## FOREX TRAINING COURSES IN MALAYSIA >> Forex News

Archive for the ‘Forex News’ Category

Greek Euro Exit Likely Within Days

The game is up for Greece as there is surely no way back for the country and a rapid Euro exit is increasingly likely. Without decisive action, the Euro is also likely to come under increasingly severe selling pressure as the financial crisis spreads. In theory, the EU and IMF can continue to provide the funds agreed under the existing bailout programme, but this will only delay the inevitable as on the current trajectory Greek public debt is likely to be at least 180% of GDP next year. The collateral row also illustrates how difficult it will be to keep EU members on board and willing to contribute to the planned second bailout package. Indeed, there is a high risk that the second bailout will unravel within the next few days.

Greece will have to reflate its economy and default on its sovereign debt to help secure a medium-term recovery and this will not be possible within the Euro-zone. It is increasingly likely that Greece will be sacrificed politically and economically in an attempt to keep the rest of the Euro area intact and aim for a more orderly move towards greater fiscal union even though this may be politically impossible.

The market’s vote of no confidence in Greece and the bailout package could hardly be clearer as Greek bond yields rise exponentionally, at one point the 2-year yields rose to a staggering 55% on Monday. The only question now appears to be the timing and method of Euro exit. Greece can either make the decision itself or it will effectively be forced out by the other members.

The decision could be taken out of Greece’s hands by the German constitutional court which will rule on Wednesday whether the EU bailouts were legitimate under German Law. If the court rules unambiguously that the bailouts were unconstitutional then the Euro-zone in its current form would have no chance of survival as the peripheral countries would come under immediate and terminal attack. A more complex and less clearly defined ruling looks the more likely outcome which would demand additional guarantees for future aid.

Such an outcome would also create market uncertainty and confusion. It would also make life even more difficult for Greece, but would not be decisive enough to force am immediate exit. More importantly, it would intensify political tensions in Germany as Chancellor Merkel would find it even more difficult to gain parliamentary support for an expanded EFSF as domestic opposition would increase further.

Tensions are flaring throughout the Euro area as Italian bond yields rise even with the support of ECB buying. Last week, the ECB almost doubled its buying of peripheral bonds as they bought EUR13.3 compared with EUR6.7bn the previous week. Italian yields have still increased back to the 5.50% area and credit-default swaps also rose sharply on Monday. European banking stocks were also sold very heavily during Monday.

The ECB is clearly extremely frustrated with the situation and has warned Italy not to slide on austerity measures in expectation that the ECB will prevent any market fall-out. The Italian government will continue to debate austerity measures on Tuesday at the same time as a General Strike has been called and the domestic willpower looks shattered.

The political and economic developments appear to have a surreal quality with key political players calling for action to stem the crisis, but simply insisting that measures agreed previously need to be implemented in full and more quickly. The calls for austerity in the face of recessionary conditions and rising debts will simply not work as the outcome will be for a further increase in debt and even weaker growth while political support will crumble.

In this environment, it is far from clear that the European authorities will be able to prevent a more substantial break-up of the Euro area. If Greece leaves the Euro, Portugal and Ireland would have great difficulties staying in while Italy would also be extremely vulnerable.

The only logical policy is for Europe to chop away as much of the periphery as is required to stop the infection from destroying the core. If they act quickly and promise more fiscal co-operation, then the casualty list may be small. The longer a decision is delayed, the more likely it is that countries such as Italy will also be forced out of the Euro area with the emergence of a two-tier Euro area.

join now button 300x134 Greek Euro Exit Likely Within Days

The 10 Worst Central Bankers In The World

burning money 300x224 The 10 Worst Central Bankers In The World Think your central bank might be messing around with your currency?

Global Finance magazine handed out grades to 36 of the world’s most influential central bankers, based on criteria like their ability to control inflation, stimulate growth, maintain a stable currency, and manage interest rates.

The bankers were given marks from “A” to “F.”

Only 6 received an A grade: Australia’s Glenn Stevens, Israel’s Stanley Fisher, Lebanon’s Riad Salameh, Malaysia’s Zeti Akhtar Aziz, the Phillipines’ Amando Tetangco Jr., and Taiwan’s Fai-Nan Perng.

