FXCM Retail Volumes Drop in March, Institutional Volumes in the Green

FXCM, one of the largest brokerage firms in the FX & CFD markets has reported trading metrics for the month of March. The US listed firm saw mixed results across its retail and institutional division. Retail volumes were lower than those traded in February, however the firm saw an uptake in its institutional offering. The drop in retail numbers is consistent across the brokerage sector with several brokers reporting declining figures in March.

The global broker saw Retail Trading figures drop 5% in March to $290 billion from February’s metrics, volumes were 9% lower from 2013 figures. In its institutional division, trading activity was higher both on a month-on-month and year-on-year basis.

The largest non-Japanese retail FX and CFD broker (according to Forex Magnates research QIR 1 2014) has been enhancing its position in the institutional market after strategic acquisitions, including; Infinium, Lucid Markets & Faros Trading. In its March company presentation, FXCM reported that it will be launching a new venture called V3 Markets. Under its institutional offering, the firm operates FastMatch and FXCM Pro. FastMatch accounts for over half of the firm's institutional volumes as stated by CEO Drew Niv in a company presentation.

The ongoing Russia-Ukraine crisis has kept retail investors on the sidelines with major moves seen across G7 crosses. The world's most liquid instrument, EUR USD, has strengthened dramatically since the crisis intensified in February, and has traded at a high of 1.3934 in mid March.

March 2014 Retail Trading Metrics (from the company release)

• Retail customer trading volume (1) of $290 billion in March 2014, 5% lower than February 2014 and 9% lower than March 2013. Volume from indirect sources was 46% of total retail volume (1) in the first quarter 2014. Retail customer trading volume (1) for the first quarter 2014 was $937 billion, 5% higher than the fourth quarter 2013, and 10% lower than the first quarter 2013.

• Average retail customer trading volume (1) per day of $13.8 billion in March 2014, 9% lower than February 2014 and 9% lower than March 2013.

• An average of 428,138 retail client trades per day in March 2014, 7% higher than February 2014 and 1% higher than March 2013.

• Tradable accounts (2) of 189,263 as of March 31, 2014, a decrease of 1,459 accounts, or 1% from February 2014, and a decrease of 6,366 accounts, or 3%, from March 2013.

March 2014 Institutional Trading Metrics

• Institutional customer trading volume (1) of $200 billion in March 2014, 23% higher than February 2014 and 60% higher than March 2013.

• Average institutional trading volume (1) per day of $9.5 billion in March 2014, 17% higher than February 2014 and 58% higher than March 2013.

• An average of 37,647 institutional client trades per day in March 2014, 7% higher than February 2014 and 109% higher than March 2013.

FXCM joined the growing number of providers offering emerging market currency pairs. The firm launched the popular offshore Chinese Yuan contract traded in Hong Kong, USD CNH earlier this month. Asia is FXCM’s largest market contributing to 45% of its business. It was one of the first brokers to enter the vibrant Chinese market in the early 2000’s. According to the firms official documents, China accounts to 20% of its global volumes.

FXCM intends to compete with major CFD providers as it has seen revenues increase in this asset class. The firm plans to launch single stock CFDs in Q3/Q4 2014, Mr Niv explained in a recent earnings call that the new product should enable the firm to attract a new client segment, additionally it should see lower client on-boarding costs.

(1) Volume that FXCM customers traded in period translated into US dollars.

(2) An account that has sufficient funds to place a trade in accordance with FXCM trading policies.