According to an announcement made by FxPro, the company is starting a transparency initiative with the publication of its execution statistics. In times when trust in the retail foreign exchange industry has been shaken by the Swiss National Bank’s black swan event, this information is more than welcome.
During the month of March, the orders of clients of FCA and CySEC regulated agency broker FxPro got mostly positive slippage execution. About 36% of the order flow has been executed “at quote”, another 26% were “positive” and the remaining 28% were “negative”.
Once a client sends an order to the market, the execution price of the order may vary from the one he clicked on. With true-agency execution brokers like FxPro this may result in better or worse levels of execution. According to the statistics published by the company, in the majority of cases clients received quotes matching or better than they had requested.
In addition, when the price moved too much clients could get requoted with a different price on display. FxPro publicized that 4.32% of client orders got requoted throughout the month of March. Amongst these, 2 percent positively and 2.32 percent negatively impacted prices.
To clarify what this means, we will illustrate a requote with an example. A client of an agency execution broker sends an order to buy the EUR/USD at 1.0858. During the time his order gets to the liquidity provider in order to get executed, the market price moves substantially and in order to execute the trade a new quote appears for the client to confirm or deny execution.
That can be negative for him (i.e. 1.0860), or a positive one (i.e. 1.0856). When the client sends a buy order a lower price has a positive impact on his position, while if its higher, it has a negative impact on the trade. The reverse holds true when the client sends a sell order.
Commenting in the announcement, the CEO of FxPro, Charalambos Psimolophitis, said, “At FxPro we have long been supporters of transparency and fairness in the Forex industry, and have worked hard to eradicate all conflicts of interest between broker and client.”
“Having adopted a Hybrid Agency Model, we provide our clients with not only superior educational resources and trading tools but also with a guarantee of their funds’ safety. In an industry where it is taken for granted that slippage almost always goes against the client, we are pleased to demonstrate that this is not in fact the case,” he explained.
Mr. Psimolophitis said in the announcement that other brokers should make efforts to publish similar data, “As the topic of slippage symmetry comes into greater focus, we encourage other brokers to be as forthcoming with their own execution statistics.”