Guest Who Is The Worst :

rasheed mohammed al maraj bahrain 300x224 The 10 Worst Central Bankers In The World

Rasheed Mohammed Al Maraj, Bahrain

2011 Grade: B-

Bahrain faces a shrinking economy and political unrest. The economy contracted 1.4% in the first quarter, according to Reuters. Emirates 24-7 reports that the country briefly suffered from deflation during the recession of 2008, and the Gulf Cooperation Council could someday threaten the central bank’s ability to make its own policy.

jean claude trichet european union 300x225 The 10 Worst Central Bankers In The World Jean-Claude Trichet, European Union

2011 Grade: B-

2010 Grade: A

The EU’s economic problems increase daily. Ominous signs that the sovereign debt crisis could result in global catastrophe threaten the success of the euro as a currency, and lack of growth throughout much of the eurozone doesn’t help. Trichet and his colleagues suffer partly from flaws in the EU system, but might also be doing too little too late.

philipp hildebrand switzerland 300x224 The 10 Worst Central Bankers In The World Philipp Hildebrand, Switzerland

2011 Grade: B-

2010 Grade: B-

The Swiss National Bank has failed to keep its currency under control, as currency traders have turned to the franc as a safe haven. The franc’s appreciation has damaged the Swiss economy, which depends strongly on exports. Rumors of a peg to the euro have dissuaded investors from purchasing francs recently.

duvvuri subbara india 300x225 The 10 Worst Central Bankers In The World Duvvuri Subbara, India

2011 Grade: B-

2010 Grade: C

High inflation (over 9%) persists regardless of the fact that the central bank keeps raising interest rates, according to Dow Jones Newswires. Growth has slowed due to this fiscal tightening, yet Subbara and his colleagues remain fixated on trying to get inflation under control.

ben bernanke united states.jpg 300x224 The 10 Worst Central Bankers In The World Ben Bernanke, United States

2011 Grade: C

2010 Grade: C

Critics have come out on all sides of Bernanke’s highly accomodative monetary policy. Quantitative easing had advocates and detractors alike. Bernanke’s decision to keep interest rates artificially low has resulted in the most divided Federal Open Market Committee in years. His detractors warn that such policies could produce runaway inflation.

andrs simor hungary 300x225 The 10 Worst Central Bankers In The World András Simor, Hungary

2011 Grade: C

2010 Grade: C

High interest rates due to excessive public borrowing have stifled Hungary’s economic growth, according to Reuters. Critics of central bank policy argue that such rates are unwarranted as inflation remains reasonably under control.

masaaki shirakaw japan 300x225 The 10 Worst Central Bankers In The World Masaaki Shirakaw, Japan

2011 Grade: C

2010 Grade: C

Reuters reports that the Bank of Japan has recently stepped in to tame the appreciating yen, but it remains to be seen whether they will be successful as the eurozone crisis deepens. However, fiscal tightening threatens to derail Japan’s still fragile recovery after March’s earthquake.

kim choongsoo south korea 300x225 The 10 Worst Central Bankers In The World Kim Choongsoo, South Korea

2011 Grade: C

Inflationary pressures could send prices out of control in South Korea, with a target inflation of 4% for the year. Price growth is likely to match or exceed GDP growth, despite one of the strongest years ever for the country in terms of exports. Though the central bank says it is taking measures to curb inflation, their efforts are not producing result.

abdullah bin saud al thani qatar 300x225 The 10 Worst Central Bankers In The World Abdullah bin Saud Al-Thani, Qatar

2011 Grade: C-

Runaway non-rent inflation earlier this year led the Qatari government to peg the riyal to the dollar. Given the situation, the IMF argued that the peg was “appropriate,” and urged Qatar’s central bank to develop its technical and operational capabilities so that it could someday have its own currency.

Mercedes Marcó del Pont, Argentina

2011 Grade: D

2010 Grade: D

According to the Associated Press, Moody’s gave Argentina’s private banks a negative outlook earlier this month. The agency cited central bank policies that produced high inflation and negative interest rates as dangerous for the banks. WSJ reports that inflation stands above 20%.

Source : From businessinsider.com ..

NFA Fines FXCM $2 Million For Slippage Malpractices, FXCM Will Credit Clients Back

Apparently Non Dealing Desk doesn’t mean you get the best execution – NFA has just announced that it heavily fined FXCM for slippage malpractices. FXCM will pay $2 million directly to NFA and will compensate all customers who suffered from this practice since June 2008. The details of this case are not much different from the similar fine of $459k which NFA imposed on Gain Capital for using the Virtual Dealing plugin and similar slippage settings.

FXCM seems to have taken this matter seriously and already started compensating clients as one of them sent me the following email:

Dear Client:

We have important news regarding your Forex Capital Markets, LLC (FXCM US) trading account(s). Last year, FXCM enhanced its No Dealing Desk forex execution by making Price Improvements (positive slippage) available on all orders. We have reviewed your past trading data and your account(s) has been identified to receive a price improvement credit.

Account Number(s): xxxxx

Price Improvement Credit(s): x

The credit will be deposited into your FXCM trading account(s) and will be available by August 28, 2011.

