August 3, 2011
London-based Forex Capital Markets Ltd. Ordered to Pay $140,000 Penalty to Settle CFTC Charges of Acting as an Unregistered Retail Forex Exchange Dealer
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges that Forex Capital Markets Ltd. (FXCM Ltd.) of London, U.K. acted as a retail foreign exchange dealer (RFED) by conducting retail leveraged forex transactions with U.S. customers without registering with the CFTC under the agency’s regulation 5.3(a)(6)(i). FXCM Ltd. has never been registered with the CFTC in any capacity.
The CFTC order requires FXCM Ltd. to pay a $140,000 civil monetary penalty and to cease and desist from further violating CFTC regulation 5.3(a)(6)(i).
Today’s action stems from new regulations that the CFTC enacted on October 18, 2010, implementing certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The new regulations also require forex dealers to take steps to protect investors, including maintaining capital and records, to reduce risk and increase transparency. (See CFTC Press Release 5883-10.)
The CFTC order finds that, from October 18, 2010 through October 29, a period of 11 days immediately following implementation of the new regulations, FXCM Ltd. acted as an RFED counterparty to U.S. customers who were non-Eligible Contract Participants in connection with leveraged retail forex transactions without registering as an RFED.
The CFTC’s order emphasizes that the CFTC’s registration requirements for commodity professionals are “a cornerstone of the regulatory framework enacted by Congress to protect the public.” Registration is the “linchpin of the CFTC’s ability to perform its statutory functions of monitoring and enforcing” the Commodity Exchange Act (CEA), and the CFTC has recognized that the operation of an unregistered entity is a “serious violation” of the CEA and a “threat to the integrity of the industry,” according to the order.
CFTC Division of Enforcement staff members responsible for this case are Eugenia Vroustouris, Rick Glaser, and Richard Wagner.
Last Updated: August 3, 2011