Proposed New Restrictions Shock FX Industry – Best of the Week
- OANADA, CMC, IG and Plus500 are among the companies that appeared in last week's top stories.
During the passing week one story dominated the conversation in the international online trading industry more than any other – the proposed new limitations from the British regulator, perhaps the most important financial authority in the world.
To unlock the Asian market, register now to the iFX EXPO in Hong Kong.
Algo-cloud
On Monday the week started off nicely with the US entity of FXCM Inc announcing that it is going to integrate live trading with cloud-based algo Trading Platform Trading Platform In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real-time updates on quotes, charts and is the main frontend which customers are facing.Brokers either use existing trading platforms and sometimes customize them, or develop their own platform from scratch. Since the beginning of the retail FX trading business MetaQuotes and its platforms MetaTrader 4 (MT4) and MetaTrader 5 (MT5) have been the industry standard, especially when it comes to automated trading.MT4 Shows Resiliency While MT4 has long been seen as ubiquitous amongst brokers’ offerings, a targeted push by MetaQuotes themselves has led to broader adoption of MT5 in recent years. Advanced trading platforms such as MT4 or MT5 also allow access to a wide range of asset classes available for trading.The development of trading platforms over the past decade has failed to successfully dethrone MT4 or MT5, notably in the retail market. However, in institutional markets, brokerage companies and banking entities also construct and utilize proprietary currency trading platforms to help satisfy internal needs with trades executed through institutional trading channels.By far the most important parameter for many retail clients is the optionality and pairs available on trading platforms. Additionally, demand by traders has led to a greater emphasis on newer features such as advanced charting and other tools. In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real-time updates on quotes, charts and is the main frontend which customers are facing.Brokers either use existing trading platforms and sometimes customize them, or develop their own platform from scratch. Since the beginning of the retail FX trading business MetaQuotes and its platforms MetaTrader 4 (MT4) and MetaTrader 5 (MT5) have been the industry standard, especially when it comes to automated trading.MT4 Shows Resiliency While MT4 has long been seen as ubiquitous amongst brokers’ offerings, a targeted push by MetaQuotes themselves has led to broader adoption of MT5 in recent years. Advanced trading platforms such as MT4 or MT5 also allow access to a wide range of asset classes available for trading.The development of trading platforms over the past decade has failed to successfully dethrone MT4 or MT5, notably in the retail market. However, in institutional markets, brokerage companies and banking entities also construct and utilize proprietary currency trading platforms to help satisfy internal needs with trades executed through institutional trading channels.By far the most important parameter for many retail clients is the optionality and pairs available on trading platforms. Additionally, demand by traders has led to a greater emphasis on newer features such as advanced charting and other tools. Read this Term QuantConnect. The move is seen as an expansion of the capabilities of algorithmic traders that are using the services of the largest US brokerage for retail foreign exchange clients.
Over 24,000 quants are active participants on the forums of QuantConnect. The community provides answers to a variety of issues that they are facing with their algorithmic trading strategies.
Live trading will be executed via FXCM’s no dealing desk execution system. Clients that use QuantConnect will gain access to FXCM’s historical tick data, which also includes second and 1 min price history until 2007.
Earthquake
On Tuesday the news broke that the UK’s Financial Conduct Authority (FCA) is taking steps to severely limit FX and CFD trading. Immediately after the open on the London Stock Exchange, shares of CMC, IG and Plus500 tanked in response.
Finance Magnates
Responses from the industry poured in to Finance Magnates. Cappitech’s Business Development Manager Ron Finberg commented: “I believe that the Forex/CFDs industry will be able to adjust to the leverage restrictions. Both the US and Japan have long had leverage restrictions and individual traders are among the most active in the world. More than bonuses and margin, a bigger blow would be an increase of minimum capital requirements. In terms of the US, it’s the $20 million minimum that drove out the brokers and destroyed the market. On a side note, I find it interesting that the FCA also mentioned that it was in the process of evaluating financial regulation for binary options.”
Aftermath
On Wednesday we reported that GAIN Capital’s City Index unit, CMC Markets and IG Group are forming a new UK industry body, sources with knowledge of the matter shared with Finance Magnates.
A CFD lobby organization can be beneficial for the UK industry as brokers can take a united position and jointly discuss with the regulator their worries.
In contrast with most responses, OANDA issued a statement of support for the proposed FCA changes
Aftershock
On Thursday the German financial regulator, BaFin, joined the party with its own steps to limit CFDs advertisement in the country. BaFin’s intent is to limit the marketing, distribution and sale of financial contracts for difference (CFDs). In addition the regulator is going after negative balance risks and is therefore mandating that no CFDs with an additional Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. Read this Term obligation can be offered to retail clients.
Chief Executive Director of BaFin, Elisabeth Roegele, stated: ”In the case of CFDs with an additional payments obligation, the risk of loss for the investor is incalculable. For consumer protection reasons, we cannot accept that.”
Reactions
On Friday Plus500 issued an official statement that the company is fully compliant with BaFin requirements to offer and market its products in Germany.
CMC Markets made a similar statement: “The BaFin consultation paper requires CFD providers to ensure that retail clients cannot lose more money than is deposited in their account, a functionality which is already available to CMC Markets clients in Germany.”
OANADA again issued a pro-regulation statement, this time in Australia. Stephen Andrews, Managing Director at OANDA Australia, in a recent statement on the regulations: “We fully support the government’s move to introduce the mandatory segregation of client funds. This new law will bring Australia in line with other international markets that ensure client funds are protected and secure. We welcome this legislation as it will not only safeguard investors but it will also ensure that Australian FX and CFD markets are underpinned by a strong regulatory framework.”
