XTB's 2.2M Fine Appeal Got Rejected by Polish Court

The Polish Financial Supervision Authority (KNF) decided to fine XTB PLN 9.9 million (more than $2.2 million) in 2018. XTB appealed this judgement, but the Polish Supreme Administrative Court (NSA) dismissed it.

It was the second cessation appeal submitted by former X-Trade Brokers, the KNF press release from Wednesday stated. In September 2018, the Polish regulator penalised the broker, and the publicly traded company contested the ruling. However, the Warsaw Voivodship Administrative Court dismissed XTB's argument and maintained the judgement. Now, the NSA has come to the same conclusion.

The offering of brokerage services without considering the client's interests was a violation of the Polish Financial Instruments Trade Act, and the KNF penalised the company for it. In the immediate model, the business executed client orders using an asymmetrical setting of the deviation parameter from 1 January 2014 to 31 May 2015.

As the transaction's counterparty, XTB used asymmetric price slippage to facilitate the complete transmission of execution losses to clients. In contrast, the broker profited from favourable price changes. This indicates that while clients did not receive any price enhancement when XTB executed client orders at a better price than anticipated, XTB did so when the slippage benefits them.

The translation of the KNF's statement is as follows:

Also, XTB used the delay parameter on a particular group of clients under the scrutiny of the Trading Department as a tool for additional price verification of the placed orders, which resulted in the suspension of execution of their orders for the milliseconds defined by this parameter.

It's interesting to note that XTB shares increased strongly in response to the Polish court's ruling. They had a spike of about 5% in just 15 minutes, bringing them once closer to the record highs of PLN 35.30 set on 21 February 2023.

The Polish FX/CFDs broker based on the Warsaw Stock Exchange revealed a significant fall in profits for the fourth quarter of 2022 in its preliminary quarterly financials issued a month ago. Even though the company's sales rose annually, they fell sharply from the prior quarter.

According to official data, XTB's operating income or revenue for the three months ending in December totalled PLN 216.7 million (about $49 million), a dramatic decrease of almost 45% from the PLN 391.3 million it brought in the previous quarter. XTB generated revenues of PLN 439.8 million and PLN 396.4 million in Q1 and Q2, respectively, which suggests that Q4 was the least successful quarter of 2022.