GAIN Capital First to Report August Trading Volumes

If the first half of 2018 has been stellar for retail brokers, the challenges for the industry are just starting. GAIN Capital, which owns two retail brokerage brands, City Index and Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term.com, has just announced its trading volumes for August.

The firm is reporting average daily trading volumes that declined 26.2 percent when compared to last year. The number stands at $7.6 billion daily, which is also lower by 8.4 percent when compared to July.

Overall, the impact on trading volumes is not conclusive. While there is no doubt that the decline is a consequence of the new regulations, August is typically a slow month for brokers.

Summer vacations could be distorting data and conclusive statements on the impact of the new ESMA regulations would be premature. Still, the comparison on a year-on-year basis is the crucial one to monitor.

GAIN Capital’s brands yielded a total of $174.6 billion in trading volumes in August. The number was lower by 26.5 percent when compared to last year and by 4.2 percent when compared to July.

Industry Eagerly Awaits Numbers

As the new ESMA regulatory framework kicks in, brokers are eagerly awaiting the publication of stats for August. The month of vacations, especially in Europe, is not the significant barometer we are all looking for.

Emphasising that the state of the industry can not be reassessed based on one month's worth of data, we can still analyse a bit. GAIN Capital’s metrics show us that some moves undertaken by brokers in recent months might have yielded results.

One such move is the 'professionalisation' of the industry, as explained by my colleague David Kimberley. Brokers have been largely successful in their effort to reclassify a number of their clients to 'professional'.

Another key point is that while retail traders rake in less volumes, they keep misplacing risk. We have pointed out on numerous occasions that the 25:1 Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term cap in Japan didn’t stop the country’s traders from forming the largest market on the globe.

Once again, one month of data is still nothing and we will be eagerly awaiting the follow up month of September for further clues.