This guys is doing a great job keeping us all more than well up-dated about the latest goings in the Retail Forex Industry. I’m talking about Michael Greenberg and his site Forex Magnates.

Worth following him

Francesc

FXCM releases Financial Data for Q3 2009: Over $115 million in capital
by Michael Greenberg, Forex Magnates

Hi everyone

FXCM has just launched its site in Italian

http://www.fxcm.it/

As far as I know, FXCM is the first US based Forex broker entering into the Italian market with a site in Italiano. Only European Forex broker based like Saxo Bank, IG Markets or ACM currently offer a version of their site in Italiano.

Interesting move….

Francesc

Hi everyone

Following the steps of FX Solutions and GFT, FXCM the leading retail FX broker is implementing too NFA’s new requirements.

New requirements should be in place on November 30th, but FXCM is putting them in place one week early and will take effect on November 22.

Important New Margin Requirements for All FXCM Micro Clients
Important New Margin Requirements for All FXCM Clients (Standard Accounts)

Francesc

Hi everyone

I just got today an e-mail from FXCM letting me know about their decision to pull out of the British Columbia market. FXCM cites new regulations as the reason.

I Googled the web and found a nice post about it at the blog of my friend Samuel Araki, founder of TradingMetro.

Good Job Samuel

Francesc

FXCM Pulls Out of British Columbia (BC)
August 25, 2009 at 2:54 am
It was a mild surprise to receive an email today saying that FXCM is pulling out of the British Columbia market.
FXCM Canada was never really fully vested in this market anyway – it was a BCSC registered, but not IIROC registered firm. Meaning it could take BC accounts, but not offer the individual account protection of CIPF.

Over nine months ago, I authored one of the most popular posts directed at BC residents who wanted to open accounts with BCSC registered dealers. Unfortunately since then the already small list has been pared further. I will write an updated post to that in the coming weeks.
FXCM cites new regulations as the reason, which is true. The BCSC is making it further constricting for dealers in the FX space to solicit BC residents.
Full Story

Well done guys!

Francesc

FXCM Recognized With Best Retail Platform by FX-Week
New York, July 16, 2009—FXCM Holdings LLC has been awarded Best Retail Platform by FX-Week at the 2009 e-FX awards.
The award, announced on July 7, 2009, at the FX-Week U.S. conference, recognizes industry excellence in electronic foreign exchange trading from banks and vendors.
FXCM triumphed over other industry leading firms, including Saxo Bank and Gain Capital.
“This award confirms FXCM’s leadership in the forex market. The No Dealing Desk* (agency execution) business model embraced by FXCM in 2006 is clearly the direction forward for the retail industry. Clients want transparent and fair execution and FXCM offers it,” says Marc Prosser, the firm’s chief marketing officer.
FXCM developed its proprietary trading platforms: FX Trading station II (pc based) and FXCM Active Trader (web based) to meet the rigorous conditions of today’s volatile markets. The current platforms were developed by an in-house team of over 50 programmers. FXCM’s platforms are extremely stable, scalable and robust. There are over 150,000 live accounts trading on FXCM platforms, with an average of over 8 million trades per month

FXCM currently has successful white-label relationships all over the world working with banks, brokerages and large financial institutions. White label partners are able to deploy individually customized platforms based on FXCM’s awarding forex trading platform.

FXCM Holdings LLC Facts As of May 2009
FXCM Holdings LLC has over $100 million in capital
More than 150,000 live accounts are traded on FXCM trading platforms
An average of over $365 billion in notional volume is traded each month on FXCM trading platforms
In excess of $600 million in customer funds trading on platforms offered by FXCM
Trading FX, CFDs and Spread Betting on margin carries a high level of risk, and may not be suitable for all investors.
*Please note, FXCM Micro, in its discretion, may or may not offset individual transactions unlike transactions in most FXCM standard accounts

Hi everyone

As you know, we are requesting top U.S Forex executives to give us their view about how new NFA requirements are changing - for good? - the US & Worldwide Retail Forex Industry.

After publishing the view of Gary Tilkin, President & CEO at GFT, today I want to welcome here one of the brightest person I’ve ever had the chance to know Drew Niv, CEO at FXCM.

Once again, thanks Drew for your collaboration

Francesc

Questionnaire

1. The new NFA rule eliminates the ability of traders to hedge open trades; there has been a lot of discussion about how retail traders may respond to the new rule. How much of your current business do you feel may be lost to off-shore retail brokers?

