Retail forex volumes survey September 2010
It’s time for a new retail forex brokers volume survey, last one was in January and many things changed since.
It’s time for a new retail forex brokers volume survey, last one was in January and many things changed since.
Most notably, several brokers filed for an IPO and had to publicly disclose their trading volumes. This allows us to see that both FXCM and Gain may have somewhat exaggerated their numbers in previous press releases. A year or so ago FXCM was claiming $500 billion a month, then it was decreased to $365 due to some change in calculation methods and now we can see that FXCM’s volume is only $261 billion a month. Same story with Gain: it was claiming $200 billion a month whereas its IPO documents show only $100 billion. Accordingly I have made slight adjustments to rest of brokers.
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Another explanation for the big drop in reported volumes is the CFTC’s fight against leverage which forced US brokers to reduce leverage from 1:200 to 1:50 on majors and 1:20 on minors in less than a year.
For the first time I’m also including here my own estimates for several brokers who never publicly disclosed their numbers.
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* numbers do not differentiate between purely retail and institutional volume as it’s next to impossible, even for brokers themselves, to know that.
** numbers do not include Japanese brokers.
If I was to guesstimate the total worldwide size of the purely retail forex market (by retail I only mean private professional and unprofessional traders) I would take 30% off the total volume number in this survey (removing what I estimate to be the institutional part) and multiply it by 2 (to include the Japanese market which is huge by itself, even after the aggressive volume reductions there) and will calculate that it equals to more or less $165 billion daily volume.
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Very interesting article and guesstimates.
Please note however that there are 2 missing pieces:
1. Those volumes on many brokers also include CFD trading volumes, and therefore this guestimate sounds reasonable for retail FX/CFD.
2. This does not include offline FX traders that trade with traditional banks.
Michael, thanks for the update.
You say you have “made slight adjustments to rest of brokers.” Can you explain what this means?
Michael
What basis/percentage/calculation have you used to ‘slash’ those numbers mentioned above? Is it based on percentages that were different to those you have numbers for or other?
Also, I’m interested specifically in Oanda. I take it their figures are published and that there was no need to reduce them based on their already low 50:1 leverage?
Interesting article.
Thanks.
Are the numbers for Interactive Brokers an estimate, or do they report that in their SEC filings? I would never have guessed that Duka does 6x the volume of them (or that Duka is now neck-and-neck with FXCM).
How did you come up with the Interactive Brokers number? Sounds really low, since they are a rather huge firm, judging from the cftc reports.