Updated with Advanced Market’s official response, below.
The number of US retail forex brokers keeps plummeting with Advanced Markets, aka AMIFX, becomes the latest to withdraw its retail (RFED) license. The firm was today put on what NFA calls a ‘Withdrawal Hold‘ – temporary period allowing clients to close down their accounts and positions and transfer their business elsewhere.
Unlike Forex Club which withdrew its RFED license only few months ago (and then became FXCM’s landing page) Advanced Markets’ move doesn’t come as a huge surprise – it simply was an institutional broker with only few ‘retail’ accounts. We brought this question to the CEO Anthony Brocco in an interview we conducted back in June:
Unlike many banks/DMA brokers you hold an RFED license which is essentially a license that allows you to accept retail clients. It seems though that you position yourself as a more institutional type of a broker – why do you need the RFED license then? Perhaps it’s wiser to use the $20m+ for some other activities?
You raise an interesting point. It’s correct that we do not accept the type of small, inexperienced customers that the $20 million capital requirement is designed to protect.
However, we do have experienced traders as direct clients, so we follow all regulations and capital requirements. Also, we support money managers and CTAs that trade accounts for retail investors who open their accounts directly with us.
Finally, we need to be well capitalized to maintain our prime broker relationships at the credit level we require, so, all things considered, that capital is fully deployed within our business model.
It seems the number of retail traders (46 to be exact according to our Q2 2012 profitability report) no longer justified the massive capital AMIFX had to put aside and the company decided to withdraw its license and keep focusing on its more successful institutional business.
This brings the total number of retail forex brokers available to US traders to only 13 and this includes the likes of Citi and Interactive Brokers.
ADVANCED MARKETS WITHDRAWS FROM DIRECT RETAIL FX MARKET
Firm to Concentrate on Wholesale, Institutional Solutions Businesses
CHARLOTTE, NC-October 25, 2012—Advanced Markets LLC has relinquished its US retail broker registration. The move enables the firm to focus on its primary business providing wholesale liquidity, credit and technology Direct Market Access (DMA) solutions to broker, banks and institutional foreign exchange market participants. The change took effect September 30 pending final regulatory approval.
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The strategy shift comes as the firm is rolling out Ultimt™, a new liquidity, credit and technology solution for MetaTrader brokers, and working with wholesale clients to launch additional foreign exchange DMA products. The Ultimt introduction alone is fueling sharp growth. The firm’s client pipeline for the product is expected to grow monthly trading volumes by $50 billion by year end
“As much as we value our loyal individual and managed account traders, we think it is important to focus our entire enterprise on providing leading edge DMA solutions for the wholesale and institutional markets,” said Anthony Brocco, Founder and CEO, Advanced Markets. “We have a number of wholesale partnerships coming online and are developing new DMA products with key institutional buy and sell-side partners.”
A significant portion of the firm’s retail accounts were managed accounts in which trading was managed by third-party professional fund managers. Advanced Markets will continue to offer DMA trading and credit solutions and services to hedge fund managers, institutional asset managers, commodity trading advisors and commodity pool operators as well as eligible contract participants and their non-US equivalents.
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About Advanced Markets, LLC
Advanced Markets is a wholesale provider of liquidity, credit and technology solutions to banks and brokers globally. It also provides FX trade execution and prime brokerage solutions and services to fund managers, commodity trading advisors and corporate FX market participants.
The firm specializes in direct market access (DMA) to streaming foreign exchange rates from leading global FX banks. Its liquidity pool is one of the deepest, most transparent in the spot FX market.
Advanced Markets’ DMA model goes beyond “no dealing desk,” STP, multibank RFQ and ECN models, enabling low latency, unfiltered, anonymous trading on live spot FX prices.
Live, executable bid/offer rates can be viewed at www.advancedmarketsfx.com.
On a wholesale basis, Advanced Markets serves more than 15,000 institutional and individual clients in more than 30 countries globally. The company is privately held. Outside investors include Macquarie Americas Corp Inc., a wholly owned subsidiary of Macquarie Bank and GFI Group Inc.
For more information, please visit www.advancedmarketsfx.com.
Media Contact: Peter Burton, Delta Markets Group, +1 732 546 3700, firstname.lastname@example.org