At FXCM we are lucky enough to have multiple regulated entities outside the United States. We have had some customers request to move from the US entity to the one in the UK or Australia. Or customers have a choice of where to open an account. US, UK, Dubai, Australia, Canada, Hong Kong, France, Germany, or Japan. The large Majority of clients still open accounts in the US entity so we have not seen a mass migration of users overseas.

2. Do you think properly educated clients regarding hedging could reduce losses to over-seas brokers?

I think clients primarily understand that if the regulator restricts something it is doing it for their own good on average, this keeps the clients motivated to stay in the United States.

3. Do you feel the FIFO rule could negatively affect other strategies or multiple strategies executed in the same account? What else would you caution your traders to be aware of with regards to the new rule?

As FIFO is new to most FX brokers including FXCM, it will definitely have an impact on many customer strategies, especially the automated ones. Like in all things clients will eventually adjust and thankfully regulators extended the deadline to July 31st to enable FXCM to more smoothly transition its clients to FIFO. it gives us a greater time to educate clients on the changes they need to start making.

4. The NFA stated hedging provides no direct economic benefit and may result in higher transactional impact; have you seen any evidence to contradict that? Have you seen any evidence that indicates removing the ability to hedge will actually reduce a traders risk profile over time?

I view hedging like I do option trading (writing options). its a very important tool in many traders tool box, that enables many people to carry out the trading style they intend on doing. Plenty of very sophisticated traders used the hedging function to replicate option like trading strategies with SPOT FX which is cheaper and more liquid. if you think of hedging as a directional strategy its silly and makes no sense, it you think about is as an anti volatility play in the same way as some option writing strategies seek to play low volatility then it makes lots of sense. Obviously just like options trading its an often misused tool that many inexperienced traders misapply and that may lead to losses. Regulators are simply playing the role of “big brother” protecting people from themselves, is that right for everybody, no its not, is it right for the majority maybe it is, maybe it isn’t. in 2008 FX volatility reached levels that have not been seen in decades, obviously use of hedging generally tended to have bad results as people bet against volatility and got it wrong. if trading conditions of 2005 and 2006 come back and market volatility flattens hedging functionality will be in very high demand as its success ratios will rise exponentially.

5. In their report the NFA noted that in a hedge, interest roll-over should wash but typically doesn’t; how do you account for the discrepancy?

Technically the discrepancy exists because there is a spread in the swap market just like there is one in every other financial instrument so when you both buy and sell you cross a spread. I think that is a red herring issue. with interest rates so low, revenues from overnight rolls are off by 90% from last year and play a nearly inconsequential part in FXCM’s revenues so certainly from a client point of view these costs are mostly inconsequential.

6. A simple work around to the current rule appears to be dual accounts at the same or even different brokers. Is there a downside to this approach traders should be aware of?

This is mostly unpopular from many clients perspectives because of the separate margin requirements and collateral that has to be split between two accounts.

7. Will your firm promote the dual-account strategy to keep clients and what can you do to help streamline the process for your current clients who implement hedging?

Clients that really want the hedging strategy at FXCM move to one of our foreign entities with out FSA regulated firm in the UK, being the top choice. we disclaim to most people that the NFA had good reasons to ban hedging as they felt most people misapplied it, and you should only continue using the strategy if you are confident in your ability to carry it out successfully. I don’t think most clients will miss hedging for now with the markets still volatile. This issue will pop up again for regulators as volatility decreases further, as I think you will see demand increase and many customers will complain to the regulators that not having it is interfering with their ability to make money. I don’t think this is the last we will hear of this issue.

FXstreet.com is hosting a special live event on April 16th at 14:00 GMT to introduce Active Trader, the new FXCM’s trading platform.

An FXCM’s representative will be showing the product and explaining its main assets LIVE from FXstreet.com homepage, using the CoverItLive technology for a most interactive presentation: you will be able to directly ask questions!

Ask for a reminder and you won’t miss it:

Francesc

Hi everyone

Just 15 days after buying ODL Securities U.S. business, FXCM shakes the Forex Retail Industry with today’s announcement of the acquisition of certain assets of the US Forex business of Hotspot FX.

Presse Release - FXCM Acquires Certain Assets of Hotspot FXr’s Retail Forex Business

FXCM’s has started an aggressive buying campaign thanks to its solid financial position and now it is time if others will follow or FXCM will keep its way on its own.