The details of NFA’s Complaint and Decision:

COMPLAINT:

On August 12, 2011, NFA issued a Complaint charging FXCM with retaining gains derived from positive price slippage; failing to adopt or carry out adequate procedures to ensure the efficient execution of all customer orders; failing to treat all customers equally when giving price adjustments; and failing to adequately investigate suspicious activity in all customers’ accounts. The Complaint charged FXCM and Niv with failing to supervise.

DECISION:

On August 12, 2011, pursuant to a settlement offer submitted by FXCM and Niv, FXCM was ordered, within 30 days of the effective date of the Decision, to make a good faith effort to credit the accounts of its customers the amount of positive slippage which its customers experienced on their trades from and after June 18, 2008. FXCM shall provide verification to NFA of these credits. In addition, FXCM was ordered to pay $2,000,000 to NFA as a monetary sanction. In the future, FXCM will not engage in price slippage or margin liquidation practices; and, in the future, when FXCM voluntarily gives a customer a price adjustment, it shall also determine whether or not it is appropriate to make the same price adjustment for other similarly situated customers.

Finally, within 30 days of the effective date of the Decision, FXCM was ordered to adopt and implement adequate procedures – or enhance existing procedures – to ensure the efficient execution of customer orders and to ensure compliance with NFA’s AML requirements.

Update – FXCM’s official statement:

NEW YORK, NY – August 12, 2011 – FXCM Inc. (NYSE: FXCM), a global online provider of foreign exchange (forex) trading and related services to retail and institutional customers worldwide, announced that its U.S. subsidiary, Forex Capital Markets LLC (“FXCM US”), has entered into a settlement with the National Futures Association (“NFA”). The settlement terms principally pertain to FXCM US’s practice concerning the execution of price improvements or “positive slippage” in its trading execution system prior to August 2010. The Company is also engaged in ongoing discussions with the Commodity Futures Trading Commission (“CFTC”) regarding this matter.

FXCM US originally enhanced its trading execution policy in August 2010 to help ensure that clients benefit from positive slippage on all market, limit and limit entry orders. The policy was further enhanced in December 2010 to address all order types, including stop and margin call orders, through FXCM’s No Dealing Desk (“NDD”) forex execution model.

Under the terms of the settlement, FXCM US has agreed, without admitting or denying any of the allegations, to pay a fine of $2 million to the NFA and to provide restitution, which the company estimates to be $8 million, to the affected clients. As disclosed on August 11, 2011 during its Second Quarter Earnings Conference Call and in related filings, the Company is making a reserve for both the restitution and fine associated with this settlement and for its ongoing discussion with the CFTC. Certain partners of FXCM Holdings, LLC have agreed to reimburse the expense in substantially the amount of such reserve, resulting in no impact to the net income of FXCM Inc. All clients receiving restitution will be notified within 30 days. Details for FXCM US clients can be found at www.fxcm.com/clients.jsp.

“We are pleased to have reached an agreement that resolves the NFA’s concerns and that we believe is in the best interests of FXCM, our shareholders and most importantly, our clients,” said Drew Niv, Chief Executive Officer of FXCM. “We previously enhanced our execution system to pass along all price improvements on every order type and remain committed to providing the most robust forex trading platform available.”

FXCM’s platforms display the best bid/ask spread streamed from the firm’s liquidity providers plus FXCM’s mark-up. Every FXCM NDD forex trade is automatically offset in a two-step process, designed to ensure that FXCM does not profit from a trader’s losses. In the first step of the execution process, a trader clicks on the price and the order is sent to FXCM. In the second step, FXCM automatically sends the client’s order to one of its liquidity providers to offset the trade.

FXCM’s execution system prior to August 2010 only offered price improvements to clients in the first step of the process. If a better price became available on FXCM’s platform in the fraction of a second after the client submitted the order but before the order was received by FXCM, the client would benefit from the price improvement. However, FXCM’s previous execution system did not provide clients with price improvements in the second step of the execution process, even if FXCM was able to offset the order at a better price, excluding FXCM’s markup. FXCM enhanced the execution system in 2010 so that clients now benefit from price improvements in both steps of a transaction for all order types.

The occurrence of price improvements is based on market conditions, including volatility and liquidity. Of the approximately $8 million being credited to FXCM US clients under this settlement, approximately $650,000 represents trades placed in 2010, less than 0.3% of the company’s trading revenues during that period. The largest portion of the credits relate to trades placed before 2009. For the portion of clients who are receiving restitution, the median amount will be $17.40.

As part of the settlement, FXCM also agreed to enhance its existing procedures to ensure the efficient execution of customer orders, modify its adjustment practices and to ensure compliance with NFA’s anti-money laundering requirements.

Mr. Niv added, “FXCM continues to strengthen its compliance program and internal supervisory procedures.”