During the passing week one story dominated the conversation in the international online trading industry more than any other – the proposed new limitations from the British regulator, perhaps the most important financial authority in the world.
To unlock the Asian market, register now to the iFX EXPO in Hong Kong.
Algo-cloud
On Monday the week started off nicely with the US entity of FXCM Inc announcing that it is going to integrate live trading with cloud-based algo Trading Platform Trading Platform In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real-time updates on quotes, charts and is the main frontend which customers are facing.Brokers either use existing trading platforms and sometimes customize them, or develop their own platform from scratch. Since the beginning of the retail FX trading business MetaQuotes and its platforms MetaTrader 4 (MT4) and MetaTrader 5 (MT5) have been the industry standard, especially when it comes to automated trading.MT4 Shows Resiliency While MT4 has long been seen as ubiquitous amongst brokers’ offerings, a targeted push by MetaQuotes themselves has led to broader adoption of MT5 in recent years. Advanced trading platforms such as MT4 or MT5 also allow access to a wide range of asset classes available for trading.The development of trading platforms over the past decade has failed to successfully dethrone MT4 or MT5, notably in the retail market. However, in institutional markets, brokerage companies and banking entities also construct and utilize proprietary currency trading platforms to help satisfy internal needs with trades executed through institutional trading channels.By far the most important parameter for many retail clients is the optionality and pairs available on trading platforms. Additionally, demand by traders has led to a greater emphasis on newer features such as advanced charting and other tools. In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real-time updates on quotes, charts and is the main frontend which customers are facing.Brokers either use existing trading platforms and sometimes customize them, or develop their own platform from scratch. Since the beginning of the retail FX trading business MetaQuotes and its platforms MetaTrader 4 (MT4) and MetaTrader 5 (MT5) have been the industry standard, especially when it comes to automated trading.MT4 Shows Resiliency While MT4 has long been seen as ubiquitous amongst brokers’ offerings, a targeted push by MetaQuotes themselves has led to broader adoption of MT5 in recent years. Advanced trading platforms such as MT4 or MT5 also allow access to a wide range of asset classes available for trading.The development of trading platforms over the past decade has failed to successfully dethrone MT4 or MT5, notably in the retail market. However, in institutional markets, brokerage companies and banking entities also construct and utilize proprietary currency trading platforms to help satisfy internal needs with trades executed through institutional trading channels.By far the most important parameter for many retail clients is the optionality and pairs available on trading platforms. Additionally, demand by traders has led to a greater emphasis on newer features such as advanced charting and other tools. Read this Term QuantConnect. The move is seen as an expansion of the capabilities of algorithmic traders that are using the services of the largest US brokerage for retail foreign exchange clients.
Over 24,000 quants are active participants on the forums of QuantConnect. The community provides answers to a variety of issues that they are facing with their algorithmic trading strategies.
Live trading will be executed via FXCM’s no dealing desk execution system. Clients that use QuantConnect will gain access to FXCM’s historical tick data, which also includes second and 1 min price history until 2007.
Earthquake
On Tuesday the news broke that the UK’s Financial Conduct Authority (FCA) is taking steps to severely limit FX and CFD trading. Immediately after the open on the London Stock Exchange, shares of CMC, IG and Plus500 tanked in response.
Finance Magnates
Responses from the industry poured in to Finance Magnates. Cappitech’s Business Development Manager Ron Finberg commented: “I believe that the Forex/CFDs industry will be able to adjust to the leverage restrictions. Both the US and Japan have long had leverage restrictions and individual traders are among the most active in the world. More than bonuses and margin, a bigger blow would be an increase of minimum capital requirements. In terms of the US, it’s the $20 million minimum that drove out the brokers and destroyed the market. On a side note, I find it interesting that the FCA also mentioned that it was in the process of evaluating financial regulation for binary options.”
Aftermath
On Wednesday we reported that GAIN Capital’s City Index unit, CMC Markets and IG Group are forming a new UK industry body, sources with knowledge of the matter shared with Finance Magnates.
A CFD lobby organization can be beneficial for the UK industry as brokers can take a united position and jointly discuss with the regulator their worries.
In contrast with most responses, OANDA issued a statement of support for the proposed FCA changes
Aftershock
On Thursday the German financial regulator, BaFin, joined the party with its own steps to limit CFDs advertisement in the country. BaFin’s intent is to limit the marketing, distribution and sale of financial contracts for difference (CFDs). In addition the regulator is going after negative balance risks and is therefore mandating that no CFDs with an additional Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. Read this Term obligation can be offered to retail clients.
Chief Executive Director of BaFin, Elisabeth Roegele, stated: ”In the case of CFDs with an additional payments obligation, the risk of loss for the investor is incalculable. For consumer protection reasons, we cannot accept that.”
Reactions
On Friday Plus500 issued an official statement that the company is fully compliant with BaFin requirements to offer and market its products in Germany.
CMC Markets made a similar statement: “The BaFin consultation paper requires CFD providers to ensure that retail clients cannot lose more money than is deposited in their account, a functionality which is already available to CMC Markets clients in Germany.”
OANADA again issued a pro-regulation statement, this time in Australia. Stephen Andrews, Managing Director at OANDA Australia, in a recent statement on the regulations: “We fully support the government’s move to introduce the mandatory segregation of client funds. This new law will bring Australia in line with other international markets that ensure client funds are protected and secure. We welcome this legislation as it will not only safeguard investors but it will also ensure that Australian FX and CFD markets are underpinned by a strong regulatory framework.”