FX Market Watch
DEFINING FOREX INDUSTRY Te Forex industry didn’t exist when Forex first started. Banks traded currencies on behalf of their customers and that was it. Now there are companies that specialize in providing services to Forex companies, such as technical services as provided by companies such as FX System Hosting, who offers dedicated servers and domain names specific to Forex companies. Te Forex Industry can be defined as the growing number of companies offering Forex specific products and services, and service providers to those companies. Tere is now a specific registration category in the NFA called RFED, or Registered Foreign Exchange Dealerii
. Tis is a
new category that didn’t exist 5 years ago.
PROBLEM OBTAINING DATA Since Forex data is available on a survey & voluntary basis, data
is
difficult to analyze. For example, even for the entire Forex market, official BIS data used commonly “4 Trillion per day” is a mere survey. While most accept that it is accurate, the data is obtained by banks volunteering this information to the survey, which is unaudited.
Retail Forex is even harder to quantify. Many brokers are private companies or based offshore. As no reporting of financial or customer data is required, it leaves researchers to only speculate. FXCM can provide a good model because they are considered to be the largest retail broker in the world, and as they are a public company they submit customer and financial
16 FX TRADER MAGAZINE July - September 2011
See their latest release: May 2011 Retail Trading Metrics: • Retail customer trading volume of $328 billion in May 2011, 12% higher than April 2011 and 5% higher than May 2010. • Average retail customer trading volume per day of $14.9 billion in May 2011, 7% higher than April 2011 and no change from May 2010.
data. According to Google Finance, FXCM has 165,000 customersiii
.
FXCM releases monthly metrics of their trading volumes on their Investor Relations website.
The National Futures Association became the de-facto global Forex regulation model
• An average of 363,579 retail client trades per day in May 2011, 13% higher than April 2011 and 8% lower than May 2010. • Active accounts of 155,592 as of May 31, 2011, a decrease of 2,410 or 2% from April 2011, and an increase of 26,465 or 20% from May 2010. • Tradeabl eaccounts of 167,844 as of May 31, 2011, an increase of 1,696 or 1% from
an increase of 6,635 or 4% from May 2010. Institutional Trading Metrics: • Institutional customer trading volume of $80 billion in May 2011, 28% higher than April 2011 and 4% higher than May 2010. • Average institutional
April 2011, and
trading
volume per day of $3.6 billion in May 2011, 22% higher than April 2011 and no change from May 2010. • An average of 8,694 institutional client trades per day in May 2011, 28% higher than April 2011 and 95% higher than May 2010. More information, including historical results for each of the above metrics, can be found on the investor relations page of the Company’s corporate web siteiv
.
WHITE LAbELINg Another phenomenon in Forex is the proliferation of White Labelingv
.
Private Labels exist in all industries, however in Forex it is very common. Tere are a few companies offering platforms and trading strategies, and 10x more who white label that product and market it as their own. For example, Citibank uses a white label of Saxo Bank for their retail business.
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