FXCM seldom misses an opportunity to extol the virtues, as it sees it, of its ‘No dealing desk’ (NDD) execution model. But this week it goes further by establishing its ‘Execution Center’ website with the intention that it will “provide forex traders with detailed information regarding forex execution practices. FXCM will continue to update this area over the coming months with insightful information and analysis.” FXCM’s first foray into ‘detailed information’ is the release of two cartoons comparing its NDD model and the ‘dealing desk’ (DD) model. The NDD cartoon shows a retail trader smiling with happiness from the “fast, automated and fair” system; the (DD) cartoon has the retail trader pulling his hair when confronted with continual re-quotes.
The Gain Capital initiative, or more precisely that of its retail platform Forex.com, comes in the wake of some less than useful publicity a couple of months ago (see FX news: Gain Capital settles with NFA). Forex.com has launched a monthly ‘Trade Execution scorecard’ which, given that the platform uses a ‘dealing desk’ execution model, tackles the issue of pricing transparency from another direction. The ‘scorecard’ shows data for the time taken to execute trades and slippage (or improvement) on the filling of limit orders. The initial scorecard looks quite impressive: 99.7% of trades are executed within one second and the average time taken to execute is 0.08 seconds; 73% of limit orders see an improvement in execution price against order level with the average improvement being 0.71 pips.
It will be interesting to see if the ongoing publication of Forex.com’s data is enough to both neutralize the doubts shed by the NFA on its pricing policy and to truly contest the virtue of FXCM’s NDD model.
