CFTC releases new data about US forex brokers including client losses

CFTC every month publishes the total amount of liabilities of US forex brokers towards their retail forex clients. Lately we’ve

CFTC every month publishes the total amount of liabilities of US forex brokers towards their retail forex clients. Lately we’ve seen that Total Amount of Retail Forex Obligation of US traders grew by $3 million in November 2011,  grew by $30 million in  in October 2011 and dropped by $20 million in September.  This is all normal business (and seasonal) fluctuation.

From December 2011 CFTC started publishing another interesting stat called Total Aggregate Retail Forex Assets. According to CFTC this the definition of both metrics:

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

Total Aggregate Retail Forex Assets: This represents the total amount of money, securities, and property held for retail forex customers in a retail forex account or accounts in compliance with Part 5 fo the Commodity Exchange Act.

Total Amount of Retail Forex Obligation: This represents the total amount of funds at an FCM, RFED, or FCMRFD that would be obtained by combining all money, securities and property deposited by a retail forex customer into a retail forex account or accounts, adjusted for the realized and unrealized net profit or loss.

Basically what CFTC is saying here is that the difference is between what was deposited and what is owned by the broker to clients, or if put in simple words: losses.

However this is not that simple. Apparently the way CFTC actually calculates this by looking into brokers’ account, where they keep clients’ cash, and comparing to deposits. However if the broker didn’t withdrew realized profits (client losses) then this is accrued and distorts the eventual result. If the broker does reconciliate and withdraws on a daily basis then the difference then should be zero – just like found with several brokers in the table below.

Suggested articles

What to Look for in a Liquidity ProviderGo to article >>

Whatever the case is it is then not very clear what CFTC is trying to do here – we all know that clients lose, we see this very clearly in the profitability reports so why add this metric as well?

Looking at the table it is clear that FXCM, Gain, GFT, FX Sol and Tradestation (probably through IBFX) accrued massive losses of clients. FXDD however is the only broker that has   positive clients balance.

 

table.tableizer-table {border: 1px solid #CCC; font-family: Arial, Helvetica, sans-serif; font-size: 12px;} .tableizer-table td {padding: 4px; margin: 3px; border: 1px solid #ccc;}
.tableizer-table th {background-color: #104E8B; color: #FFF; font-weight: bold;}

Adjusted Net CapitalTotal Aggregate Retail Forex AssetsTotal Amount of Retail Forex ObligationDifference
     
ADM256,605,074968,009968,0090
ADVANCED MARKETS20,542,7421,753,5861,753,5860
ALPARI25,397,94113,211,62910,671,378-2,540,251
FXCM31,243,101208,489,756144,703,279-63,786,477
FOREX CLUB22,923,3389,889,8923,461,914-6,427,978
FX SOLUTIONS41,409,11161,447,53117,524,164-43,923,367
FXDD27,886,60135,345,29635,721,539376,243
GAIN CAPITAL35,700,900157,059,925102,599,438-54,460,487
GFT79,672,867130,876,90088,475,168-42,401,732
ILQ20,066,0429,623,7998,804,848-818,951
MB TRADING25,101,76335,241,26832,808,570-2,432,698
OANDA140,452,807164,918,077156,356,338-8,561,739
PENSON143,384,89530,231,57530,231,5750
PFG33,644,88843,923,05431,786,635-12,136,419
RJ OBRIEN ASSOCIATES201,729,0115,520,4792,971,072-2,549,407
TRADESTATION25,235,604100,719,79871,531,907-29,187,891
XPRESSTRADE22,972,4521,462,7581,444,758-18,000
     
Totals 1,010,683,332741,814,178-268,869,154

 
When comparing November and December balances we see that the total number of retail forex obligations grew by $20 million but this only due to Penson which started reporting its forex obligations for the first time. Excluding Penson the amount dropped by $10 million. Tradestation and IBFX merger is reflected in Tradestation’s December balance as IBFX was removed from the list.
 

table.tableizer-table {border: 1px solid #CCC; font-family: Arial, Helvetica, sans-serif; font-size: 12px;} .tableizer-table td {padding: 4px; margin: 3px; border: 1px solid #ccc;}
.tableizer-table th {background-color: #104E8B; color: #FFF; font-weight: bold;}

NovemberDecember
ADM388,210968,009
ADVANCED MARKETS1,712,8601,753,586
ALPARI11,395,01610,671,378
FXCM145,610,245144,703,279
FOREX CLUB10,050,5633,461,914
FX SOLUTIONS18,037,80317,524,164
FXDD33,439,89235,721,539
GAIN CAPITAL106,658,310102,599,438
GFT89,756,73888,475,168
ILQ8,671,3018,804,848
IBFX30,713,888 
MB TRADING33,990,53732,808,570
OANDA153,547,893156,356,338
PENSON 30,231,575
PFG33,065,15931,786,635
RJ OBRIEN ASSOCIATES2,963,0822,971,072
TRADESTATION41,216,37571,531,907
XPRESSTRADE840,9431,444,758
   
Totals722,058,815741,814,178
Got a news tip? Let Us Know