When you hear the word ‘regulation’ what immediately comes to your mind? Is that something good or bad? To me, that is always something grey, bureaucratic, NFA, cumbersome, rigid, etc. Now we have one more reason to frown when we hear that word.
So how many US brokers do you think have survived the NFA requirements tsunami which swamped the Forex industry in the past year or so? Given the competitiveness in the market and the abundance of online and offline ads you might say 50 or maybe 30 or even 20 if you are a real skeptic.
Actually it’s closer to 14. Yes, that much.
Back in October 2008 there were at least 29 of them. That’s a 60% decrease in 6 months…
With NFA inventing new impractical requirements every couple of months and FXCM acquiring one broker’s customer base after another the US Forex industry is undergoing a significant consolidation process. What used to be thriving and very competitive industry is now becoming more and more regulated and centrist and this is really bad news for consumers. The less competitive the market the worse is the bargaining power of the consumer.
NFA failed in its bid to make the markets better and made them worse by making all the wrong moves that were possible.
The Forex survivors, so far, are (registered with NFA as of March 2009):
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Alpari – Just entered the US market
I-Trade – sold its retail business to FXCM
ODL – sold its retail business to FXCM
Advanced Markets (amifx.com not the Swiss ACM)
GFS– announced its exit from US market
FXDD – is in registration process, though it might encounter few problems…
Give the NFA a few more months and the number of brokers goes below 10. Guaranteeed.