Gain Capital’s Retail FX Deposits Drop $10 Million in August, CFTC Data Shows

The number of deposits made by retail FX traders in the United States, which had grown slightly over the past few months, has cooled off in August as the summer’s low volatility and prolonged strict regulations dampened enthusiasm.

According to the CFTC’s monthly report, the FX funds held at brokerages operating in the country, including FCMs that are registered as Retail Foreign Exchange Dealers (RFEDs) and those included as broker-dealers, came in at $523 million. This figure is $14.8 million or three percent lower than the $533.7 million reported in July.

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Data from the US securities regulator also showed that Gain Capital lost nearly $10 million in retail forex deposits. Overall, the balances of US retail traders have been largely skewed negatively during the reported period.

Only one of the four FX firms listed notched increases in Retail Forex Obligations, which was this time Interactive Brokers. The Connecticut-based company was the best performer after recording an overall rise of $3.4 million to $37.3 million at the end of August 2018, compared to $33.9 million in July, or an increase by 10 percent month-over-month.

Meanwhile, GAIN Capital saw a drop of $9.9 million, or nearly four percent month-over-month. Further, retail funds at OANDA Corporation slumped by nearly $4 million or two percent in August. Retail brokerage TD Ameritrade’s $4 million-plus loss was the biggest, on a percentage basis, as the discount broker lost more than six percent of its clients’ deposits.

Retail currency brokers are still struggling to operate in the United States after nearly a decade of tougher margin and capital requirements. But things could change if Donald Trump is able to follow through on his pledge to deregulate financial markets. Global key players in the vast retail FX market are also gearing up for a hopeful re-entry. At the heart of the forex brokers’ optimism is the possible repeal of the Dodd-Frank Act.

Looking at the market share of different brokers, distribution changed slightly in August relative to the month prior. GAIN Capital remained the leader in terms of market share, commanding a 45 percent share, but down one percent from July. OANDA also solidified its stance as the second largest in the US with 36 percent market share – TD Ameritrade and Interactive Brokers retain a 12 and seven percent share respectively.

The chart listed below outlines the full list of all FCMs that held Retail Forex Obligations in the month ending in August 31, 2018 – for purposes of comparison, the figures have been included against their July 2018 counterparts to illustrate disparities.