Very interesting move indeed.

Francesc

Hi everyone

Yesterday I published FINRA’s proposed rule to establish a leverage limitation for Retail Forex to 1.5 to1.

To get the insight of the Forex Retail Industry, I contacted to some of the top U.S. executives of this industry to get their opinnion about it.

I want to thank Drew Niv, CEO at FXCM and James Green, Managing Director & General Counsel at FXDD for their collaboration.

I must remind here us all that FINRA is the largest non-guvernmental independent regulator for all securities firms doing business in the United States. We oversee nearly 5,000 brokerage firms, 172,000 branch offices and 665,000 registered securities representatives.

Top U.S. Executive Comments:

Drew Niv, CEO at FXCM
“Recently many FX brokers in the US sought to shelter them selves from the new regulatory requirements of the NFA and CFTC by becoming broker dealers and switching to Finra.  thsi is the regulator’s way of saying that you have to be an FDM under the CFTC/NFA in order to do retail FX.”

James Green, Managing Director & General Counsel at FXDD
“Dear Francesc: At your request I am commenting on FINRA’s new proposed rule to limit leverage in the OTC spot Forex market for transactions conducted with a registered broker dealer to 1.5 to1.
My comments are mine alone and may not necessarily reflect the views of the management of FXDD.
The background set forth in the discussion on the issue is, I believe, accurate from the perspective of a regulator. Their position is to protect customers. However, their justification, again from my perspective, is probably behind the curve.
As we all know, the regulatory function, among other things, is to regulate an orderly marketplace though transparency and to insure that customers are not defrauded. I do not believe that it has ever been a regulatory function to protect customers from bad trading decisions or from their own failure to understand how the market and their dealer functions before they jump in with both feet.
The educational component for the retail Forex market is very deep and very wide thanks to the efforts of participating firms and to the Internet. Good information is free and is accessible by virtually anyone on the planet with a computer and internet connectivity.
The margin call issue, i.e. that a customer would lose their entire investment because they do not receive a margin call from their dealer is, from my perspective, a straw man. Most, if not all, platforms show clients on a mark to market basis the change in their positions and the required margin to hold those positions. Even the most rudimentary trading catechisms include the margin caveat….you must keep your positions properly margined or you will be liquidated. Having said that, positions do get liquidated.
Unlike earlier electronic platforms, where verbal margin calls were made, current platforms are set to liquidate at specific margin : equity levels. To reduce leverage broker dealers can offer to their clients to 1 to 1.5 is, in my opinion, a guaranteed maneuver to keep broker dealers out of the retail spot Forex market.
Whether that is the intended purpose of the proposal or simply a new proof for the law of unintended consequences is irrelevant. However, retail clients want at least 100:1 leverage. Many want 200:1 or 400:1. These levels of leverage correspond to the accepted characterizations of standard size contracts, mini contracts and micro contracts. Thus, clients will go to those firms that offer them what they want. Whether those firms are located in the U.S. or outside the U.S. is becoming, increasingly, irrelevant. Capital goes where it is appreciated and allowed to function.
Along the same lines, the NFA has proposed a new rule to limit leverage in the non-majors to 25:1. If this proposed rule becomes effective I suspect it will have the same net effect as the FINRA proposal. Customers will go where they can get the leverage they want. In both instances (NFA and FINRA) the reference is to that level of leverage that characterizes the futures market. In my view, that reference is outdated and misapplied.
The OTC market is not the futures market and it should be recognized as that. Efforts to squeeze all markets into a one-size-fits-all category by making these markets operate as something they are not is, in my view, counterproductive.
In summary, these types of proposals bear little relevance to how the OTC market actually works. Regulators propose rules so manage situations they believe important. I do not disagree with that standard.
I only hope that both regulatory agencies will listen to their participants and members so as not to drive good clients and their capital out of the USA.
My best regards to you,
Jim”

Hi everyone

The Retail Forex Industry in the U.S is getting smaller. ODL Securities announced today the selling of its U.S division to FXCM (Forex Capital Markets LLC)

I’m not sure if this move will lead ODL to full withdrawing from the FX business or it will just a matter of concentrating in other parts of the world where regulators requirements are not so high as in the U.S.

We will see

Francesc

View the presse release here: ODL Securities Sells US Business