Exclusive: ILQ Chief Executive Talks About What’s Next After Exit From U.S. Forex Market
Following the news that Institutional Liquidity LLC will discontinue its RFED license, Forex Magnates followed up with Jason Tanner, the

Following our coverage last Friday that Institutional Liquidity LLC (ILQ) announced it will discontinue its operation in the U.S. as a Retail Foreign Exchange Dealer (RFED), Forex Magnates has obtained feedback and comments from the company’s CEO Jason Tanner.
ILQ had followed its announcement of the bulk liquidation -which provides clients nearly two weeks to transfer their funds to another broker or withdraw their funds – in an email to clients last week, and then issued a press release regarding its futures business which is moving to the FCM Advantage Futures. Forex Magnates had reported when ILQ had acquired the futures business of the FCM Velocity Futures during 2013.
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Mr. Tanner explained that the reason for the exit was strategic as the overseas operation under ILQ Australia had already surpassed its US entity. In 2013, ILQ Australia’s trading volumes exceeded that of the U.S. entity. Mr. Tanner added that the exit from the U.S. was not related to any litigation with the NFA or how committed ILQ was to cooperating with U.S. regulators.

“ILQ made a strategic decision to exist in the U.S. markets, in part, to more efficiently utilize our resources in the area that we are experiencing growth. ILQ Australia was launched in early 2013 and grew quickly. Its trading volume surpassed that of its U.S. counterpart by the end 2013. Currently, ILQ Australia’s monthly trading volumes represent a significant part of our global volume. Although a difficult decision, ILQ believes that allocating its resources to better support our growth overseas will result in a favorable experience for our global partners and their clients.”
100% Introducing Broker Focused, as Driven by B2B Model
Unlike most forex brokers whose efforts to on-board customers are driven from a combination of direct retail sales efforts, and partnerships with introducing brokers and/or affiliates, including white-labels or other intermediaries that bring in business, ILQ is 100% focused on a B2B model which focuses entirely on the IB, Affiliate and white-label side of the spectrum.
This business model was explained as the reason for ILQ not selling its book of Forex accounts in the U.S. to a specific broker, as have other companies in similar exits, since ILQ wanted to allow its partners the option to choose were to take their clients – although the clients ultimately decide. However at least in this scenario IB’s have a chance to contact their clients and discuss options. Because in the case of a bulk transfer, IB’s might not have received a favorable deal with the new acquiring broker, as an example.
What is next for ILQ?
While ILQ’s RFED license is still active and valid with the NFA, once it discontinues that license, as implied in its email to clients and notice that was since posted on its website, the net capital that will be freed up which was recently around $33 million – will be a considerable boost for it to allocate to the Australia-based entity or other business efforts in-the-works.
Indeed, during our conversation, Mr. Tanner stated that ILQ is preparing for an upcoming announcement having to do with new offerings offshore, and it is news that ILQ will share with Forex Magnates for its readers. However, Mr. Tanner said ILQ will wait for the dust to settle as the firm is busy handling the current transferring and closing of accounts in the U.S. for its Forex business, and transferring futures accounts to the NFA-regulated FCM Advantage Futures.
ILQ Regulatory Status with NFA Still Active
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It is not clear for how long ILQ will keep its FCM license, since if it will no longer hold client segregated funds and hence that status wouldn’t be needed, it’s possible it could become an IB, with regards to the Advantage Futures business that was introduced. However, it may retain some status with the NFA as in Forex Magnates’ opinion – as compiled from feedback given to us from senior industry executives regarding maintaining a U.S license, having such a status appeals to overseas investors – even if those investors deal with the firms non-US-regulated entity.
It will be interesting to see how ILQ Australia fares as its efforts become more concentrated on that business and with the available capital that will be freed from its U.S. entity. The company has a competitive spread structure for end-traders which includes its rebate to partners, and although many IB’s and/or clients may have been disappointed or sad about the planned exit from the U.S., according to sources, a large number of IB’s that have non-US business will continue to work with ILQ in its Australian entity.
Highlights of Some of the Historical Challenges in the US Retail Forex Space
During the conversation with Mr. Tanner, we explored the history of the FX Market in the U.S., where in the early part of the last decade after President George W. Bush had signed the Commodities Futures Modernization Act (CFMA) of 2000, the CFTC began combating fraud related to Forex schemes, and ponzi scams, and other unscrupulous people who really had nothing to do (most often) with the legitimate Forex space, and who most of the time didn’t even use any trading platforms, and had collectively given Foreign Exchange a bad name in the USA.
