CMC Markets told to refund tens of thousands on SNB trades in UK ruling

Author: Adam Button | Category: News

UK regulators side with clients in complaint against CMC Markets

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Several clients of CMC Markets were informed they will be refunded after requotes in the period after the Swiss National Bank eliminated the floor in EUR/CHF on Jan 15, 2015.

A group that's handling complaints showed us documents dated yesterday that inform clients that the UK financial ombudsman has ruled in their favour and against CMC Markets.

"The crux of this complaint is whether or not CMC was right to make the retrospective adjustments to the price," one letter reads.

"...I think that the business hasn't acted fairly... "My conclusion therefore is that the complaint should be upheld."

It goes onto say that cash adjustments should be reversed, any interest on paying negative balances should be refunded along with various compensatory payments for the people stuck in this 10 month saga.

There was liquidity

CMC Markets claimed: "Our platform published incorrect prices by failing to represent the complete absence of liquidity in the underlying financial market."

The Ombudsman ruled against this and showed that ample trading took place in the minute after the announcement -- up to 9:31 am.

As a result, the Ombudsman ruled that CMC "has not provided any evidence to support this assertion" of a lack of liquidity.

"Anecdotal evidence as well as the information we have received in respect of similar complaints makes it very clear that trading in the various Swiss Franc currency pairs did take place and in very substantial volumes. I accept that liquidity may have been drastically reduced from typical levels and trading was difficult. I do not accept CMC's assertion that there was a 'complete absence of liquidity'," it says.

They believe about 400m CHF equivalent of client trades took place between 9:30 am and 10 am BST.

Timing is everything

The Ombudsman believes there was ample liquidity and electronic platforms and liquidity providers were operating somewhat correctly at least until 9:32 am.

This is an important precedent for those who made trades in the two minutes after the floor was lifted. During that time, the ombudsman ruled that CMC's platform was working properly and generating prices reflective of the underlying market.

What's next?

We understand that the decisions are binding so CMC Markets will be refunding payments or cancelling debts. (Update: A CMC Markets spokesman called to tell us that this decision isn't final but wouldn't say whether CMC will make the refunds or fight the decision).

 Similar complaints are outstanding against IG, ETX and Alpari.

We understand that IG has modified client prices in EUR/CHF due to similar complaints but they are still way off the mark at 1.0249 (compared to the 1.20 floor).

If you're looking for a forex broker, check our listing and remember the importance of regulation.

If you have any further information about SNB trades and regulator decisions, please contact us. We've been working hard to make sure retail clients get the best result possible.
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