Interactive Brokers Continues to Lose Market Share in US FX Retail Space

FX funds held at registered brokerages operating in the United States came in at $537.7 million in May.

Retail FX deposits at U.S. brokerages, which have been struggling to eke out a profit in a strict regulatory environment, rose in May for a second consecutive month, increasing by $4.5 million, CFTC data showed on Thursday.

The brokers, including FCMs that are registered as Retail Foreign Exchange Dealers (RFEDs) and those included as broker-dealers, saw a total positive change month-over-month from April, though differences amongst each broker were more pronounced.

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The prospect of loosening regulations may soon revive interest in the US market among foreign brokers, or at least help brighten the outlook for a retail industry that has struggled for quite some time under the provisions of the Dodd-Frank legislation.

However, the exact timeline for revised rules is unclear, but it would likely take several months at the earliest, given the scale of the reform the regulators will be implementing.

Jay Powell, the Fed chair appointed by President Donald Trump, told reporters last month that regulators were seeking to “replace overly complex and inefficient requirements with a more streamlined set of requirements.”

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Back to the figures, the FX funds held at registered brokerages operating in the United States came in at $537.7 million in May 2018, which is 1 percent more than the $533.3 million reported in April 2018.

According to the CFTC dataset, three of the four FX firms listed notched increases in Retail Forex Obligations including GAIN Capital, OANDA Corporation, and TD AMERITRADE.

The best performer for the month was TD AMERITRADE which saw an overall rise of $4.4 million to $69.0 million at the end of May 2018, compared to $64.7 million at the end of April, or an increase by seven percent month-over-month.

Meanwhile, the single loss was made for the third consecutive month by Interactive Brokers, which saw a drop of $4.2 million, or nearly 12 percent month-over-month. This is also a drop of nearly 25 percent off January’s figure.

Looking at the market share of different brokers, the distribution slightly changed in May relative to the month prior. GAIN Capital remained the leader in terms of market share, commanding a 47.0 percent share. OANDA also solidified its stance as the second largest in the US with 34.0 percent market share – TD Ameritrade and Interactive Brokers retain a 13.0 and 6.0 percent share respectively.

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

CFTC data
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