While such fraudsters still occasionally surface on the CFTC’s radar, back in the early 2000’s Forex was referred to as the ‘Wild Wild West.’ However, the key again is that these firms who gave FX a bad rap, had nothing to do with the real emerging retail forex space that was just starting to develop at that time.
A document from the CFTC published in the second half of the last decade, that provided the agency’s outlook for 2007-2012, had summarized that some $500,000,000 in civil monetary fines had been imposed on fraudulent persons purported to be FX brokers, since 2000 when the CFMA had been signed. Since the passage of the CFMA in 2000 through 2007, in addition to those fines, nearly another half of a billion dollars in restitution were imposed on these fraudsters from nearly 100 filed cases. If these firms were legitimate forex brokers, it would be different, but most of them were just purporting to be involved in FX just to cater to the allure that clients had with Foreign Exchange as it was [really] emerging in the retail space.
Why its Been Challenging In the U.S. for Retail Firms
Forex Magnates opines that this history had a massive effect on the regulators attitude towards FX, and its subsequent rules and actions taken to scrutinize legitimate firms, and then following the Zelner vs. CFTC case (which argued jurisdiction over OTC contracts and their definition), then the Farm Act (which required OTC fx firms to get NFA-registered), then the Dodd-Frank Act (which increased the CFTC’s authority over derivatives by broadening the definition of what constitutes a derivative), the space became incredibly difficult with Retail Foreign Exchange Dealers required to maintain a higher net capital – of over $20,000,000 – when compared to other Futures Commission Merchants whose net capital is nearly 1/20th that amount.
As a result of the regulatory burden for retail forex brokers, only a few have managed to strive and survive, while trying to best meet the stringent rules. Ironically, these rules do not always guarantee investor protection as was seen in the case of PFG and MF Global, both firms involved in Forex and Futures, where clients didn’t receive full protection that they had expected from then-regulated firms, following their respective demise.
The regulatory landscape, not only in the U.S, but around the world – for Retail and even Institutional Forex – is a work in progress, and could be thought of as cyclical if it goes through periods of tightening as well as loosening just as economies and political policies get tightened and loosened. Therefore while the last decade may have been on the increasingly tightening side, hopefully some more friendly and convenient regulatory efficiencies will provide an easier environment for firms to operate in (although big changes may come first). However in this U.S. this remains an expensive and overall difficult challenge -with the latest at the mercy of this being ILQ’s planned departure to focus on other markets overseas.
Forex Magnates has explored related subjects as part of our research compiled for our Quarterly Industry Report (QIR) for the 1st Quarter of 2014, which will be available for purchase shortly.
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I can understand the exit from the US market, that in itself needs no explanation nowadays.
What I cannot understand though was the hurried manner and short time-frame in which the withdraw has been enacted.
Would have been an insight if that question was asked by the interviewer I feel.
Otherwise this article reads like a set standard PR release, espousing the virtues of their ventures elsewhere while skirting over the US mess.
I don’t buy it.
I can understand the exit from the US market, that in itself needs no explanation nowadays.
What I cannot understand though was the hurried manner and short time-frame in which the withdraw has been enacted.
Would have been an insight if that question was asked by the interviewer I feel.
Otherwise this article reads like a set standard PR release, espousing the virtues of their ventures elsewhere while skirting over the US mess.
I don’t buy it.
