These case studies have been modified so as not to identify any actual cases at FIDReC. They are provided for purposes of learning and are not necessarily indicative of outcomes at FIDReC.
Bob, a middle-aged professional, opened a margin trading account with Onion Brokers (OB) to trade Contracts for Difference (CFDs). On two occasions, once in September 2024 and again in November 2024, Bob claimed he suffered losses totaling S$150,000 due to technical failures on OB’s trading platform. He alleged that when he tried to adjust his stop level on active trades to manage risk, there was an error message that did not allow him to proceed. This resulted in unintended closures of his positions.
OB disagreed with Bob and, after direct negotiations failed, referred Bob to FIDReC. As Bob and OB could not reach a settlement at mediation, Bob proceeded to adjudication.
During adjudication, Bob argued that OB’s platform errors prevented him from managing his trades. Bob suggested that the company profited from the platform failures because OB would trade against the customer.
OB showed evidence of their internal logs confirming that they executed Bob’s trades based on the most recent instructions. Their investigations also showed that there were no reported platform issues relating to amending stop levels on the dates in question. OB further explained that their business model relies on transaction fees. They would benefit from more customer trades, not from customer losses. They added that under the terms of the margin trading account, the agreed stop level would be triggered when the bid or offer price moved against the customer at or beyond the agreed stop level. The positions were therefore closed correctly.
Finally, if the Adjudicator found any system failure, OB relied on an exclusion clause that stated: “If you undertake transactions on an electronic trading system, you will be exposed to risks including the failure of hardware and software. The result of any system failure may be that your order is either not executed according to your instructions or not executed at all”.
The Adjudicator found that there was no evidence of fraud or negligence by OB. The internal logs submitted by OB did not support Bob’s claims of system failures. The Adjudicator also noted that trading CFDs involves high risk and rapid market movements. Bob, who had used OB’s platform for four (4) years, was familiar with those risks. Even if OB had been negligent, the exclusion clause would operate.
Key Learning Points
In adjudications, the claimant bears the burden of proof. This means that the claimant must provide evidence to support claims of platform errors or misconduct.
Trading leveraged products like CFDs carries significant risk, especially in fast-moving markets. Consumers should understand these risks before trading.
The contractual terms will set out the rights and obligations of the trading platform and the user. They may include clauses that limit or exclude liability for losses. Always review these terms before trading.
If a consumer is dissatisfied with the FIDReC adjudication outcome, their legal rights are not affected. They may still pursue court action should they so choose.
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