FXCM Inc Upgrades CFD Market Making, Adds New Mini Accounts

The new technology deployed by the brokerage will permit it to hedge its exposure on the futures markets instantaneously

FXCM Inc (NYSE:FXCM) has announced a couple of changes to its product offering which could enable further extension of its market share. The first step that the company is taking is to revamp its CFDs market making technology. The brokerage has detailed that its new approach towards managing exposure will also bring about a much awaited no-requotes trading to index CFDs.

The company will also waive some restrictions on placing stops and limit orders close to the market price of indices and lower the spreads on a number of indices. FXCM Inc (NYSE:FXCM) also asserts in its announcement that the risk management methodology which the company has been using when handling CFDs will permit it more flexibility.

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The improvements in the efficiency of managing market exposure could result in better Revenues Per Million (RPM) captured from CFDs trading. According to the announcement, this becomes possible due to the ability of the risk management team to hedge market exposure in the futures market in real-time with very high-frequency execution.

With benefits to both the broker and its clients, FXCM aims to recover its position on the market after the brokerage got hit by a major loss in January due to the Swiss National Bank (SNB) induced black swan event, causing substantial damage to the forex brokerage industry.

Commenting on the announcement, the CEO of FXCM Inc (NYSE:FXCM) Drew Niv said, “The new offering provides all traders, especially scalpers and news traders, with their ideal trading environment for indices. This will provide the most unique Index trading offering in the industry and immediately benefit clients.”

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New Mini Accounts with a $50 Minimum Deposit

In addition to the above changes, the company has unveiled a new mini type of account requiring a minimum deposit of $50 and numerous details pertaining to its execution policy and the use of its dealing desk business model.

Clients of FXCM Inc (NYSE:FXCM) will be able to trade micro CFD lots from as little as $0.10, gaining access to 22 CFDs and 19 currency pairs. The mini account holders will be serviced by a dealing desk execution model where the costs of the trade are calculated into the spreads.

The company’s announcement states that mini account holders are prohibited from using price arbitrage strategies, in which FXCM Inc (NYSE:FXCM) determines, at its sole discretion, what constitutes a price arbitrage strategy.

In the case of identification of prohibited strategies, the firm states that certain mini accounts may be switched to a No Dealing Desk execution.

The company has detailed the leverage offerings for its new mini accounts – those who have equity totaling less than 10,000 base currency units get 400:1 forex leverage. For the second bracket between 10,000 and 20,000, the leverage is 200:1, while those holding more than 20,000, will get access to 100:1 leverage and No Dealing Desk execution.

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