It’s no wonder that following the latest CFTC regulatory blitz the US industry is consolidating and the market is getting smaller and more centralized – which in my opinion is essentially bad for the small retail trader. Actually that is something that I believed would happen, however the scale of what is happening right now beneath the surface caught even me by surprise.
What I’m hearing from several knowledgeable and unrelated sources is that CMS Forex was just acquired. CMS Forex is a pretty known and established US broker operating out of New York. Its volumes and revenues figures aren’t really known, as I pointed out in my latest volume survey CMS doesn’t disclose its volume, but my understanding is that during 2009 CMS Forex’s profits significantly decreased. CMS Forex’s strength in my opinion lies with its institutional clients rather than its retail forex business and perhaps the institutional part wasn’t the one to suffer from decreasing volumes.
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From what I’m hearing, CMS Forex was bought by either Gain Capital (Forex.com) or IG Markets with the latter being the most likely buyer. If it is IG indeed this makes it really interesting because I would expect a US broker to buy a US broker and not a foreign entity. IG is regulated in the US and is even registered as an FCM with the NFA and while most of the brokers make themselves out of the US (by opening foreign subsidiaries) IG seems to take the opposite direction. On the other hand, CMS just recently opened a UK subsidiary so perhaps this was the reason for IG’s decision. I do however really like CMS’s technology which could have rivaled other platforms in the market but I guess no platform can really rival Metaquotes no matter how good it is, and perhaps the technology was another motive for the acquisition. Until today I couldn’t receive an official response from CMS.
Whichever is the case, this is certainly a very interesting development and from what I hear is not the only one and bigger news are soon to follow! Stay tuned for more updates.