Hi Steve, Thanks for your reply. Perhaps I am being overly critical on your article, and I apologise if it came across like that, it was a tad fluffy for me Steve when you were interviewing the CEO but that’s my personal opinion. The nature of ILQ’s main business model in not attracting normal retail traders as such but the IB’s and WLP’s lent me to think that they did leave them in the lurch. Eight business days notice may well be fine and ok for a retail guy to close out but its certainly not enough time for an… Read more »
Hi Steve, Thanks for your reply. Perhaps I am being overly critical on your article, and I apologise if it came across like that, it was a tad fluffy for me Steve when you were interviewing the CEO but that’s my personal opinion. The nature of ILQ’s main business model in not attracting normal retail traders as such but the IB’s and WLP’s lent me to think that they did leave them in the lurch. Eight business days notice may well be fine and ok for a retail guy to close out but its certainly not enough time for an… Read more »
each of them for different reasons, but main goal was to protect local clients both by making sure they only trade onshore and that the financial institutions don’t scam them
it’s a known fact that comments/review/opinions on various forums and portals are typically made by brokers, either about themselves or about others…
it’s a known fact that comments/review/opinions on various forums and portals are typically made by brokers, either about themselves or about others…
each of them for different reasons, but main goal was to protect local clients both by making sure they only trade onshore and that the financial institutions don’t scam them
1) Explanation of shutting down as favor to IB’s is poor lie. No favors for partners you no longer need. No other RFED would buy book of business. Maybe due to ILQ’s book. Maybe strategic change from big RFEDs. If FXCM/Gain not buying assets because they know they will land clients anyways, not a good sign for few remaining RFEDs 2) NFA is not done with ILQ. More to come. Is how NFA operates. 3) Equity Capital going back into owner’s pockets. Not to allow for another poorly run venture halfway across globe
1) Explanation of shutting down as favor to IB’s is poor lie. No favors for partners you no longer need. No other RFED would buy book of business. Maybe due to ILQ’s book. Maybe strategic change from big RFEDs. If FXCM/Gain not buying assets because they know they will land clients anyways, not a good sign for few remaining RFEDs 2) NFA is not done with ILQ. More to come. Is how NFA operates. 3) Equity Capital going back into owner’s pockets. Not to allow for another poorly run venture halfway across globe
Also not mentioned is that the CEO was the one responsible for implementing much of the current rules and regs while working at the NFA – Fortress reports etc. Just goes to show you how little regulators know not only about the industry they regulate and proof positive they are completely incompetent when running a business in said industry. Oh the irony.
yeah, i know of some people considering offering BitCoin/USD on trading platforms – but at this point it’s not that popular..
yeah, i know of some people considering offering BitCoin/USD on trading platforms – but at this point it’s not that popular..
Also not mentioned is that the CEO was the one responsible for implementing much of the current rules and regs while working at the NFA – Fortress reports etc. Just goes to show you how little regulators know not only about the industry they regulate and proof positive they are completely incompetent when running a business in said industry. Oh the irony.
I agree with Vlad #2 – slapping them with a fine on their way out seems to be SOP at the nfa. They have done it in the past multiple times.
I agree with Vlad #2 – slapping them with a fine on their way out seems to be SOP at the nfa. They have done it in the past multiple times.
1) Shutting down as opposed to selling the book of business. ILQ closed doors because of NFA/CFTC issues; Agreed. But ILQ liquidating accounts because no one else would buy their book of business. Other stories like this end with, “…sold the book of business to____”.
2) NFA will not let them de-register. Will continue to sort through old files to find issues. Dan Roth still needs a villian such as retail FX to cover for failures at Sentinel, MF Global, Refco, PFG, etc
1) Shutting down as opposed to selling the book of business. ILQ closed doors because of NFA/CFTC issues; Agreed. But ILQ liquidating accounts because no one else would buy their book of business. Other stories like this end with, “…sold the book of business to____”.
2) NFA will not let them de-register. Will continue to sort through old files to find issues. Dan Roth still needs a villian such as retail FX to cover for failures at Sentinel, MF Global, Refco, PFG, etc
I have known Jason for years and he is a stand up individual. People don't advance in their career at the rate Jason has by luck. ILQ made the right move bringing him on and they are also making the right move focusing on Australia. I wish them the best of luck.
I have known Jason for years and he is a stand up individual. People don't advance in their career at the rate Jason has by luck. ILQ made the right move bringing him on and they are also making the right move focusing on Australia. I wish them the best of luck.
Before i left there was no big business in Australia, The truth is the NFA was closing in and they abandon ship.
@Jamese – there ways around all of this. But, when a broker offers MT4 with a marketplace embedded in the platform, a regulator may not care that this is a MQ operated app store, but just look at the fact that the product is a branded broker MT4 app store of EAs. If you take a look at many financial broker and bank websites, when they post third party content and a reader clicks on a link to discover more about this third party, you often see a popup that states “be advised you have elected to view content on… Read more »
@Jamese – there ways around all of this. But, when a broker offers MT4 with a marketplace embedded in the platform, a regulator may not care that this is a MQ operated app store, but just look at the fact that the product is a branded broker MT4 app store of EAs. If you take a look at many financial broker and bank websites, when they post third party content and a reader clicks on a link to discover more about this third party, you often see a popup that states “be advised you have elected to view content on… Read more »
Before i left there was no big business in Australia, The truth is the NFA was closing in and they abandon ship.
If it was not for James being such a good guy I’d tell it like it is.
If it was not for James being such a good guy I’d tell it like it is.