What gives you a complaint about the broker?


What gives you a complaint about the broker?


The situation in which a client or a consumer of goods and services is dissatisfied with the work of the organization providing certain services (selling goods) is not uncommon in any markets – from global economic to local commodity markets. There are also controversial situations in the field of over-the-counter foreign exchange trading, which is most often directly related to operating in the Forex market – one of the main international trading floors

What could be the cause of controversy?

In fact, the lack of legislative regulation makes the Forex market extremely vulnerable to various types of fraudulent schemes and unfair actions of intermediaries, forex brokers. Thus, traders’ claims are often connected with quite specific problems:

  • Denial of payment/ closing of the account;
  • disconnection from the terminal during the bidding process;
  • untimely response to a trader’s requests;
  • et cetera.

As a matter of fact, the lion’s share of problems falls on the moments of interaction between a trader and a broker, which sometimes require a high level of coordination and rapid response to changes in the market situation. And it’s not easy to achieve that. Especially if the broker is not under the jurisdiction of the local authorities and is registered somewhere in the Virgin Islands – in an offshore zone that allows for free circulation of capital. That is, it may not be afraid of prosecution and other unpleasant consequences of their own activities.

Should I file a complaint against the broker?

But even in the absence of a clear regulation of the brokerage services market in the framework of over-the-counter trading, it is still possible to find control over an unscrupulous broker. However, the result may not be worth the effort. After all, in many countries, and in Russia in particular, any decisions made by private regulators are recommendatory and do not have to be implemented, because they do not entail any responsibility. And in order to get at least such an optional solution, you need to have a broker in one of the associations that have some influence on their members.

If we are talking about a Russian brokerage organization that is a tax resident of the Russian Federation, everything is a little easier. And to solve disputable questions, in particular, connected with fraud of the broker, it is possible to address to law enforcement bodies.

For U.S. brokerage companies, it’s still easier. In this case, it is possible to file a complaint against the intermediary’s activities with the NFA, one of the most influential associations regulating activities in over-the-counter markets. At a minimum, such an appeal will provide a justification for the broker’s actions in the disputed situation. As much as possible, you can expect to meet your requirements.

What gives you a complaint about the broker?

In theory, a complaint to the regulator or representatives of the dealing centre/organisation on whose behalf the broker acts should have very specific consequences. Namely, the settlement of the conflict or the substantiation of the broker’s actions in terms of the internal rules of the organization/cooperation agreement in force. To learn more about how and where to send your complaint to the Regulatory Authority, please see this section.

As for the attempts of judicial settlement of such situations, it is the private clients of brokers, i.e. traders, who suffer most often. After all, even in the event of bankruptcy, a brokerage company must first of all satisfy the requirements of corporate clients. And only the second is to deal with obligations to private investors.

What can prevent the broker from returning the client’s assets immediately? Market conditions in which there are long-term obligations and a lot of other nuances allowing broker organizations to legally use funds of their clients in margin transactions or even for personal purposes. How is that possible? The fact is that most of the standard contracts include points that allow withdrawing funds from traders’ accounts and transferring them to other accounts/launching them in the course of trading operations. However, in most cases the seized funds are safely “deposited” in the accounts of the company owners. But it is not always possible to withdraw them immediately – because brokers often prefer to play “long”. And even the existence of an official ban on mixing the funds of a broker and his clients in the course of trading operations (within the framework of the resolution of the FCSM of the Russian Federation of 13.08.2003) does not cancel the risk that it is your broker who will be a fan of putting his hand in someone else’s pocket.

Is there any way to influence the development of the situation if the broker refuses to withdraw funds from the client’s account? Yeah. If you file a complaint with a regulator with influence on the broker. Or try to use the possibilities of civil law proceedings. After all, the brokerage activity in Russia is equal to the agency activity. And, theoretically, it is still possible to bring an unscrupulous “agent” to justice.

And what to do if a trader dealing with banking organizations has problems with receiving funds? In this case, the regulator is the Central Bank. This means that controversial moments may arise only in case of bankruptcy of the broker. And here it is important not only to apply for a refund in time, but also to do it according to all the rules. After all, only in this way can you be among those to whom the funds from the special brokerage deposit will be paid. All other appeals will be considered in the order of general priority, and traders belong to the third category of creditors, receiving compensation in the last place.

Learn more about the basic rules of choosing a brokerage company in the article “How to choose a broker?