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Imaginary prices of gold

XAUUSD spiked 13 dollars down during the night for 15 minutes but only on Darwinex platform. Explanation?

Liquidity Provider issue most probably. Contact Darwinex support info@darwinex.com directly if you are affected.

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My friend @gories68 has been refunded but I still see a -4% on his KKH .
The same on ZAG managed by @TheMarketBank

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That is a real problem !

The answer of Darwinex can not only be financial compensation. At the very least, the notional Darwin equity curve needs to be re-established.

I remember that there was this kind of problem at JFD Brokers, and it seems to me that they or their aggregator is creating a sort of filter against spikes type aberrations.

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This kind of incident, even if Darwinex is not responsible, creates big damage!

I who promote Darwinex on various forums, I am regularly faced with negative reviews that rely on screenshots of spikes.

And in the collective spirit, spikes = rotten broker who hunt the stops, etc.

In short, I hope that Darwinex takes this type of incident very seriously.

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Hi guys,

I can confirm we are not the only broker that was affected by this (some of our clients have provided screenshots from other brokers).

Apparently, a big bank that was providing liquidity to our LP executed orders at 20:00:07 (when market was already closed!), which caused this strange candle. All the brokers that use that bank as LP were affected.

We proceded to review all the affected orders and are in the process to compensate users who were affected.

We are also claiming compensation from our LP because yesterday’s candle is definitely unacceptable, especially when the market is closed!!!

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Fellow traders on the Spanish Darwinex Telegram chat shared the image below of their Pepperstone account:

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There was an issue yesterday morning impacting NASDAQ where some providers took a test data stream and displayed it as real prices. It may be something similar hit gold and some of the big liquidity providers picked up on it by accident?

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Dear @Medialux

We understand your concern.

As a matter of fact, we share it. Without going into details, I can confirm we’ve taken a non-trivial financial hit by making every trader and investor whole on whatever losses this spike created. In short: we’ve passed on the chip onto our shoulder, as we think this is the morally correct stance when stuff happens that shouldn’t happen. Note that we did this not knowing if we’ll be re-imbursed ourselves, at the time of writing this we’re still awaiting the outcome of the conversation between our PB and the LP.

Beyond that, this points to an operational issue on our PB side, which highlighted:

  • The typical “off-quotes” provisions seem not to have worked - 200 bp spikes are … better not to comment
  • It seems as though a single LP drove the price - which imho should invalidate/disable the feed

The fact that it was an abnormal market close (4th of July) should be a mitigant… but all in all it was a pretty unpleasant way to finish a monday. In fact, several employees at our end stayed on until 2 AM to process all the compensations.

Last, but not least - what can Darwinex do? Unfortunately, not much as long as we retain our “matched principal broker” restriction. This means that Darwinex cannot, under any circumstances take on market risk dealing in an OTC instrument. Because this makes us a price taker, all we can do is “accept / pass-on” whatever prices we receive from the “market”. Whenever we think prices are off-market, we can choose to and pay out of our pocket, the way we’ve done this time.

As we’ve discussed ad nauseam, in webinars etc., FX is by far the largest Over The Counter market in the world… e.g. the market is the aggregate result of LPs competing with each other. In this case, it seems as though a single LP (the only one pricing at that point in time, because the market was closed) drove the price to the infinite and beyond. Just what a systemic risk this poses has been made abundantly clear by SNB, GBP Flash Crash, etc.

One has to wonder what regulators are waiting for… but in the meantime we are where we are, so as long as OTC is traded off-exchange this leaves three options:

  • Bite the bullet
  • Not offer FX (or other OTC instruments)
  • Relinquish our “matched principal” license… e.g. become a broker-dealer

Now it’s your turn. What would you have us do?

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Well I got slipped on this trade for just over 8% I complained straight away so I got a refund but they still honourd the stop so I’m still 2% down on from one trade that should of never happened iv tried to discuss this with customer service via chat email they have replied a few times but say the trade would of stopped me today so the stop stays I complained as soon as this happened the trade was only a scalp after I sent pictures and explanations the customer service did not reply kind of getting the feeling they did not want to reply and had said all they wanted to say not very good customer service and I can honestly say I’m not very happy with the way they have delt with me by cutting me off and not replying

also reading above about pepperstone having the same issue I’m in a trading room a few guys trade with pepper stone on non of there feeds were there any spikes on gold

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I also trade with other STP/DMA brokers (including ICMarkets and Pepperstone) and can also not see the spike …

  • Option 4?? Improve the service by finding out what some of the other bigger STP brokers do that have avoided this. More liquidity providers? A better PB relationship? Better technology bridges? Personally I feel more can be done than the options mentioned above?
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I don’t understand the discussion but I don’t know the contracts of Darwinex/Tradeslide with their LPs.

So if the market is closed, I cannot place an order and get a message - why could the LPs do so? Why did open orders still exist and why could they be filled?

Reversal of the transactions should be obvious - simply because the market was closed.

I documented it here first: ZAG -- The Market Bank

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Hi Juan,

Thank you for these clear and detailed explanations.

I would not fail to use these arguements and even link to your post when a chatterer will question the quality of Darwinex by referring to screen shots of spykes.

And congratulations for this excellent attitude of reimbursing the concerned customers, without being contractually obligated.

Perhaps a proactive announcement on the forum by the support team to report the incident would have been fine.

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You are right. We were overwhelmed with hundreds of messages and complaints on the chat and din’t think of this.

My fault.

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Sorry, fellow Spanish trader who informed about the same spike taking place in Pepperstone sent me a message saying he goy the charts confused. Again, my fault :frowning:

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What STP brokers do you have in mind, if I may ask?

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Just my observation btw I cannot claim to know what happens behind me the scenes with some of these guys.

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@Journalist

Thanks for your comment. We agree that reversal of the transactions was the decent way to proceed, and that’s what we did from minute one for all parties involved.

What some of the comments in this thread overlook is the matched principal broker leg-> reversing the client facing leg with customers, is independent from the market facing legs - where:

  • Darwinex in turn have to agree with the Prime Broker to reverse them… after
  • The PB and the 2 LPs agreed to reverse them on their end

Those are different discussions involving different parties - with both Darwinex and the PB “caught” as middlemen between the customer and the LP that filled the order.

What Darwinex did was decide before agreeing with the PB on the reversal, to face the loss regardless of the outcome. Luckily the matter is now resolved and no-one was worse off financially.

This all came about because XAUUSD was “closed” for trading (e.g. we’d been advised there would be no prices streamed) at schedules where there are normally. It was a lesson learnt for everyone… and to be honest, imho that’s it.

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Do you allow me to post the hours of conversations we had yesterday and the day before on our chat and twitter?

Does the message below really sound like I am not willing to reply?

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