Are the larger brokerage firms offering forex trading generally safer?
For instance, in the Swiss Franc liquidity crisis early this year it seems as though both Interactive Brokers and TradeStation (or rather their client accounts) lost huge sums that would have taken many other firms straight into insolvency, but due to their huge capitalization it barely affected their financial position.
Big firms like MF Global also seem to go bust though . . .
Does the size of a firm (all othger things being equal) make any real difference to the safety of client funds?
I’ve read the same thing which has lead me to consider opening an account with IB while also convincing me to stay away from FXCM.
It seems to me that FXCM does not have nearly the amount of money that others have and, as I am sure you have also read, they have concerns regarding their debt. From my own perspective, much like a bank that you have a savings account with, if clients are concerned with their broker’s/bank’s financial fortitude this could lead to a run on said bank.
Another factor that comes into play, namely with IB, is that they are in a far better financial position when a crisis occurs (i.e. Swiss bank crisis) than the other FX players. They are able to carry on ‘business as usual’ because they have sooo many other clients who have their accounts or trade with them outside the world of FX.
It’s important to note that despite the events of January 15th, FXCM’s capitalization remains at levels similar to before the SNB event.
Additionally, all of our regulated entities except the US provide clients with segregated funds. Our UK regulated entity through the FSCS even offers clients £50,000 per person in protection. Canada has similar insurance for retail traders of up to $1 million.
As we mentioned during our last earnings call, FXCM’s plan is to pay back that loan by the end of the year, and we have outlined the non-core asset sales to accomplish this:
At that time, our CEO Drew Niv said the following:
“FXCM is pleased with how our debt reduction plan is proceeding. We are ahead of plan and the results of the FXCM Japan sale exceeded our expectations. With all the increased attention to our other properties, we are expecting robust and competitive auctions for the other non-core assets we have targeted to sell.”
As a further update last week, we announced the completion of our sale of FXCM Hong Kong to Rakuten Securities for a total consideration of approximately $38 million.
Regarding size, below is the latest information on client funds with US forex brokers as reported by the CFTC:
The column that says “Total Amount of Retail Forex Obligation” shows the amount of money retail traders have on deposit with FXCM’s US regulated entity which is over 50% greater than what is on deposit with the number 2 forex broker in the US.
Hello Mr. Rogers, I do apologize if this has already been answered: Does FXCM provide a list with their liquidity providers, or in case this is confidential, any other similar information? This question might be annoying I understand, but is important for those of us who want to protect and grow our funds.
Non-disclosure agreements with our liquidity providers mean I can’t name them. However, several of these LPs were mentioned in our October 2014 Investor Presentation (page 6).
