Forex Market Sees 4% Decline in 2023, Recovery Discussed at FMLS:23

by Damian Chmiel
  • Despite regulatory concerns, prop trading growth is a highlight in the struggling FX market.
  • The panel "Trading Behaviour Shifts, Risks, and Outlooks" addressed key shifts in trading practices over the past year.
From left: Opal Yang and Naomi Ewart-Simcock
From left: Opal Yang and Naomi Ewart-Simcock

In 2023, the forex (FX) industry faced challenges and declining trade volumes, which shrunk by an average of 4%. Its future and what 2024 will bring were discussed during the Finance Magnates London Summit 2023 (FMLS:23) in a panel featuring Naomi Ewart-Simcock, the Senior Account Manager at ActivTrades UK, and Opal Yang, the Forex Regulation Consultant at New Direction Business Consultant.

"Spot transactions were down by 3.3%, forwards decreased by 7.10%, and so forth. Overall, we see a decline of approximately 4%," ActivTrades UK's representative commented.

Forex Industry Faces Challenges amid Market Volatility

Ewart-Simcock opened the discussion during the panel titled "Trading Summary 2023: Trading Behaviour Shifts, Risks, and Outlooks" by highlighting the challenges faced by the FX industry in 2023, noting significant workforce reductions among leading brokers. She stressed the need to understand this downturn's underlying causes and explore potential recovery strategies.

Naomi Ewart-Simcock
Naomi Ewart-Simcock

"2023 wasn't a good year for the FX industry in general. We saw the leading brokers has lost up to something like 10% of the workforce," said Ewart-Simcock. She attributed the decline to high inflation and interest rates. However, over 50% of market analysts predict interest rates will fall next year. "Once it's reached the bottom, the only way is going up," she added.

Yang questioned the impact of these economic factors on trading companies, leading to a discussion about the need for brokers to diversify their offerings. Ewart-Simcock suggested that promoting non-FX CFDs, like futures, metals, commodities, and indices, could be a viable strategy.

Declines in volumes are confirmed, among others, by data published monthly by Finance Magnates and the BCG Expand Research report for the first half of 2023. Spot FX volumes declined 7% during the period.

FX Revenue Banks

Amidst these challenges, the panelists highlighted the explosive growth of funded trading through "prop firms" as a bright spot.

Prop Trading Offers Opportunities

shared insights from her research, noting the rapid growth of proprietary trading and its appeal to traders. She highlighted the significant number of new accounts and profits generated by leading prop trading platforms, comparing them to traditional Forex retail brokers like IG.

Opal Yang
Opal Yang

"I wouldn't say I'm an expert in it, but we do see the increased numbers," said Yang. She cited statistics showing funded trading platform FTMO gained 960,000 new accounts and over $100 million in profit in 2022. Representatives from FTMO addressed the potential of the prop trading industry in a separate panel during FMLS:23. They suggested that it will continue to develop, but it may face significant consolidation.

"You can trade without having your own funds. Quite attractive for the traders," explained Yang. She attributed the model's popularity surge to social media and psychology.

However, recent regulatory scrutiny of top firms like MyForexFunds raises questions. The lawsuit against a popular company revealed that the industry is amassing a lot of money, is under-regulated, and is increasingly full of fraudsters and dishonest actors.

While regulations may limit payouts from the current high rates, Yang believes funded trading has a few years of strong growth ahead. As an introducing broker, she advised: "We should definitely think about how we can also make profits from this phenomenon."

In 2023, the forex (FX) industry faced challenges and declining trade volumes, which shrunk by an average of 4%. Its future and what 2024 will bring were discussed during the Finance Magnates London Summit 2023 (FMLS:23) in a panel featuring Naomi Ewart-Simcock, the Senior Account Manager at ActivTrades UK, and Opal Yang, the Forex Regulation Consultant at New Direction Business Consultant.

"Spot transactions were down by 3.3%, forwards decreased by 7.10%, and so forth. Overall, we see a decline of approximately 4%," ActivTrades UK's representative commented.

Forex Industry Faces Challenges amid Market Volatility

Ewart-Simcock opened the discussion during the panel titled "Trading Summary 2023: Trading Behaviour Shifts, Risks, and Outlooks" by highlighting the challenges faced by the FX industry in 2023, noting significant workforce reductions among leading brokers. She stressed the need to understand this downturn's underlying causes and explore potential recovery strategies.

Naomi Ewart-Simcock
Naomi Ewart-Simcock

"2023 wasn't a good year for the FX industry in general. We saw the leading brokers has lost up to something like 10% of the workforce," said Ewart-Simcock. She attributed the decline to high inflation and interest rates. However, over 50% of market analysts predict interest rates will fall next year. "Once it's reached the bottom, the only way is going up," she added.

Yang questioned the impact of these economic factors on trading companies, leading to a discussion about the need for brokers to diversify their offerings. Ewart-Simcock suggested that promoting non-FX CFDs, like futures, metals, commodities, and indices, could be a viable strategy.

Declines in volumes are confirmed, among others, by data published monthly by Finance Magnates and the BCG Expand Research report for the first half of 2023. Spot FX volumes declined 7% during the period.

FX Revenue Banks

Amidst these challenges, the panelists highlighted the explosive growth of funded trading through "prop firms" as a bright spot.

Prop Trading Offers Opportunities

shared insights from her research, noting the rapid growth of proprietary trading and its appeal to traders. She highlighted the significant number of new accounts and profits generated by leading prop trading platforms, comparing them to traditional Forex retail brokers like IG.

Opal Yang
Opal Yang

"I wouldn't say I'm an expert in it, but we do see the increased numbers," said Yang. She cited statistics showing funded trading platform FTMO gained 960,000 new accounts and over $100 million in profit in 2022. Representatives from FTMO addressed the potential of the prop trading industry in a separate panel during FMLS:23. They suggested that it will continue to develop, but it may face significant consolidation.

"You can trade without having your own funds. Quite attractive for the traders," explained Yang. She attributed the model's popularity surge to social media and psychology.

However, recent regulatory scrutiny of top firms like MyForexFunds raises questions. The lawsuit against a popular company revealed that the industry is amassing a lot of money, is under-regulated, and is increasingly full of fraudsters and dishonest actors.

While regulations may limit payouts from the current high rates, Yang believes funded trading has a few years of strong growth ahead. As an introducing broker, she advised: "We should definitely think about how we can also make profits from this phenomenon."

About the Author: Damian Chmiel
Damian Chmiel
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About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1378 Articles
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