The client of the broker “company” which is certified by the Euro Trade Commission sent a complaint:
The owner used account No. 23287413 to trade in the Forex market and the US stock market. According to the client, before the incident 4 positions were opened 6217814, 96218111, 96217752, 97823424 for the instrument: WTI (West Texas Intermediate).
Before the incident:
- the sum of long positions at WTI quotation was equal to 68,000,
- the sum of long positions on the WTI quote was equal to – 320,000
- the sum of long positions on the WTI quote was equal to – 600,000
- total long position at West Texas Intermediate – 988,000
This situation with the company’s customer account occurred 23.01. 2020 at 16:13 (according to the server provided by the broker).
Explanation: On Wednesday evening, when the American trading session opened and there was a significant drop in the price of WTI crude oil. All customer positions were closed by the broker at a stop-out, due to a deficit of margin. The client received a stop-out loss of 72 684 $.
In the explanation, it is also said that only the broker had a drop in WTI oil at the trading terminal and there is no other evidence than screenshots from the terminal and the client’s explanation. The client demands to solve this situation in his favor by compensating losses on the WTI positions closed by stop-out, in the amount of $72 684 . This information is to be checked by the Euro Trade Commission and to make decisions based on data obtained from open sources.
Representatives of the broker gave the following answer: the client has no reason to complain because all transactions were closed correctly and at the actual price at the time of closing. In order to document all this, the broker company sent a report on the client’s positions in accordance with internal rules. Digital data were also provided from the server’s log for 5 trading days, this client, and a tick-off journal of WTI quotes for four days.
The following is the content of the letter sent to the broker and client:
|Claim № *****||*****|
|Date of Claim||Date of Reception of Claim by the Commission|
|Reply on the claim of||24.02.2020|
Settlement of the claim was announced on the basis of data received from both parties by e-mail.
For an impartial settlement of the claim, officers of the Euro Trade Commission reviewed the evidence received from both parties that were sent by the parties and based on these documents concluded:
- Trading on the commodity market is accompanied by high risks, since the opening price of the trading session today may differ significantly from the closing price of yesterday. This situation greatly affects the value of assets and causes a gap in price. This fact should be taken into account and acknowledged by the client when trading in this market.
- By opening an account with a broker, the client agreed to the rules set forth in the “Trade Agreement” tab, which in turn are located on the broker’s website. These rules say that the client’s spread is floating and the stop out level is 20%.
- By requesting WTI oil quotes data from the provider of this broker, the commission concluded that the quotes were not correct and were at 61.10 / 61.20 at the time the position was closed by stop out. From the report of the liquidity provider it turned out that the quotes were also at the level of 65.10 / 65.20 and are reliable.
- For an impartial conclusion, it was required to request data on the cost of WTI crude oil from other liquidity providers that would not intersect with this broker and its supplier. When comparing quotes from third-party suppliers and a broker, it turns out that the quotes are identical for 4 days as set out in the broker’s tick report. Accordingly, Euro Trade Commission staff found the market value of WTI not normal.
- Based on the server entries sent by the broker, it is clear that the margin in the client’s account, after the opening of the US trading session, fell below the level of 20% set by the contract. Due to insufficient money in the account, the client’s positions were closed automatically based on market prices.
Based on all the above items, Euro Trade Commission employees came to the conclusion that the broker not fulfilled all the obligations under the contract concluded with the client.
In this regard, Euro Trade Commission employees decided to reimburse the client for the requested loss of $72 684.