All News

US forex brokers profitability report for Q4 2011 shows steep drop in number of US accounts amid increase in traders’ profitability

US retail forex industry is now showing obvious signs of slow down with number of non-discretionary retail forex accounts held with US based reporting brokers down to record 97,206. This is the lowest count reported since Q3 2010 when first such report was released.

IG shows positive growth 2011 (last 6 months)

IG Group a UK-based derivatives broker announced interim results for the latter end of 2011, results showed IG outperforming its peers with profit before tax up 28%.

Advertising

Generic_Forex
  • Number of forex accounts held with US forex brokers drops by more than 11,000 to all time low of 97,206
  • Clients’ profitability is up 6.4% on average, second consecutive quarter that profitability is improving
  • OANDA is still the most ‘profitable’ broker although just 0.1% above GFT
US retail forex industry is now showing obvious signs of slow down with number of non-discretionary retail forex accounts held with US based reporting brokers down to record 97,206. This is the lowest count reported since Q3 2010 when first such report was released. Reasons can be many but without any doubt extreme regulatory climate has made it extremely difficult for American brokers to attract new clients. In fact only Forex Club and Tradestation have reported growth in number of accounts they hold.

 

American brokers now face very high compliance and regulatory costs on one hand while on the other they are not competitive as leverage, FIFO and hedging requirements forced foreign clients look elsewhere. American traders themselves were forced to either comply with those requirements or simply exit the market (and hopefully for NFA the futures lobby: go back to trading futures). There might be other explanations to this such as seasonal slowdown and relatively low volatility. Brokers may have been moving foreign traders to their foreign subsidiaries – as same trader in a foreign subsidiary is more profitable than in the American one due to the reasons mentioned above. However regulation without any doubt had a huge impact on this industry’s slowdown.

 

FXCM in the past published a study about profitability of traders during low volatility times which may explain the rise in average profitability.

 

OANDA is still the most ‘profitable’ broker with 39% of its clients being profitable in Q4 2011. GFT is just 0.1% with profitability of its clients jumping 13.7%. PFG’s profitability jumped 14.6% and Interbank’s 10.0%. Amazingly profitability of all brokers improved in Q4 2011. Seems that traders in general were happier this quarter.

 

 

Click here to access your latest copy of the Forex Magnates Retail Forex Industry Report.
Got a news tip? Let Us Know
FOUND A MISTAKE
IN THE ARTICLE?
How do you feel about the article?
  • Educated 0
  • Surprised 0
  • Intrigued 0
  • Indifferent 0
  • Annoyed 0

Discuss the Article


+ 6 = 8

I agree to the Terms of Use Required field

Notify me of followup comments via e-mail.
You can also subscribe without commenting.

6 Comments

  1. Martin Anderson

    Michael, are there any statistics how many active FX-broker accounts exist in the US?

    • 0
    • 0
  2. Martin Anderson

    Ok, thank you Michael. I was surprised by the report, thought US FX retail market is bigger.

    • 0
    • 0
  3. Kyle Waitkunas

    So how many brokers are in the US now? I seem to recall reading ’16’ at one point but dont know if thats accurate anymore.

    • 0
    • 0
  4. Michael Greenberg

    What do you mean? this is the formal statistics. there are also accounts with Citi, Interactive Brokers and few more – but those don’t report and there’s no way to know. they are not that big in retail fx either.

    • 0
    • 0
  5. Michael Greenberg

    we all were… note though that this represents only non-discretionary accounts that traded once in past quarter, total number of accounts including ‘passive’ and discretionary is about 50% higher.

    • 0
    • 0
  6. Michael Greenberg

    depends what you call a broker. it’s all those in this list + Citi, Interactive Brokers, thinkorswim, etc

    • 0
    • 0