Integral Posts 2013 Retail FX Survey

Financial technology provider Integral released the findings of its 2013 Retail FX Survey. The survey asked FX executives from brokers around the world to answer questions such as which retail markets they think are hot, how new technology is changing the market, and whether increased regulation is having a positive or negative impact on their business? A summary of questions and answers are below. Readers can download the results directly from here.

What are the biggest opportunities for growth in 2013?

Respondents provided a diverse set of answers. The top three choices were focusing on geographical markets, offering new front end platforms, and building the company brand. In our own conversations with brokers, interest in regional expansion continues to be a hot topic.

What are the biggest challenges for 2013?

Surprisingly, after the poor 2012, only 15% of responders stated ‘Lack of Volatility.’ The choice tied for the top choice with ‘Increasing client profitability’ but would have been expected to be higher. As such, it appears to imply that despite the decline in volatility, most brokers viewed it as a short term issue.

Will more brokers shift towards and agency model in 2013?

50% responded yes, while only 15% said no, and 35% said ‘about the same’. The important follow up question that we wish was also asked is what percentage of those that responded yes would themselves be interested in operating an agency model

How will 2013 retail FX volume be?

Even though only 15% answered that they were worried about FX volatility in 2013, only 24% though volumes would be higher in 2013. 56% said about the same, and 20% forecasted a decline.

Optimum number of trading platforms to offer clients?

48% answered 2-3, with a surprising 39% stating only 1, and a clear minority of 13% believing 4+ is best. With what seems like a lot less than 39% of brokers only offering one platform, the results of this answer reveal that brokers don’t see much advantage for traders in one system over another.

Will MT5 overtake MT4 in 2013?

Another surprising answer. 52% said ‘no way’ and 48% chose ‘50/50 by the end of the year’. The answer would seem to indicate that quite a few brokers are looking to launch the product during 2013. This greatly counters opinions from 2012 where brokers we spoke to didn’t see MT5 taking off. Although, no one answered that it would overtake MT4.

Is social trading a sustainable trend in retail FX?

Not surprisingly, 79% answered ‘yes, but it won’t take over the world’. That indicates that brokers overall realize that social trading is an important product for the foreseeable future but that self-trading will continue to be the largest percentage of traders.

What regions are expected to see the most new brokers?

Another non-surprise was that respondents believed Asia would show the most growth with North America fairing the worst. Despite the increase in new brokers in Australia the last two years, the continent’s growth was forecasted to be ‘luke warm’ in 2013.

Do you expect to see consolidation in 2013?

76% answered yes, with only 24% saying less than 2012.

Is increased regulation good for the industry?

57% answered no and 43% said yes. This seems to be a regional answer as brokers from Europe, Japan, the UK, and US would prefer a halt to new rules, while emerging market brokers are more likely to prefer greater regulation as a method to enhance the appeal of forex.

What are the optimal amount of Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term providers?

42% answered 6-10, with around 25% choosing 2-5 or 11-30. The answer fits well with a similar recommendation we reported in our Liquidity article in our Q4 Industry Report. Interestingly, 0% answered only one provider. Although no one wants to be working with only one provider, the fact of the matter is that there are still plenty of firms that do operate in such a way, even though they know it’s risky.