Friday held a bit of a surprise for XTB’s Warsaw offices. Several individuals staged a protest right outside their office, demanding that XTB return the losses the retail investor incurred through a series of infringements. The brokerage firm was fined a whopping 9 PLN million.
This little protest was organized by an association of the local brokerage industry, calling themselves the “Trading Jam Session Foundation.” While it wasn’t a legion of thousands of people showing their displeasure, the few activists that did gather went out to make a point. They assembled at the city park, carrying signs that called for the money that traders lost due to this wrongdoing, be returned to their respective accounts.
This protest came a few weeks after a court in Warsaw upheld the PLN 9.9 million fine XTB was given by the Polish Financial Supervision Authority (FSA) back in 2018
XTB on the backfoot
XTB had started to sweat bullets when, in 2017, regulatory investigations began to focus on XTB. In particular, they found their execution model, something that is supposed to pass the full benefit of price improvements to their clients.
The KNF disagreed with this. They say XTB’s best execution rules were a failure, due to the lack of XTB implementing specific mechanics. The way XTB’s execution worked was that it detected price movements between receipt of an order and its execution, applying it in the purchase. While XTB’s smart execution did pass on negative changes to a transaction, it failed to detect a positive price. Sometimes, it was unable to work all together, and the trade wasn’t even executed. All in all, it didn’t look good for XTB.
XTB had challenged the initial ruling already. They claimed that the allegation of abusive price slippage took place more than a year after KNF’s guidelines were issued on the issue. They also claim it was a year after they changed its execution system, allowing the customers to gain from a fairer price model.
Of course, the company was outraged at this “unfair” treatment they had received. They stated they wholeheartedly disagree with the legal arguments pursued. They claimed that the “asymmetric deviation mechanism” isn’t violating any rule in its process to provide the best possible deal to XTB’s clients. They state it’s never affected their transaction results.
You know a group like this is starting to sweat when they don’t even name the thing that it really is. They pretty it up into some jargon in an attempt to distance it from the term.
The Trading Jam Foundation stated that they would continue with attempts to recover XTB traders’ losses. Specifically the losses during the 2014-2016 time period where this unfair asymmetric deviation occurred.