Yesterday I showed here Interbank FX’s account profitability report which all brokers will now need to publicly submit to the CFTC as par of the new rules.
I contacted IBFX asking to explain how exactly they calculate the number of accounts and how come there is discrepancy between this report and the number of accounts typically reported by Interbank in its press releases. IBFX published a short blog post explaining this:
In Interbank FX’s most recent CFTC email on October 6, we noted our profitability numbers which included only actively trading and non-discretionary accounts.
Filling the Gap Between Brokers, LPs, and ClientsGo to article >>
“Actively trading accounts” we define as an account with any trading activity whatsoever in the given quarter. “Non-discretionary accounts” we define as an account under the sole control of the account owner(s). Therefore, for each quarter, any account which did not execute a trade, or any account which was controlled by someone other than the account owner(s) (i.e. money manager, Power-of-Attorney), were not included.
Interbank FX would be happy to share the method of calculation used to generate the profitability numbers published in the aforementioned Email. Interbank FX calculated the profitability of accounts using the simple equation of ‘Ending Equity’ – ‘Beginning Equity’ + ‘All Withdrawals’ – ‘All Deposits’.
This seems to explain the difference as typically there are many accounts which are rarely traded and there are many more which are professionally managed by others. It’s interesting though whether accounts that were opened and burned out in the same quarter appear on this report or not.
I’m all eager now to see the reports by other brokers – I’m sure we will see some wild fluctuations in the number of profitable traders between various brokers… Moreover, I’m sure many brokers are now sweating trying to game their numbers for this report.