational section is more robust than the research portal, providing broad- based forex education and platform tutorials. Clients can sign up for live classrooms or access a subset of past recordings while a separate video library focuses primarily on platform tutorials rather than technical or fundamental education. Clients can also get a basic set of trading guides through email by registering for the option marketing list. The portal lacks CFD education and would greatly benefit from a dedicated search function or one-page listing of all resources.
An active trader program offers cost savings as well as tighter spreads, market depth, and other features that include four free APIs. However, qualified candidates will pay commissions instead of spread costs, raising confusion about actual savings over a standard account. The broker provides VPS hosting but lower-end accounts will pay a $30 monthly fee. Automated and algo trading interfaces are impressive, including a number of high end third party platforms that incur monthly fees.
The list of forex, CFD and spread betting instruments is below industry average, with just 63 total securities that include just two cryptocurrencies – Bitcoin and Ether. There’s no share coverage and the list of exotic currency pairs is unusually small. UK and Ireland clients can choose between CFDs and spread bets, but pay attention to the fine print because they carry different average spreads unlike many UK brokers. Index CFDs feature a subset of major world instruments, but clients can trade just 9 major commodity CFDs.
UK accounts can be opened for £300, which is above average for this venue. Additional fees can add up quickly, undermining the usefulness of published average spreads. The fine print indicates the broker may be compensated through markups to spreads received from liquidity providers as well as markups to rollover fees. They also charge inactivity fees and higher than average withdrawal fees for bank wire transfers. And, although active traders gain access to dynamic live spreads and market depth, orders are still processed by the dealing desk rather than through the interbank system.
Commissions and Fees
Published commissions and spreads are average to competitive but the lack of side-by-side comparisons and real-world examples raise confusion about bottom line costs. The site publishes average spreads but there’s no time of day break out and trades made during off market hours are likely to incur much higher costs. This lack of predictability could deter many potential clients, especially with prior regulatory offenses undermining confidence. However, the broker publishes regularly updated positive and negative slippage data in an effort to rebuild trust.
The broker provides industry standard 24/5 phone and live chat coverage, with a broad selection of country-based toll-free phone numbers and a direct line to the trading desk. Clients can seek assistance through SMS messages and email. The site’s help section includes a well-organized breakdown of available topics as well as a dedicated search function. However, a simple inquiry on how to close an account responds by telling the client to contact the broker while offering no direct answer.
What You Need to Know
It’s tough to recommend the broker for retail clients because it’s been less than 2 years since they were banned from U.S. operations, and trust takes time to restore, especially with a financial institution. Transparency issues on bottom line costs, subscription walls, and the lack of direct interbank system trading access adds to our apprehension. FXCM offers a better fit for professional and institutional clients, with robust third party specialty platforms and a broad variety of APIs supporting sophisticated algo and automated strategies.
FXCm is great for professionals looking for a full-scale desktop trading experience. See how they compare against other online brokers we reviewed.
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