Last week there was information on Chinese media commenting on a XM China Shanghai office. AtoZForex.com shares the official information from XM legal team on this subject.
7 April, AtoZForex – The Chinese Forex market is complex. The market is not like what you are used to in Europe nor in the US. The Chinese Forex market much depends on IBs, fund managers and most important of all, trust! As long as this trust is there foreign Forex brokers tend to enjoy the benefits. However, if the trust is broken, hell will break loose on those brokers.
When, comments came to AtoZForex about possible XM China office police intervention we reached out to XM directly by contacting XM Cyprus offices. According to Anna Miruna, XM Cyprus representative who answered the phone "these are allegations":
"These allegations of non-payment to customers and IBs are untrue, we are in the process of taking legal action."
China IBs and Affiliates have conflict of interest
It seems like all the China based Forex issues are based on the same scenario. IBs and Affiliates push their limits trying to get as much commission as possible.
The issue in Chinese Retail Forex is that in China IBs and Fund managers have conflict of interest with their clients. You will see a client (investor) depositing money with his IB expecting this IB to trade for him. However, the IB ultimately has a CPA or volume based agreement with the broker. These IBs focus on what commission they generate more that their trading results. Thus, often these IBs or fund managers will go over and beyond their boundaries having a conflict of interest. (The above is just an example of the overall Chinese Retail Forex industry)
XM China Shanghai office official information
According to the official update provided by XM legal advisory team, on 29 March 2017, three individuals entered the office of Shanghai affiliate company of XM without being authorized and with no warning. The three individuals demanded a sum of $5,700 as a lump sum compensation for their alleged losses and rebates incurred in their XM accounts. They have gone forward harassing the staff and taken photos as well as the videos of the office.
The affiliate company employees therefore appealed the police in order to end the harassment of these three individuals. Therefore the police attended the Shanghai affiliate company of XM to remove the three individuals from the premises.
Furthermore, according to the official information provided to AtoZForex, the given affiliate office does not accept customers of XM. Meanwhile, the office continues to be occupied by the affiliate and its employees.
Forex trading carries a high level of risk:
- Of course Forex and any other leveraged products carry high level of risk, therefore you should never invest the money that you can not afford losing. This is of course covered by law for every regulated broker, including XM.
- Referrals sign a contract that the Broker remains the right to make changes to the commission structure.
CySEC against IB business
Just earlier this week the CySEC chairlady explicitly talked about the IB business wrongdoings by the brokers. The issue in China due to incurred loss of commission also demonstrates how important it is to have a balanced marketing operations and control IBs & affiliates.
Indeed, at AtoZForex.com we believe that any entity trading on client behalf or providing education or introduction can not and should not work with rev-share commission. Indeed, if a so called fund manager receives volume commission for every order he opens, how could you expect him to trade without conflict?