US FX Brokers Feel the Summer Heat as Retail Assets Decline 1.4% MoM

The gradual diminish of the US retail FX market is coming close to reality as brokers are experiencing declining metrics.

stock-illustration-20730281-crumbling-money-rollUS financial services firms operating as FCMs or RFEDs have reported financials for the month of June to the CFTC. The current figures reinforce a disappointing notion of declining clients assets in the worlds largest economy. Overall, firms reported a reduction in total clients assets held, for June firms held $635.54 million, a drop of 1.4% from $644.59 held in May.

Of the 12 reporting brokers, 6 reported a decline in client assets with the biggest downfall seen at Interactive Brokers and Knight Capital Americas. With the former experiencing a 13% decline and the latter a 7.4%. On the plus side IBFX (Monex) and FXCM both saw assets increase by approximately $2 million.

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Unlike previous months, the US market was free from brokers departing or arriving. However, with Dodd Frank reforms implemented the US markets attraction is quickly fading away with other brokers expected to call it a day. On the other hand, a recent trend in the market is the global expansion of Japanese brokers. At the moment Japan brokers have preferred Australia or the UK to set up, however with capital requirement not being an issue for the giants, US could be a destination, especially for firms looking to capture the virgin LATAM region.

Although the fall in client assets is a concern for the industry at large, trading volumes in June were vibrant. This indicates that trader behaviour could be gearing towards higher leverage and an increase in the frequency of trading. The volatility in the markets have been a driving force behind the increasing volumes and short-term traders may be taking advantage of the current erratic trading environment.

fcm data june

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