Dodd-Frank has opened a door to U.S. banks to offer retail currency trading (aka FX or Forex) as of July 22, 2011, but is about to close that same door to U.S. securities firms. Although theoretically securities firms will still be able to offer FX, the Securities and Exchange Commission is not likely to pass retail FX rules by the July 15 deadline to prevent its registrants from being shut out of FX, a lucrative business with significant growth potential. Some firms affected by this likely SEC inaction include Charles Schwab, T.D. Ameritrade, E*Trade, and Interactive Brokers. As of July 16, only … Continue Reading →

The number of active retail FX traders in Japan rose to 643,000, a record high, for the quarter ending in March 2011. The 7.7% increase follows six quarters that each averaged 600,000 active traders. Much of this increased level of activity that took place did so in a quarter that saw a major earthquake and a record low level in USD/JPY (U.S. dollar/yen). As with retail FX’s institutional peers, price volatility attracts retail traders. But the picture for Japanese brokerages is not too rosy. The level of volume from active over-the-counter (OTC) traders is up 3% from December 2010, but … Continue Reading →

There is an unusual level of expediency at most regulators over requirements and deadlines imposed by the Dodd-Frank Act. As we approach the July 21 anniversary of this landmark legislation, regulators from seven U.S. regulatory bodies —  CFTC, SEC/FINRA, OCC, FDIC, Federal Reserve, NCUA, and FCA – have an important task ahead: setting up rules for retail currency trading. Retail FX (also known as Forex) deals with regular people who wish to day-trade the dollar against the euro instead of buying Apple and selling Microsoft. Many financial institutions in the market have not yet realized how popular retail FX is, and … Continue Reading →

Active trader darling TradeStation (NASDAQ: TRAD) announced today the launch of its TradeStation Forex Inc. subsidiary. Its arrival to Forex continues to solidify the arrival of well-capitalized financial firms into a space dominated by brokers that only offer FX services to a retail public: Deutsche Bank (DBFX, 2006), Citibank (CitiFX Pro, 2007), and TD Ameritrade (thinkorswim, 2009). Interactive Brokers (IB) and Man Financial have offered retail FX since at least 2005, but neither has created a separate entity for it or promoted it actively. A little perspective about this move by TradeStation is in order. The firm debuted in 1982 at … Continue Reading →

A complex yet impressive picture of retail FX traders is emerging from Japan. A recent Aite Group report sizes the retail FX market in Japan at 3.6 million, using data from the country’s Financial Futures Association (FFA) and data compiled from almost 40 medium and large retail FX brokers. An estimated 597,000 traders were considered active during Q4 2010. The relevance of understanding Japanese active-trader patterns resides on the direct correlation that trading volumes and currency pair preferences have with retail FX broker revenue. The Wall Street Journal recently reported that as much as US$ 171 billion (30%) of US$570 … Continue Reading →