Washington, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) settled charges against Forex Capital Markets Ltd. (FXCM Ltd.) on August 3, 2011, for operating as a retail foreign exchange dealer (RFED) without proper registration. The London-based firm conducted leveraged forex transactions with U.S. customers without registering with the CFTC, a violation of regulation 5.3(a)(6)(i).
According to the CFTC’s order, FXCM Ltd. never held any registration with the agency. The charges stem from new regulations enacted on October 18, 2010, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which require forex dealers to register and adhere to investor protection standards.
The CFTC found that between October 18, 2010, and October 29, 2010—an 11-day period immediately following the implementation of the new regulations—FXCM Ltd. acted as an RFED for U.S. customers who were not considered Eligible Contract Participants. These transactions occurred without the firm being properly registered as an RFED.
The settlement requires FXCM Ltd. to pay a $140,000 civil monetary penalty and to cease and desist from further violations of CFTC regulation 5.3(a)(6)(i). The CFTC emphasized that registration is a critical component of protecting the public and ensuring the integrity of the commodity markets. Operating without registration is considered a “serious violation” of the Commodity Exchange Act (CEA).
The case was led by CFTC Division of Enforcement staff members Eugenia Vroustouris, Rick Glaser, and Richard Wagner.
Source: CFTC.gov
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