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US forex broker Forex Capital Markets, aka FXCM (NYSE:FXCM), has decided to discontinue its introducing broker (IB) partnership with Avail Trading Corp., operating under the brand ATC Brokers, which recently filed for bankruptcy, online forex media LeapRate reported on Thursday, citing an email sent by FXCM to its clients. The broker will stop acting as a FXCM IB, starting the end of the trading day on 18 March, 2016.
FXCM ensures its clients who trade via ATC Brokers that their investments are safe as they are held by FXCM and not the IB.
Overall, FXCM’s decision to drop the partnership will not affect ATC Brokers’ clients since they will continue to have a trading account with FXCM under the same trading conditions, retaining their open positions and account information. The only difference will be that accounts of investors who use ATC Brokers’ trading platform will be transferred on FXCM’s Trading Station platforms. Those who wish to continue trading on MetaTrader 4 (MT4) will be able to transfer part or all of their funds to a MT4 account.
ATC Brokers filed for bankruptcy with the California Central Bankruptcy Court under Chapter 11 of the US Bankruptcy Code on 9 February, 2016, over unpaid liabilities of $1.56 million. Usually, companies which file under Chapter 11, or the so called Reorganization chapter, aim to gain some breathing space while reorganizing their finances and arraigning payment plans with creditors. In such cases, companies usually intend to continue their operations after the bankruptcy proceedings have been finalized.
ATC Brokers has a UK-based and regulated sister company. The UK broker’s clients can receive back up to £50,000 of their investmetns in case of the broker’s default under the Financial Services Compensation Scheme (FSCS). Under the US laws, however, no fund safeguards are available for brokers of retail forex and futures trading instruments.
It is not clear whether the US broker’s bankruptcy procedure or the termination of the FXCM partnership will affect the UK broker.
FXCM is a registered futures commission merchant (FCM) and a retail foreign exchange dealer (RFED) with the US Commodity Futures Trading Commission (CFTC). It has a unit registered and regulated in the UK, as well as others that fall under the regulation of the relevant authorities in Australia, and France.
Avail Trading Corp. is a member of the National Futures Association (NFA) and is a registered introducing broker with the Commodity Futures Trading Commission (CFTC). California-based ATC Brokers was set up in 2005, while its UK sister company was established and license by the Financial Conduct Authority (FCA) in 2014. The two brokers offer trading in forex. They both support the MT4 trading platform and its Trade Copier service. The US unit, however, also offers trading in futures via the ATC Trader, which is its own proprietary platform for futures trading.