Customer Complaint Dated December 17th 2023

The decision on this complaint is based on the information provided by the brokerage company and the Client.

After a comprehensive analysis of the documentary evidence provided by the Client and the Broker the Dispute Resolution Committee of the Financial Commission has come to the following conclusions:

1. First of all, it should be noted that the incident on the Client’s trading account occurred at the very beginning of the Asian trading session after the weekend. The Client should be aware that the market very often experiences a significant decrease in liquidity during this period. In turn, this circumstance radically changes the flow of quotes, leading to a sharp widening of spreads and the formation of price gaps. The Client should be aware that trading operations in such market conditions involve significant risks. In addition, the geopolitical tensions in the Middle East region that occurred over the weekend (source), caused a significant increase in the market volatility of the financial instrument XAUUSD at the time of the incident.

2. Second, the Client should take into account that even 100% locking on trading accounts with a floating spread is impossible, due to the absence of a fixed difference between the Buy and Sell prices. In the case of position locking (which was the case in this case), spread widening automatically reduces the unrealized positive financial result on profitable positions, while increasing the unrealized negative financial result on unprofitable positions. In some market situations, spread widening can lead to undesirable consequences, such as Stop Out.

3. Third, according to the information received from the Broker (formal letter from the Broker’s Liquidity Provider regarding the abnormal market conditions in the period of the incident), in the period from December 3rd 23:15:00 UTC to December 3rd 23:58:00 UTC due to the immense volatility in the market of the financial instrument XAUUSD during that period, liquidity was limited, leading to high spreads, as most liquidity providers halting pricing altogether. The apex of the low liquidity and higher spreads regime was between the times December 3rd 23:27:00 UTC to December 3rd 23:40:00. After 23:40 prices were normalized and providers that halted pricing for those 13 minutes, have resumed their pricing.

4. Fourth, the trading terms on the Client’s account suggest a floating spread and a Stop Out at the 40% level. This information is clearly defined on the Broker’s website. By opening a trading account of the selected type, the Client agreed to accept the trading terms provided by the Company. In this regard, it should be noted that according to the information provided by the Broker, at the time of the incident, the spread in the financial instrument XAUUSD had widened significantly. As a result, the Equity/Margin ratio on the Client’s account fell below the critical level (40%). As such, due to insufficient margin, the disputed positions ## 49586486, 49596596, 49596622, 46155870, 48886713, 49259052, 49664998, 49674113, 48886673, 49021139, 49044482, 49175857, 49175865, 49258891, 49693280, 49664695, 49664989, 49693254, 49699199, 49610305, 49696990, 49697606 were liquidated by the Broker. This fact is confirmed by the server log records, provided by the Broker. In the period of the incident, the Broker acted in full compliance with the provisions of their regulatory documents:

14.2. The Client shall pay the Initial Margin and/or Hedged Margin at the moment of opening a position. The amount of Initial Margin and Hedged Margin for each Instrument is defined in the Contract Specifications.

…

14.6. XXXXXX is entitled to close the Client’s Open Positions without the consent of the Client or any prior Written Notice if the Equity is less than a certain rate depending on the account type as stipulated on the Website.

5. Finally, to ensure an objective investigation of the case the DRC requested historical price data on the financial instruments in the disputed transactions from other independent providers of financial services. Financial Commission uses several different sources, such as Tradeproofer, Tradefora, Verify My Trade, TrueFX, FX Benchmark and some others to verify the quality of trades’ execution. A comparison of the Broker’s quotes offered to the Client with the quotes from independent sources confirmed the fact that in the period of the incident the quotes on the financial instruments in the Client’s portfolio, published by the Broker reflected the actual situation on the market.

Summarizing all the above and taking into account the abnormal market conditions during the incident, the experts of the DRC have made their decision in favour of the Broker. In the general opinion of the DRC members, at the time of the incident, the Broker acted in full compliance with the provisions of its regulatory documents and the trading rules established by the Company. The experts of the DRC found the execution of the disputed orders correct and legitimate since the quotes on the financial instruments published by the Broker were consistent with acceptable market prices. Accordingly, the claim of the Client for compensation of losses in the amount of 16661.72 USD was found by the members of the Committee as having no grounds.

This complaint was reviewed by the members of the Dispute Resolution Committee of the Financial Commission and was processed by the Head of the Committee.

Head of DRC